HomeMy WebLinkAbout20201431.tiffApril 26, 2020
Ivan Adams
117 Bayside Circle
Windsor, Colorado 80550
Mr. Scott K. James
Weld County Commissioner, District 2
1150 O Street
P.O. Box 758
Greeley, Colorado 80632
Dear Commissioner Scott K. James:
RECEIVED
MAY 1 1 2020
WELD COUNTY
COMMISSIONERS
Through my two terms as a Windsor Town Board Member (limited to two terms by policy); I had the
honor and privilege to serve on regional work sessions and other work sessions in regular County and
community improvement projects, study groups, and other learning opportunities. However, to my
knowledge, I have not met you nor have I had the opportunity and privilege to work with you or serve on
any committees with you. I have served on committees with Mike, Barbara, and Steve.
I find it interesting that your email to me dated April 7, 2020, asked me to kindly detail why I support the
C -PACE Program (Colorado Commercial Property Assessed Clean Energy), and why I believe Weld County
should participate —without referencing the Future Legends Sports Park Project. This is an interesting
request; but I will attempt to honor your request and respond keeping this in mind. I just respect you
and your allowing me to respond!
I will mention first and foremost that after working with the present Windsor Town Board, I trust the
Town Board and feel it would have done its due diligence in planning the financing of such a large project
as I was very involved in the original discussions and planning of the original stages of the project! Being
quarantined in my house due to the COVID-19 crisis, I took the opportunity of being cooped up in my
home to spend 18 days to research C -Pace and found some very interesting things about projects that
they have been involved with including Fremont County! I apologize for taking so long to respond to your
request, and hope you will forgive me. My research was directed at a study of C -PACE, its history,
successes in financing, and organizational history as well as reasons that the Weld County Commissioner's
Board would vote unanimously to approve its support of the original proposal of the Town of Windsor;
and then, reverse its decision to withdraw its support of the state supported program, C -PACE, based on
its determination that it is "bad policy"! The only reason that I could find was that the County
Commissioner Board's decision came about because its treasurer and finance director had brought it to
their attention, hence my 18 -day research.
My research started with a study of the Fremont County's Project that defaulted; but no mention of the
several projects in their district that were successful. The project in Fremont County evidently went
sideways when the developer left a mess for the Fremont County Treasurer to attempt to clean up with
one hand tied behind her back. This intrigued me so I called Mr. Tracy Phillips, the Director of the C -PACE
program who gave me some insight. I will not go into a lot of detail; but will write that Mr. Phillips
told me that the project involved the renovation of an older building in the downtown area. The
developer of the project was struggling with serious deterioration of his health including going blind, and
some serious heart conditions. He felt these two reasons would not allow him to continue. Yes, I am sure
there were other situations that I am not aware of at this time.
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An editorial in the Colorado Sun newspaper written by Sharon Sullivan on November 15, 2019, began with
the heading, "Will Commissioners Ever See the Light on C -PACE?" At that time, Mesa County was the only
qualifying county in Colorado to refuse to adopt the C -PACE Loan Program. The editorial explained how
the program works and stated the program encourages developers to build energy -efficient buildings by
facilitating access to long-term, nonrecourse financing for up to 20 percent of their construction budget.
Sharon Sullivan explained that individual counties must formally opt into the program for it to be available
to its constituents. She stated that counties are involved because the project's loan repayment is routed
through the county property tax assessment process....a voluntary assessment is placed on the tax
owner's property tax bill that is paid over the financing term. It was felt at that time that Mesa County
was missing the boat! It was also felt that Commissioner Scott McInnis thought that adding a voluntary
assessment to a tax bill was not the role of county government -even though assessments and the billing
are core functions of county governments and counties are paid a 1% fee to cover the cost of county
administrative time. This 1% fee, according to Mr. Tracy Phillips, Director of C -PACE, in essence would
amount to $12,000 on a $400,000 amount! He also pointed out that this procedure was something a
county already does with special assessments!
At that time, according to the editorial, another Mesa County Commissioner, John Justman's explanation
that he wasn't familiar with the program, and didn't remember even discussing it were considered "lame
excuses" for not implementing a program that could be beneficial to Mesa County business owners and
farmers! In my opinion, this same message could be conveyed to Weld County residents that would not
benefit from sports fields that would allow growing numbers of athletes, students, and adults who would
finally be allowed to play a variety of outdoor sports on appropriately designed and maintained fields and
facilities; as well as bringing thousands of visitors to Weld County and other neighboring towns and cities
to participate in tournaments and events bringing economic growth to our communities with new hotels,
restaurants, service stations, and retail stores to the area. Oops, I strayed from my mission, sorry!
The article goes on to say that Mesa County was giving up a valuable tool with special relevance to the Las
Colonias Business Park. The outdoor recreation manufacturers, for which Las Colonias might be an
attractive place to settle, often have mission statements with a strong emphasis on sustainability. The
loss of C -PACE financing to build high-performance buildings at the lowest weighted average cost of
capital can be a nonstarter. During that time, November, 2019, voters had just indicated they wanted Las
Colonias to succeed by extending lease terms for the business park for 99 years. Yet, the county —for no
good reason —was putting the business park at a disadvantage compared to nearby counties that offer
C -PACE financing.
Ken Scissors, the Co-founder and Executive of the Grand Junction Clean Tech Business Coalition, called on
Mesa County Commissioners to adopt C -PACE financing in an op-ed back on August 25, 2019. Being a
C-PACEholdout is a self-inflicted wound, Ken Scissors wrote, "Let's remedy that!" The authors of this
particular article stated they could not agree more! This is a program that doesn't cost anything; but
provides an attractive financing option to help businesses reduce energy bills and improve and add to
their facilities. Their remedy was to confront commissioners directly, with obvious economic
development implications at stake. It was said, "The Grand Junction Economic Partnership, the Grand
Junction Area Chamber of Commerce, the Outdoor Recreation Coalition, the Clean Tech Business
Coalition, and local companies that specialize in energy efficiency should form a united front and impress
upon commissioners why C -PACE financing is critical to their competitive footing!" Their closing remarks
were, "The other remedy —with an election coming up in 2020 —is to elect candidates who take the time
to understand how C -PACE works."
At the approximate same time, in Montrose County, two businesses -Mayfly Outdoor and Swiss-O-Matic-
installed renewable energy and energy efficiency improvements financed through C -PACE.
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So, with all this written, what is C -PACE? From the research I have done, C -PACE is a relatively new way of
financing that provides building and property owners a smarter way to modernize their buildings or create
new properties to include 1) 100% financing with no out-of-pocket expense including hard and soft costs;
2) long term financing meaning up to 25 years, not to exceed the weighted EUL of eligible improvements;
3) low energy costs; 4) combined with utility, tax , and economic development incentives; 5) no personal
guarantees; and 6) special purpose assessment such as sewer assessments.
C -PACE is designed as an "open -source funding model" to include prequalified private capital that provides
funds for eligible projects where no public funds are used to finance projects. The owner may choose a
preferred capital provided upfront; or a Program Administrator can review pre -approved projects with
qualified capital providers to determine their funding interests --where capital providers submit financing
term sheets for owner's decision.
Colorado C -PACE makes it possible for commercial building owners and real estate developers to obtain an
affordable , long-term financing for energy efficiency, renewable energy and water conservation
improvements. Anything that saves energy, creates energy, or saves water is eligible, as long as it would be
permanently affixed to the property.
Presently, Although the numbers may vary from report to report and month to month-- of the 64 counties
in Colorado, 31 counties are participants in C -PAC; 17 are in discussion; and as of this date, only two
counties are not participating —one being Mesa County as discussed previously, and the other county,
although not a definitive non -participating, is Weld County. The remaining counties have not been
approached by C -PAC, said Tracy Phillips, Director of Colorado C -PACE!
You might ask, "Who is using C -PACE?" Although the numbers may and probably are not up-to-date, they
may give you an idea of who is using C -PACE! Again, although the amounts and numbers may be changing,
my research shows that to date, 13 projects valued at approximately 515M have been financed through
Colorado C -PACE. There are approximately 71 other projects valued at more than $80M in active
developments with C -PACE, the program is gaining momentum. I was especially intrigued by many of the
large successful projects throughout Colorado and the country that were secured, successfully funded, and
supported by C -PACE! I would like to discuss five of those projects to show how C -PACE is accepted and
helpful in the processes.
(1)
The first, of five, is in our own capital city, Denver, Colorado. The owners of the Historic Petroleum
Building in downtown Denver sought to enhance occupancy rates and renew leases by creating a
healthy, comfortable, productive, safe, and environmentally considerate place to work. The key
benefits of the efficiency upgrades are reduced energy use and more flexibility to address tenant
comfort issues. Clean Fund secured 1.1. million in C -PACE capital to be repaid over 20 years at a fixed
rate, is nonrecourse, and covers 100% of project cost. It is believed that the building's energy efficiency
will improve by 12% with an annual CO2 reduction of 1,384 tons, the equivalent of taking 296 gas -
powered cars off the road for a YEAR!
(2) The second was the State House Square Building, one of the premier Class A Office Buildings in
Hartford, Connecticut. The $8.4 million in C -PACE financing enabled State House Square to significantly
lower its energy and operating costs. The PACE Board obtained consent for the settlement from one of
the nation's largest loan services that was the key ingredient to success. This project resulted in an 80%
energy savings from the newly installed Central Heating and Cooling Plant including chillers, natural gas
fired condensing boilers, steam boilers, cooling towers, and plate -and -frame heat exchangers.
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(3) The third project was the transforming and redevelopment of the Historic Brockfield Building in
Downtown Kansas City. The project involved transforming a dilapidated downtown property into a
modern high efficiency mixed use building, while restoring it to its historic grandeur. The building is
now home to a 118 -room boutique hotel Indigo Kansas City Downtown and the Fairfax Lofts. This was
a 90 year -old building that had stood vacant since 2005, as developers worked to raise capital for the
project. C -PACE accumulated $2.4 million that filled the finance gap and made the project a viable
historic tax credit that was also used to fund the project. This resulted in high efficiency HVAC systems,
LED Lighting, new electrical, and improved water heater and coolant systems that will result in 83%
energy savings.
(4) The fourth project had its groundbreaking ceremony for the new Hyatt Regency Hotel in Salt Lake City,
Utah on January 10, 2020. It is evident that Salt Lake City, the county, and the states elected officials
are paying close attention to economic trends and have taken notes from other sprawling cities like
Austin, Texas and Las Vegas, Nevada. An "inversion" layer created by a combination of the Salt Lake
area's unique topography( surrounded by gorgeous mountains), winter weather, and high carbon
emissions are why Salt Lake City set aggressive sustainability goals for 2020 to be 100% renewable and
cut carbon emissions by 80% by 2040. They felt that C -PACE couldn't be more needed! City and county
officials hope that C -PACE financing will usher in a new era of environmentally friendly real estate
development. The Hyatt Regency itself is going to exceed the energy code compliance level by over 20
percent.
During the groundbreaking ceremony of the new Hyatt Regency, Salt Lake County Mayor Jenny Wilson,
began her speech by proclaiming, "Perseverance and dedication, are what got this project across the finish
line!" These two words struck a chord with the Clean Fund members who sat in the audience and worked
tirelessly to close $54M of the $377M in total project costs. Just eight months ago, in the fall of 2019, PACE
was selected to provide the final financing to build a needed 700 -room hotel tied directly to the Salt Palace
Convention Center in Downtown Salt Lake City.
It is said in much of the research that over the past decade, The C -PACE industry has persevered despite
many headwinds and much of its success is due to the dedication of pioneering companies like CleanFund.
The years spent believing that C -PACE uniquely addressed capital shortfalls; and could make an
environmental impact in the process, felt justified, and the celebrations well-earned, as elected official after
elected official, and CEO after CEO exclaimed that after nearly 20 years, the project was going to finally
break ground.
To tell the whole story of how CleanFund was to meet such a lofty challenge, mobilize a fledgling C -PACE
program, and collaborate with a top -tier developer and others in the complicated capital stack would be a
story in itself, and would take far too much time in this response. But the words, "perseverance and
dedication" do sum it up nicely and CleanFund along with C -PACE, couldn't have been more delighted to be
the lynchpins that delivered this needed asset to Salt Lake City!
The next project that I want to discuss; but certainly not the last, of a long line of success stories to be
completed by C -PACE, is the Bay Area Hospital, the key acute care facility in Daly City, California. CleanFund
secured $40 million in PACE financing for seismic retrofit to the Seton Medical Center campus. CleanFund
worked with the hospital's owner, Verify Health Systems, to finance critical health and safety
improvements. The proceeds will allow the hospital to make upgrades to meet California's mandatory
Hospital Facilities, Seismic Safety Act (SB1953). In addition to traditional bond financing, Seton Medical
Center needed to raise further capital to fund the state -mandated seismic upgrades. PACE offered long-
term, competitive, fixed rate financing, similar to the traditional tax-exempt debt that hospitals often use
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for infrastructure investments. This project involved the largest PACE financing to date, providing a public
safety benefit and ensuring local acute healthcare services that will be available to the communities for
years to come.
Commissioner James, I didn't know that an answer to your email question would become my second
Doctor's Degree Dissertation; but I got carried away with the learning that I was achieving, and because of
the COVID-19 crisis! I had a lot of time to thoroughly research C -PACE as well as CleanFund; however, I
concentrated on C -PACE! You asked me if I would detail my reasons for supporting the C -PACE Program,
and why I believe Weld County should participate. Other than the preceding pages where I have detailed
what C -PACE is, how it works, and how an owner, business, town, or county gets involved with
C -Pace; I would offer to you the 123 pages of information, facts, and details from my research the past 18
days, as well as other information that I have researched for your review, if you would ask!
Following are the specific reasons, in my mind, why I support C -PACE and why I believe Weld County should
participate:
First —Having worked with them, I believe and trust that our Windsor Town Board and its finance
department had thoroughly studied and researched the proposal before choosing C -PACE.
Second-- C -PACE has financed 2020 buildings nationwide, and has financed in the amount of $1.1 Billion.
Third —C -PACE through C & I, would study all facility and retail needs that would improve our economic
needs in Windsor, Weld County, and neighboring counties and communities.
Fourth —The county's role in C -PACE assessment billing, collections, and remittance is clearly stated and
defined to include:
a. County management of ongoing billing, collations, and a remittance process that is consistent
with existing property tax processes
b. Includes the C -PACE assessment fee as a line item on the property owner's tax bill
c. County servicing fee is up to 1% of PACE annual assessment amount, included on owner's property
tax bill; and
d. Upon collection of a C -PACE assessment fee (in normal course of collecting property taxes), the
county remits collections to NEID
Fifth —The role of a Capital Provider is provided that 1) conducts underwriting to assess a project's financial
health, and 2) executes financing agreement with property owner
Sixth —C -PACE has a sound system to deal with new construction that has an eligible finance amount
determination process
Seventh —C -PACE has already determined 34 Prequalified Capital Providers that represent multiple
sectors
Eighth —C -PACE has 23 unique mortgage holders that have consented to a C -PACE project with 10 of
the mortgage holders having consented many times, and eight (8) mortgage holders having provided
C -PACE project financing
Ninth —The Role of the Mortgage Holder has been defined to 1) provide consent to C -PACE assessment;
2) mortgage holders have assessed the projects inspection, borrowers' ability to repay, collateral value,
and the assessment is non -accelerating; 3) 200+ lenders have consented to PACE projects nationwide;
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Ivan L. Adams
and 4) mortgage holder can finance the project through C -PACE
Tenth —the Colorado C -PACE Program has:
a) Financed 58 projects; total of $61.3 million in project financing -24 in 2018--$24.8M (452% increase
over 2017)
b) Smallest project: $60,000, largest project: 7.1 Million
c) Average project: $1.04 Million, median $580K
d) Twelve new construction projects financed
e) 31 counties opted into the program
f) 204 registered contracts; 34 registered capital providers
g) Projects in active "active development ---50 representing = $100M
Eleventh —C -PACE funds up to 100 percent of a project's costs —both hard and soft costs may be
included so there are no upfront , out of pocket costs. The terms are commensurate with the
weighted average estimated useful life of the improvements, which can span up to 25 years, making it
highly affordable.
After my research, I came to some conclusions that I hope will detail for you, the reasons that I support
The C -PACE program, and why I believe the Weld County Board of Commissioners should support the
Program also! I have concluded that C -PACE is a viable financing structure for the following reasons
I hope the reading of this letter regarding my research has convinced you of the same.
First: C -PACE financing structure can be very attractive to C & I owners!
Second: Well -designed projects are typically "too good to be true"!
Third: No out-of-pocket, often positive cash flow, nonrecourse, long-term financing that is transferable
Fourth: It is a statewide program with NEID as sponsoring agent that ensures consistent, repeatable
and scalable process
Fifth: It is a technically sound program with guidelines and independent review; and
Sixth: It has "Open Market" access to private capital that provides the building owner selection of
"Best -fit" capital providers
Yes, I have read and seen enough to be convinced that even though C -PACE is in a relative infancy in
Colorado, it is a growing and convincingly good program for the Windsor community and Weld County
areas and deserving of the Weld County Board of Commissioners' favorable consideration and support.
Commissioner James, thank you again for your request of my honest, sincere detailing of my support of
the C -PACE program and my explanation of why I believe Weld County should be participating in the
program; and sincerely hope this information will be beneficial to you! It was fun, interesting; but
tedious, to read and study the 123 pages of information plus watching several videos!
Sincerely yours,
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Hello