===== PDF PAGE 22 ===== [Extraction: embedded PDF text] CITY OF WEST CHICAGO ECONOMIC DEVELOPMENT COMMISSION AGENDA ITEM SUMMARY ITEM TITLE: AGENDA ITEM NUMBER: 8 Illinois Finance Authority (IFA) Commercial Property Assessed Clean Energy (C-PACE) COMMISSION AGENDA DATE: 10/22/2024 Program STAFF REVIEW: Kelley Chrisse, AICP, CEcD SIGNATURE ITEM SUMMARY: The Commercial Property Assessed Clean Energy (C-PACE) Program was authorized in Illinois in 2017 through the Property Assessed Clean Energy Act to facilitate access to capital providers for the purpose of encouraging energy improvements on commercial, industrial, and multi-family (of 5 or more units) properties. Financing obtained through this program “can be used by owners and developers of commercial properties to finance or refinance eligible improvements in connection with renovations of existing buildings and new construction, in each case up to 25% of the value of the property. Eligible improvements generally include fixtures, products, systems, equipment, devices, and materials intended for energy efficiency, renewable energy, resiliency, or water use; electric vehicle charging stations are eligible improvements too. C-PACE financing has features that make it very attractive as an alternative or a supplement to existing types of commercial real estate financing.” “C-PACE financing does not accelerate upon a default (payment or otherwise), permits terms of up to 40 years, and allows financing of up to 100% of all project and closing costs.” C-PACE financing is secured by a voluntary special assessment on the benefited property that is represented by an assessment contract between the record owner and the Governmental Unit. The special assessment is senior to all mortgages and other private liens on such property and is pari passu to other real estate taxes and assessments. The lien priority and preferences of C-PACE financing is the primary reason why capital providers are willing to provide up to 100% financing that is non-recourse, non-callable in the event of default, and assignable in the event of a transfer of the property.” Initially, there was very limited use of the program, which resulted in changes to State law and the launch of the Illinois Finance Authority PACE Program a couple of years ago. “The Illinois Finance Authority has standardized the structure, implementation, and delivery of C-PACE financing in Illinois to lessen the burdens on counties and municipalities throughout Illinois that may desire to create PACE areas and establish property assessed clean energy programs, to attract capital providers to purchase bonds or notes issued by the Authority to fund PACE Projects throughout Illinois, and to assist record owners in the financing or refinancing of PACE Projects throughout Illinois.” Currently, projects in DuPage County are eligible for C-PACE funding administered through the Illinois Energy Conservation Authority NFP (IECA), which has a slightly different structure and is geared for smaller project financing. The IFA’s C-PACE program offers an alternative and creates options for financing larger projects. Attached is an overview of the IFA PACE Program as well as a document that depicts the Program design to clarify the role and responsibilities of the City, if choosing to participate. ===== PDF PAGE 23 ===== [Extraction: embedded PDF text] ACTION PROPOSED: Staff is looking to gauge interest in City participation in the C-PACE program administered through the IFA. Attachments: Illinois Finance Authority PACE Program Overview IFA C-PACE Program Design ===== PDF PAGE 24 ===== [Extraction: embedded PDF text] Will Hobert, Chair Chris Meister, Executive Director Illinois Finance Authority PACE Program The Illinois Finance Authority (“IFA”) has standardized Commercial Property Assessed Clean Energy (“C-PACE”) financing in Illinois through the nonpartisan, nonpolitical Illinois Finance Authority PACE Program (“IFA PACE Program”). Any interested county or municipality that desires to create a PACE area can establish the IFA PACE Program by adopting the enabling PACE Ordinance and related Program Report provided by IFA. These documents are posted on IFApace.com for counties or municipalities to download. At no cost to the county or municipality, the IFA PACE Program makes C-PACE financing available to any eligible record owner of eligible property that voluntarily requests the levy of a special assessment to secure the financing or refinancing of a PACE Project (see below) pursuant to an assessment contract. C-PACE financing to fund PACE Projects occurs through the issuance of conduit debt obligations (such as bonds or notes), similar to other special assessment financing programs in Illinois. Counties and municipalities can avoid using their own time and resources to issue bonds or notes by establishing the IFA PACE Program to fund PACE Projects. IFA has statewide authorization to issue bonds and notes to fund PACE Projects in any PACE area. The IFA PACE Program is administered by a component unit of IFA known as the C-PACE Open Market Initiative, which is a 501(c)(3) organization. Referred to as the PACE Area Administrator, it is the independent, neutral program administrator of the IFA PACE Program, and provides a fair and competitive, statewide open market. The PACE Area Administrator approves capital providers or their affiliates as participants in the IFA PACE Program to act as program administrators on a non-exclusive basis, with their own resources, and within appropriate guidelines. Referred to as PACE Project Administrators, such program administrators originate financings or refinancings of PACE Projects, purchase or arrange for the purchases of the related bonds or notes issued by IFA, provide or arrange any related interim financing by a warehouse fund prior to the issuance of such bonds or notes, and provide or arrange for the administration and servicing of such PACE Projects. Record owners are afforded the opportunity to work with PACE Project Administrators of their own choosing. For each PACE Project approved under the IFA PACE Program, the assessment contract and related assignment agreement (assigning the assessment contract to IFA) will be in substantially the forms appended to the Program Report. Such collateral documents require execution and delivery by an authorized officer of the applicable county or municipality for each PACE Project approved under the IFA PACE Program. In connection with each request, IFA will provide a summary of the PACE Project and its estimated annual impact regarding any energy savings, energy utility bill savings, water savings, and water bill savings. The PACE Project Administrator will further provide a Compliance Certificate for the PACE Project as required by the enabling PACE Ordinance and Program Report. Any financing or refinancing, or interim financing, of a PACE Project approved under the IFA PACE Program must be accompanied by a written opinion from a nationally recognized municipal bond counsel in form and substance acceptable to IFA as the issuer of the bonds or notes. About PACE Projects C-PACE financing can be used by owners and developers to finance or refinance eligible improvements affixed to any privately-owned commercial, industrial, non-residential agricultural, or multi-family (of 5 or more units) property or any property owned by a not-for-profit in connection with renovations of existing buildings and new construction, in each case up to 25% of the value of the property. Eligible improvements generally include fixtures, products, systems, equipment, devices, and materials intended for energy efficiency, renewable energy, resiliency, or water use; electric vehicle charging stations are eligible improvements too. C-PACE financing is non-recourse to the record owner and assignable upon transfer of the property. C-PACE financing does not accelerate upon a default (payment or otherwise), permits terms of up to 40 years, and allows financing of up to 100% of all project and closing costs. For additional information: Please visit IFApace.com or contact Brad Fletcher at bfletcher@il-fa.com ===== PDF PAGE 25 ===== [Extraction: embedded PDF text] Will Hobert, Chair Chris Meister, Executive Director Additional Features of the IFA PACE Program and Key Benefits to Counties and Municipalities • The exhibit and schedules included with each assessment contract will reflect the actual terms and conditions governing that particular financing or refinancing and assessment as agreed between the record owner and the PACE Project Administrator. The form of the body of the assessment contract and the form of the assignment agreement are standardized and will not be subject to change. Counties and municipalities have no legal obligation to execute and deliver any assessment contract if they are not satisfied, may suspend or terminate the PACE Area Administrator or any PACE Project Administrator for any reason, and may terminate the IFA PACE Program at any time. • Each county or municipality establishing the IFA PACE Program will have no risk or liability or operational responsibilities. The record owner provides an indemnity under the assessment contract in connection with its PACE Project. Each PACE Project Administrator provides an indemnity with respect to its activities and is required to maintain insurance policies under which each participating county and municipality is an additional insured. PACE Projects approved under the IFA PACE Program do not require billing and collecting by the county or municipality or any use of public funds, similar to the structure of commercial real estate mortgages. • The simplification of a single conduit issuer (such as IFA) with statewide authorization to fund PACE Projects attracts capital providers that desire a standardized, efficient, and affordable way to facilitate access to capital for record owners and appeals to record owners seeking lower legal and financing costs to existing alternatives. Counties and municipalities establishing the IFA PACE Program benefit by not incurring any related conduit debt compliance or accounting obligations. • If a PACE Project is in a municipality (i.e., city, village, or incorporated town) where neither the county nor the municipality has established the IFA PACE Program, IFA has a policy preference to discuss adoption of the enabling PACE Ordinance with the same set of stakeholders that are responsible for the applicable property’s zoning, construction permitting, and building code enforcement. If a PACE Project is in a municipality where the county and municipality have both established the IFA PACE Program, IFA will defer to the preferences of record owners on a case-by-case basis given the open market architecture of the IFA PACE Program. Under the enabling PACE Ordinance, each county and municipality establishing the IFA PACE Program retains its right to establish other property assessed clean energy programs and to issue its own bonds or notes under such other programs. About Illinois Finance Authority IFA is a body politic and corporate created under the laws of the State of Illinois. IFA was created under the Illinois Finance Authority Act, 20 ILCS 3501/801-1 et seq., as amended (the “IFA Act”), which consolidated seven of the State’s previously existing financing authorities. Pursuant to the IFA Act, IFA is governed by up to 15 Members appointed by the Governor with the advice and consent of the Senate. The Members receive no compensation for the performance of their duties but are entitled to reimbursement for all necessary expenses incurred in connection with the performance of such duties. Meetings of IFA are conducted in accordance with the Open Meetings Act, 5 ILCS 120/1 et seq., as amended (the “Open Meetings Act”). About C-PACE Open Market Initiative C-PACE Open Market Initiative is an Illinois not-for-profit corporation and component unit of IFA. Members of IFA also serve as the Board of Directors of C-PACE Open Market Initiative. The Directors receive no compensation for the performance of their duties but are entitled to reimbursement for all necessary expenses incurred in connection with the performance of such duties. Meetings of C-PACE Open Market Initiative are conducted in accordance with the Open Meetings Act. For additional information: Please visit IFApace.com or contact Brad Fletcher at bfletcher@il-fa.com ===== PDF PAGE 26 ===== [Extraction: embedded PDF text] Will Hobert, Chair Chris Meister, Executive Director Illinois Finance Authority PACE Program The Illinois Finance Authority (“IFA”) has standardized Commercial Property Assessed Clean Energy (“C-PACE”) financing in Illinois through the nonpartisan, nonpolitical Illinois Finance Authority PACE Program (“IFA PACE Program”). At no cost to the county or municipality, the IFA PACE Program makes C-PACE financing available to any eligible record owner of eligible property that voluntarily requests the levy of a special assessment to secure the financing or refinancing of a PACE Project pursuant to an assessment contract. Program Design All parties benefit from IFA’s vast experience in the issuance of conduit debt obligations (such as bonds or notes), which each year amounts to billions of dollars of long-term investment in voluntary projects of private sector borrowers in Illinois. Accordingly, IFA elected to leverage its competitive advantages to achieve vertical integration and economies of scale in collaboration with local governments to accelerate private investment in PACE Projects throughout Illinois. The following matrix shows the relationships of local governments, the PACE Area Administrator, PACE Project Administrators, and capital providers to IFA under the IFA PACE Program: LOCAL GOVERNMENTS PACE AREA ADMINISTRATOR Any county, city, village, or incorporated town that C-PACE Open Market Initiative, a component unit desires to create a PACE area can establish the IFA of IFA, as the independent, neutral PACE Area PACE Program by adopting the enabling PACE Administrator, approves program administrators to Ordinance and related Program Report provided by participate on a non-exclusive basis in the IFA PACE IFA. Program as PACE Project Administrators. ILLINOIS FINANCE AUTHORITY IFA has statewide authorization to issue bonds and notes to fund PACE Projects in any PACE area in accordance with the Property Assessed Clean Energy Act, 50 ILCS 50/1 et seq., and pursuant to the Illinois Finance Authority Act, 20 ILCS 3501/801-1 et seq. CAPITAL PROVIDERS PACE PROJECT ADMINISTRATORS Upon approval by IFA, capital providers (or their Upon approval by C-PACE Open Market Initiative, designated transferee(s)) purchase bonds or notes PACE Project Administrators originate financings or issued by IFA and provide or arrange any related refinancings of PACE Projects and provide or interim financing by warehouse funds prior to the arrange for the administration and servicing of such issuance of such bonds or notes, in each case to fund PACE Projects, with their own resources and within PACE Projects. appropriate guidelines. Members of IFA also serve as the Board of Directors of C-PACE Open Market Initiative, which is a 501(c)(3) organization. Meetings of IFA and C-PACE Open Market Initiative are conducted in accordance with the Open Meetings Act, 5 ILCS 120/1 et seq., as amended. For additional information: Please visit IFApace.com or contact Brad Fletcher at bfletcher@il-fa.com