Sorry. Okay, good evening and welcome to the ordinary intergovernment relation committee, a sub commmittee of the Lawrence City Council. So today, Tuesday, May 12, 2006, is 7:15
p.m. So the boarding member for this committee are uh Franklin, Miguel, the vice chair, Selena, Ree, Councelor, Allar, and Gregor de Rosario, district person to chapter 20 of the AT
2022. This meeting of ordinant committee is being conducted both in person and via remote participation. A reminder that person who would like to listen to view this meeting while in progress may either attend in person at
the location above or using any of the following asex location Facebook or YouTube. Roll call please. Mario >> Conor de Rosario >> present.
>> Consent. >> Council Frank Miguel >> present. >> And councelor Anna Levy >> present. >> Thank you. >> So uh council there are some minutes uh
to approve the minutes for February 9, 2026. February 2024 2026 and March 2024 26. May I hear a motion please? >> Move.
>> Second. >> All those in favor? >> I have it. Uh councelor uh we have an agenda for the new business on May 5th, 2026.
Item 18826 is the request vote to up to M2 to the property as sex clean energy base program by Mr. Frrio business and economic development director.
>> Good evening. >> Good evening councelor >> and chair for the uh Frank Serillo economic development director for the city of Lawrence 255 street. I am bringing before you the request to opt in to the um property assess clean
energy program, the PACE program. And with me tonight to talk about the program is Connor from Mass Development. And you have handouts on your that we gave you from the PowerPoint which we're going to at the full council level.
We're going to do the full PowerPoint. Thank you, counselors, and thank you, Madam Chair. And um I'll be referencing this presentation in front of you today. Um I'm Connor Glenn with Mass Development. I'm on the green finance department and we administer the PACE
program in Massachusetts. Um it's a statewide program here. Um if you're unfamiliar with Mass Development, we're the state's development finance agency and land bank. You may be familiar with the uh TDI program here in Lawrence. Um in the TDI district um that's part of uh
one of the divisions at Mass Development. I'm part of the finance programs division. Um we work with businesses, nonprofits, financial institutions, and communities across the state to help stimulate economic growth. And PACE is exactly that. It's
essentially a tool for cities and towns to opt in um to offer as part of the toolbox for economic development. PACE stands for, if you want to reference on page three of the uh presentation, it stands for property assessed clean energy. You may hear it
referred to as CPACE. Um that just stands for commercial property assessed clean energy. So this is a program that is only available to commercial property owners. And essentially, it's a financing mechanism for commercial property owners if they're looking to do energy efficiency upgrades to their
building. Um, install renewable energy systems such as solar, heat pumps, geothermal systems, um, or qualifying new construction projects can uh, also access this financing. And where the city of Lawrence would come in by opting into this program is that the financing
is repaid via a betterment assessment that shows up on the property tax. Um so essentially the city would operate as the billing and collection mechanism of the finance financing and send it back to the original capital provider and that could be a bank or a private fund
that's providing the financing. The reasons why um this program is beneficial um first and foremost for towns and cities um you're attracting private investment into your community. So that can help with job creation, attract new um or retain existing
business and obviously then the environmental benefits associated with reducing energy consumption um or building uh new construction uh in an efficient manner because there's standards um these property owners would have to comply with to be able to get um the financing uh that gets measured um
for either the energy efficiency or the new construction builds. For the property owners, PACE is attractive for a couple different reasons. First and foremost, it's long-term financing. So, it's financing uh it's a fixed year fixed rate at a 20-year uh repayment. So, it's a pretty
long-term financing. It doesn't show up as new debt on their balance sheet because the financing is actually tied to the property. So, it runs with the land. So, if they end up selling the property, that assessment would run to the new owner. It doesn't follow them. And like I said, that means there's no
required payoff upon sale of the property. Um, and for the lenders or the mortgage holders on the property as well, that helps with improved cash flow and a reduced credit risk from lower operating costs uh via financing that cannot be accelerated. And also any
improvements to the property could also improve the collateral property value. And that also can be a benefit to the city because if the improvements do increase the property value, you can obviously levy a higher property tax from them. And if it's a new construction, you're obviously bringing a new commercial property online that
you can also um levy property taxes off of. Page four um just notes that we're not the only state that has a PACE program. Currently, there's 36 states plus Washington DC that have a PACE program.
Then there's 40 states plus DC that have passed enabling legislation. So just like our program, uh state legislators um pass a statute that enables PACE financing. Um ours was passed back in 2020, I believe. And as of June of last
year, um $9.7 billion has been financed for over 3,500 projects using CPACE financing. So it's becoming quite popular across uh the entire country. And that graph on page four just references the CPACE dollars funded by building type. So it breaks it down by
like kind of the most commonly used uh se building sectors that utilize CPACE financing. The hospitality sector um is by far the most popular uh utilizer of CPACE financing followed by office, retail, industrial and so on.
Uh continue on page five. Um it's just kind of more background on PACE program. So every state in New England um except for Vermont at this point has an active program or uh legislation that's been passed that enables CPACE financing. Um and then there's another graph on page
five as well that just references CPACE projects uh by amount finance. So uh that blue part accounts for 19% of all CPACE transactions. Um it's deals that are under $1 million in financing. The gray part is uh a million dollars uh
between $4.9 million that accounts for 33% of all CPACE transactions. And that green part, the largest chunk uh which is 48% of all CPACE transactions are any financings greater than 5 million. So far in our program, we haven't done anything over $5 million. We've kind of
mo focused on smaller retrofit projects, but um as our program continues to mature, I'm sure we'll attract kind of some of these larger projects. On the next page, um, just brings you to when PACE was introduced here in Massachusetts. So, like I said, the
program launched back in July of 2020. Originally, it was just for existing properties to apply for financing, and then new construction became eligible in May of 2023. Mass Development, we're the program administrator, but we also work with the state department of energy resources,
the DOER. They write our technical guidelines and they also have to review any applications we get. They're the ones that are making sure that these property owners are adhering to the standards so they can access the financing. So that's how we verify that. Um we have a whole web page dedicated to
PACE on Mass Development's website if you want to check it out. There's more information uh and resources there. Our guidelines and other documents are all housed on that web page. Page seven is a a really important slide because that goes over how the flow of
funds works and what the city would do um as if it opts into this program. So, as I said earlier, it's all private financing in this program. There's no public funds that are used and there's no financial liability on behalf of the city in this program. You're strictly just kind of the billing and collection
mechanism of the financing and then you disperse that payment back to um the capital provider via our paying agent. Um the paying agent right now is Zion's Bank. So the property owner, the new construction developer, they get the financing all up front. Um they come up
with a term sheet with their it could be their local bank if they want it to be or it could be one of our registered Pace Massachusetts capital providers. They get the financing and then the financing is catered to your property tax cycle. So we try and like alleviate
as much of the administrative burden as possible. So there's no ad hoc billing required. So it would um follow your billing cadence, which I believe was quarterly. So if there's a PACE transaction or a PACE deal in uh Lawrence, there'd be four payments every
year for 20 years because back to that long-term financing of a 20-year amateurization period. Um and then our paying agent receives the payment from the city and then they send it back to the original capital provider or to the bank that provided the financing. And
that's how the flow of funds works. If there's any questions too, you can feel free to um interrupt me or we can save questions for the end. Um the page eight just goes over the eligible properties uh for either new construction projects or the existing building. So obviously commercial and
industrial buildings uh qualify. So office, malls, hotels, restaurants, manufacturers. Um nonforprofits can actually qualify for CPACE. Obviously most of the time they're not paying property taxes or if they are they're paying a pilot. Um, but they can access
PACE financing if the city can generate them a property tax bill and we just have in the system that it's for $0 just so we can get that betterment assessment on the property tax. Um, like I said, if they're already paying a pilot, that could make things easier. But that's kind of the route that nonforprofits can
take if they want to try and get Cpace financing. And then multif family housing counts as a commercial property if it's five units or more. So that's how a multif family um complex could qualify for CPACE financing. Page nine goes over kind of what the
eligible measures are. It's not all of them. Our our guidelines list everything that's eligible for PACE financing. These, I'd say, are the most common inquiries that we get from commercial property owners. So on the energy efficiency side, if they want to put in new energy management systems or new
building management system, um improvements to their insulation and air sealing, improvement or replacing their HVAC system, replacing boilers and furnaces, new lighting, energy recovery and redistribution systems. on the renewable energy side, if they want to
finance uh solar panel installation, solar hot water, geothermal, things like even like replacing their roof is qualifying for PACE financing because if they even are replacing the roof and they can build it to be solar ready, that qualifies as a PACE eligible improvement um as well. So, there's a
wide range of applicability for CPACE financing for these property owners. Uh the next few slides starting on page 10 are just some examples of some past projects that have been done in Massachusetts. Uh page 10 was actually the first CPACE deal in Massachusetts in
Greenfields. It was the Bank Row uh uh Abberi building on Bank Row. And that property was a blighted abandoned historic 12,000 foot property um that the owner was able to rescue and transform. And Pace uh played a small part in that financing stack. um
actually was actually applied retroactively. So you can actually access paints financing retroactively as well. And the property owner installed a 30 kowatt uh solar PV system on the roof. They did efficient electrification of space heating.
They did energy recovery ventilation, LED lighting controls and improvements to their windows and insulation. Their lifetime energy savings was at 189,000 kilowatts. Uh New Green Capitals, the one that provided the financing on this deal. and the mortgage holder on this property that had to provide their
consent because actually if there's a mortgage on a property they have to take a subordinate position behind the PACE loan. This was Birkshire Bank. Um they're known as Beacon Bank now. Um and the financing here was $450,000 being repaid over 20 years.
For the sake of time, I I won't run through all the examples because they're all kind of pretty similar. Um but we've done two deals in Boston as well. Both were commercial uh industrial properties. Similar energy improvements as well. Um one of the properties did building envelope upgrades and window
and door weatherization. Um most of them all did new roof replacements and or solar installations. And like I said, the financing has all been under 5 million so far. Um the biggest one we've cracked so far is just over $1.1 million in financing. Um,
the Boston deals were, like I said, were cargo venture properties that were servicing Logan Airport. And then the most recent deal we did, if you want to look on page 13, um, was a down in New Bedford, it was a seafood processing and distribution facility. This was a pretty simple project. It was a roof
replacement again in a solar installation. Amalgamated Bank did the financing here. Again, Berkshire Bank was our mortgage holder that consented on that. in the financing. This one was actually the largest one, just over 1.1 million in financing being repaid over
20 years. Page 14 of the slide deck gets into the key elements of PACE. So, obviously, first and foremost, the municipal opt-in is required. So, it's just a one-time vote of the full city council that will be needed to opt into PACE. Um, there's a sample PACE resolution as well that
the language that the council would vote on. So there's no kind of rolling basis on behalf of the council or the committee where you would have to approve projects on a case- by case basis and the town sorry the city doesn't have to approve like engineering drawings or do any underwriting or anything like that. Um the maximum
financing term allowed is 20 years um or dependent on the useful life of the project measures and that's determined by state statute. So we can't go beyond 20 years. For the third bullet point is really important as well. um for existing properties right now there's a requirement called the savings to
investment ratio. So if they want to access PACE financing the energy cost savings that they're from their you know energy efficiency measures or renewable systems those cost savings need to exceed the cost of improvement. So they basically need to be able to do a calculation where they show that the
money that they're saving from these improvements um can pay for the cost of that project. So DOE is the one that kind of reviews that information and gives them a sign off that they can pass that calculation, but that just shows the demonstration that the project that they're doing is reducing kind of their
um energy consumption and their clean energy usage is increasing. I've already talked about the assessments run to the new owner if the property is sold. We do have a retroactive window for uh projects as well. Um you have 18 months to apply for PACE financing after the project's
completed and then it's all thirdparty direct financing. No public funds are used. Currently, we have 17 organizations that we've registered that have responded to our RFI. Page 15. We're wrapping up here, I promise. Um, the PACE application has to
be approved by the DOER and mass development for the financing to close. We have to get the mortgage holder or any senior lenders consent on the deal before moving forward as well. and the betterment assessment and the pace lean is all placed at the closing. Mass development's council prepares all the
closing documents and then handles the recording at the registry of deeds. And the council also prepares the repayment schedule and we share that with the city as well. So the city knows when exactly the project's being build and collected and they know the exact dollar amount down to the cents as well. So again, we
try and do as much of the work possible on behalf of the city. So we limit the administrative work on behalf of city staff. The lean is assigned to the city, then to mass development, and then to the capital provider. If there's a default on the property, we haven't had it
happen yet, but this is a common question we get. The capital provider holds the enforcement rights to pursue remedies in a default. If this happens though, PACE cannot be accelerated. It's only the unpaid build assessment can be pursued in a default. And then any municipal lean uh related to the
property taxes, if there's a delinquency on their property taxes as well, they have the most senior position. So, for example, if they're not paying the PACE assessment and they're also not paying their property taxes, the city's first in line to get what's owed to the city. So, you don't have to subordinate behind
to anybody. And then the PACE lean is senior to the private mortgage leans um in a default. So, that's kind of like the priority order if that does happen. And then page 16 just goes over all of our PACE authorizing municipalities. Um,
as of this month, we actually have 83. Um, we printed this presentation right um before the town of Lee in Berkshire County uh opted in. So we have 83 communities. Um, and also I'm talking to the city of Mthuan as well and they're voting next week. So, um, if this moves
forward, I think the city of Lawrence would be number 85 if Mthuan accepts the program as well, which, um, so far during their first reading of their council meeting, they voted to accept the program. So, we'll we'll see though. Um, the communities here are all listed alphabetically. Um, like I said, 83 out
of 351 may not seem like a lot, but these communities represent over 55% of the Commonwealth's available commercial real estate portfolio. So, um, it's a decent chunk of what's available out there and we're always, you know, mass development, we're essentially a state agency. So, we're always working with
cities and towns to encourage this adoption of this program because essentially, like I said, it's it's an economic development tool uh for towns and cities to access financing um for these clean energy improvements. Um because some some cities are even requiring that their commercial
properties uh reduce their fossil fuels like Boston and Cambridge um have Berto and Bido those programs um respectively. Uh the next page is just a map of those communities that have opted into the program.
And then wrapping up here, the last page, the commercial pay structure. Um it's I know it's a crazy looking page with a lot of uh text and pictures on it, but it's essentially just um all the different uh folks and uh entities
involved in a PACE transaction. The arrows represent either the documents that get exchanged with the between the different parties or different actions taken on behalf of those parties. Um, and kind of how mass development we're at the center. Um, and we're working with everyone to kind of make sure that the process can be as smooth as
possible. Um, we actually retain a betterment assessment consultant. Uh, they're called Municap at the moment. Um, and we actually have them work directly with towns and cities on the billing and notification process. They're experts on municipal tax software programs. Um, so they're really
familiar with, you know, Munis, Vadar, whatever towns and cities use. Um, they work directly with them to again try and alleviate any kind of burden on the staff and that's something that mass development pays for. Um, it's not a cost that gets passed on to the city.
And the last page is just our contact info. Um, that's the green finance team there. Those, uh, three folks I work with, Wendy Ali and Rob Dolan. Um, but yeah, that's uh that's the PACE 101 presentation and I'm happy to take any
questions or comments you guys have. >> Council, any comments or any question >> to your chair Rosario? >> To me, it sounds fantastic, but this this is to me again, this is my my opinion. It's more very sort of what's
coming for Lawrence. is not what's in Lawrence right now. Um >> what happened? >> It it's it's what's coming. This is to me is basically what's coming because if we go to the Allington neighborhood, the development coming in there is is not to
me is not facing here. And I mean I have family owners of of three stories uh three apartments, right? It doesn't it doesn't it doesn't show here that they that they could apply. Another thing is it's financing. It's target to their mortgage. It's it's
it's going to be back and and it it worries me. And what is the difference when Mass Energy is offering me all this for nothing? Uh and and actually will help uh let's say the Alington neighborhood, not the new construction coming in. That's
that's how I see it. But if I'm if I'm seeing it wrong, can can I have some explanation? because this is basically to me on the new construction coming, the new development coming and maybe some of the business around. But again, the neighborhood that I represent, this won't help them at all. And if we adopt
this, we need to have a massive education portion to the community or how they going to pay this because again, it's another expense for them. It's another extra dollar on a bill. In addition, a approvement process with also my
community doesn't I mean most of my community has a credit issue or something like that that this is not guaranteed and once again I'm going to mention why would I go with this when mass energy has given me all of this for nothing.
>> So the difference with mass energy is managed energy is going to be tied to the person. This is going to be tied to the property. So if the property owner sells the property with mass energy