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Home My WebLink AboutOrdinance 5624ORDINANCE NO.5624 AN ORDINANCE CREATING A PROPERTY ASSESSED ENERGY IMPROVEMENT DISTRICT COEXTENSIVE WITH THE CITY OF FAYETTEVILLE NAMED "ENERGY IMPROVEMENT DISTRICT NO. 1" TO FACILITATE A PACE PROGRAM AND ADOPTING CERTAIN PROVISIONS RELATED THERETO WHEREAS, pursuant to the authority granted by Arkansas Code Annotated § 8-15-101 et seq. (the "Property Assessed Clean Energy Act"), the City of Fayetteville may create a Property Assessed Energy Improvement District, either solely or in combination with one or more other governmental entities; and WHEREAS, such a district, once created, has independent legal and financial authority, including the authority to issue bonds; and WHEREAS, such districts were authorized to permit the creation and implementation of, among other things, a property assessed clean energy (PACE) program under which a real property owner may finance an energy efficiency improvement, a renewable energy project, or a water conservation improvement for their property on a voluntary basis, with loan repayment tied to collection of real property taxes, NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby enacts ARTICLE XXVI ENERGY IMPROVEMENT DISTRICT NO. 1 to the Code of Fayetteville, which shall read as follows: "ARTICLE XXVI ENERGY IMPROVEMENT DISTRICT NO. 1 33.380 Establishment and Purpose There is hereby created an Energy Improvement District No. 1 which territorial jurisdiction shall be coextensive with the City of Fayetteville and the territory of any other agreeing and participating governmental entity that may hereafter join. Energy Improvement District No. 1 shall exercise such authority and power as granted by the Property Assessed Clean Energy Act, Ark. Code Ann. § 8-15-101, et seq. within the boundaries of the District. Page 2 Ordinance No. 5624 33.381 Board of Directors, Membership, Terms of Office (A) Energy Improvement District No. 1 shall be governed by a Board of Directors consisting of seven (7) members. One member shall be the Mayor or the Mayor's designee. Should the Mayor designate a member, said member shall serve at the pleasure of the Mayor. The remaining six (6) members shall be qualified electors of the District chosen by the Fayetteville City Council, each to serve a term of two (2) years. In making its Board appointments, the City Council shall give due consideration to candidates with connections to or relations with local utility companies, lending or bonding institutions and the advanced energy industry. City Council appointed members shall be subject to the term limit provisions of Section 33.329(B). (B) Should additional governmental entities enter into an agreement with the City of Fayetteville for participation in and addition to Energy Improvement District No. 1, the composition and terms of members of the Board of Directors shall be as agreed between the City of Fayetteville and other participating and agreeing governmental entities. 33.382 Legal and Financial Independence In the operation of its business, Energy Improvement District No. 1 is legally and financially independent of the City of Fayetteville. No debt entered into by the District shall ever be construed as an obligation of the City of Fayetteville or of any other governmental entity which may participate in the District." PASSED and APPROVED this 15t' day of October, 2013. APPROVED: am ATTEST: By: �!.- SONDRA E. SMITH, City Clerk/Treasurer K'/ ��`��• G\TY z,FAYEEVILI �- Ir NSPC, City of Fayetteville Staff Review Form City Council Agenda Items and Contracts, Leases or Agreements 10/15/2013 City Council Meeting Date Agenda Items Only Peter Nierengarten Sustainability & Strategic Planning Submitted By Division Department N/A N/A N/A Cost of this request Category / Project Budget Program Category / Project Name N/A N/A N/A Account Number Funds Used to Date Program / Project Category Name N/A N/A N/A Project Number Budgeted Item Remaining Balance Budget Adjustment Attached Fund Name Z-7-h 3 Previous Ordinance or Resolution # Date Date U - at, 10-I.-7.6t'z Finance and Internal Services Director Date Date AD / J D to Comments: Original Contract Date: Original Contract Number: Received in City o,,- _ - - J Clerk's Office �EWWID.J Received in Mayor's Office Revised January 15, 2009 ORDINANCE NO. AN ORDINANCE CREATING A PROPERTY ASSESSED ENERGY IMPROVEMENT DISTRICT COEXTENSIVE WITH THE CITY OF FAYETTEVILLE NAMED "ENERGY IMPROVEMENT DISTRICT NO. 1" TO FACILITATE A PACE PROGRAM AND ADOPTING CERTAIN PROVISIONS RELATED THERETO WHEREAS, pursuant to the authority granted by Arkansas Code Annotated § 8-15-101 et seq. (the "Property Assessed Clean Energy Act"), the City of Fayetteville may create a Property Assessed Energy Improvement District, either solely or in combination with one or more other governmental entities; and WHEREAS, such a district, once created, has independent legal and financial authority, including the authority to issue bonds; and WHEREAS, such districts were authorized to permit the creation and implementation of, among other things, a property assessed clean energy (PACE) program under which a real property owner may finance an energy efficiency improvement, a renewable energy project, or a water conservation improvement for their property on a voluntary basis, with loan repayment tied to collection of real property taxes, NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby enacts ARTICLE XXVI ENERGY IMPROVEMENT DISTRICT NO. 1 to the Code of Fayetteville, which shall read as follows: "ARTICLE XXVI ENERGY IMPROVEMENT DISTRICT NO. I 33.380 Establishment and Purpose There is hereby created an Energy Improvement District No. 1 which territorial jurisdiction shall be coextensive with the City of Fayetteville and the territory of any other agreeing and participating governmental entity that may hereafter join. Energy Improvement District No. 1 shall exercise such authority and power as granted by the Property Assessed Clean Energy Act, Ark. Code Ann. § 8-15-101, et seq. within the boundaries of the District. 33.381 Board of Directors, Membership, Terms of Office (A) Energy Improvement District No. 1 shall be governed by a Board of Directors consisting of seven (7) members. One member shall be the Mayor or the Mayor's designee. Should the Mayor designate a member, said member shall serve at the pleasure of the Mayor. The remaining six (6) members shall be qualified electors of the District chosen by the Fayetteville City Council, each to serve a term of two (2) years. In making its Board appointments, the City Council shall give due consideration to candidates with connections to or relations with local utility companies, lending or bonding institutions and the advanced energy industry. City Council appointed members shall be subject to the term limit provisions of Section 33.329(B). (B) Should additional governmental entities enter into an agreement with the City of Fayetteville for participation in and addition to Energy Improvement District No. 1, the composition and terms of members of the Board of Directors shall be as agreed between the City of Fayetteville and other participating and agreeing governmental entities. 33.382 Legal and Financial Independence In the operation of its business, Energy Improvement District No. 1 is legally and financially independent of the City of Fayetteville. No debt entered into by the District shall ever be construed as an obligation of the City of Fayetteville or of any other governmental entity which may participate in the District." PASSED and APPROVED this 15t' day of October, 2013. APPROVED: LIONELD JORDAN, Mayor ATTEST: an SONDRA E. SMITH, City Clerk/Treasurer Pjl1 aTvVT t ARKANSAS� CITY COUNCIL AGENDA MEMO To: Mayor Lioneld Jordan Thru: Don Marr, Chief of Staff From: Peter Nierengarten, Sustainability & Strategic Planning Director Date: September 25, 2013 Subject: Fayetteville Energy Improvement District RECOMMENDATION THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENT CORRESPONDENCE Staff recommends adoption of an ordinance that creates an Energy Improvement District for the City of Fayetteville that manages innovative financing programs for renewable energy, energy efficiency and water conservation improvements on residential, commercial, industrial and other real properties at the request of the owner. This financing program includes property assessed clean energy (PACE) as a financing option. BACKGROUND PACE is a creative financing mechanism that allows property owners to borrow money for weatherization, energy efficiency, renewable energy or water conservation improvements to their property. The security of tying the repayment of loans to property tax assessments combined with low default rates allow PACE to offer very low and extremely attractive interest rates for these improvement loans. PACE is a completely voluntary program that enables private investment for the purpose of energy savings. PACE enabling legislation was passed by the Arkansas Legislature in the 2013 session and signed by the Governor in April 2013. That legislation allows Cities, Counties or the State to create Energy Improvement Districts within the State of Arkansas. The Arkansas Legislature noted that Energy Improvement Districts would benefit Arkansas by: • Creating jobs and stimulating the economy • Generating significant economic development • Protecting citizens from the rising cost of electricity and non-renewable fuels • Providing citizens with options for financing improvements that are otherwise not available • Providing a positive cash flow on energy improvements • Increasing the value of real property • Improving the state's air quality and conserving natural resources • Promoting energy independence and security for the nation and state ENERGY IMPROVEMENT DISTRICT The Energy Improvement District should manage innovative financing programs for renewable energy, energy efficiency and water conservation improvements on residential, commercial, industrial and other real properties at the request of the owner. This financing program includes property assessed clean energy (PACE) as a financing option. According to Arkansas' PACE enabling legislation the district should be managed and controlled by a board of directors. The board should be composed of a minimum of seven directors and should at a minimum meet quarterly. The board must THE CITY OF FAYETTEVILLE, ARKANSAS have one member appointed by the Mayor. Staff recommends that the remaining six at -large members be appointed by the City Council and be made up of representatives of local utility companies, lending or bonding institutions and the advanced energy industry. The district board will establish procedures by which they will operate and may work with a third -party administrator to create program guidelines. The board should have all other powers and duties granted in Arkansas' PACE enabling legislation and should meet annual reporting requirements. DISCUSSION Staff recommends that the Energy Improvement District develop a third party administered program that manages innovative financing for renewable energy, energy efficiency and water conservation projects in the City of Fayetteville. This program could manage multiple types of renewable energy, energy efficiency and water conservation financing mechanisms including PACE, and would allow flexible financing options for the greatest number of improvement projects in Fayetteville. Third party administration of the program provides a replicable model for other municipalities in Arkansas and the most long-term sustainable financing program for Fayetteville due to the reduced municipal program development and operational cost and the reduced workload for City Staff in managing the program. Steps necessary for the Energy Imrovement District Board to implement a third party administrated program include: 1. Advertise a Request for Proposals (RFP) for third party program development and administration of the Energy Improvement District. 2. District board evaluates RFP's and selects the program administrator. 3. Work with selected program administrator to create clean energy, energy efficiency and water conservation financing programs, which would include PACE as a financing option. BUDGET IMPACT Under this recommended program there is no budget impact to establish the Energy Improvement District. PACE ARKANSAS INITIATIVE (SB 640) What is PACE? A Property Assessed Clean Energy (PACE) bond or lien is a debt device where proceeds are lent to interested property owners to finance energy efficiency improvements, water conservation improvements, and renewable energy projects that reduce their energy costs. Why do Arkansans need access to PACE loans? • Property owners can finance for up to 20 years the costs of energy and water efficiency improvements and renewable energy projects. There are no upfront costs. • Energy cost savings from PACE -eligible improvements exceed the loan payments which are assessed annually on the property owner's property tax bill. For business owners, this means that PACE improvements increase their company's cash flow. • Cities, counties, and even the state have the opportunity to create jobs with no added credit risk. • PACE improvements increase property values. How does a PACE program work? • PACE legislation authorizes voluntary creation of energy improvement districts which will be certified to issue general revenue bonds. Proceeds from these bonds will fund loans to interested property owners for energy efficiency improvements, water conservation improvements, and renewable energy projects. • Energy Improvement Districts may consist of individual cities and counties, or a combination of the various jurisdictions. A district could be organized statewide. • PACE program assessments only affect property owners who obtain loans for energy improvements. • Loans or liens stay attached to the property until the loan/lien is repaid. • Energy and water improvement work must be performed by qualified and certified providers thus protecting property owners and PACE districts. Why does the AREA endorse the PACE Initiative? • An effective PACE program can bean economic boost for the entire state. PACE will reduce energy costs for participating consumers and create jobs in the energy efficiency and renewable energy sectors. March 2013 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33. 34 35 36 Stricken language would be deleted from and underlined language would be added to present law. Act 1074 of the Regular Session State of Arkansas As Engrossed: S315113 S3/14 13 S3120113 89th General Assembly A Bill Regular Session, 2013 SENATE BILL 640 By: Senators D. Johnson, J. Woods By: Representatives Leding, Barnett, C. Armstrong, Hawthorne, McGill, B. Overbey, T. Thompson, Sabin, D. Whitaker For An Act To Be Entitled AN ACT TO CREATE JOBS, RETAIN WEALTH, AND GROW ARKANSAS'S ECONOMY BY ENABLING PROPERTY ASSESSED CLEAN ENERGY FINANCING; TO AUTHORIZE THE ESTABLISHMENT OF ENERGY IMPROVEMENT DISTRICTS TO FUND LOANS FOR ENERGY EFFICIENCY IMPROVEMENTS, RENEWABLE ENERGY PROJECTS, AND WATER CONSERVATION IMPROVEMENTS; AND FOR OTHER PURPOSES. Subtitle TO AUTHORIZE THE ESTABLISHMENT OF ENERGY IMPROVEMENT DISTRICTS TO FUND LOANS FOR ENERGY EFFICIENCY IMPROVEMENTS, RENEWABLE ENERGY PROJECTS, AND WATER CONSERVATION IMPROVEMENTS. BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: SECTION 1. Arkansas Title 8 is amended to add a new chapter to read as follows: Chapter 15 — Energy Efficient Facilities 8-15-101. Title. This chapter shall be known and may be cited as the "Property Assessed Clean Energy Act". 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5/13 S3/14/13 S3/20/13 1 8-15-102. Definitions. 2 As used in this chapter: 3 (1)(A) "Bond" means a revenue bond or note issued under this 4 chapter. 5 (B) "Bond" includes any other financial obligation 6 authorized by this chapter, the laws of this state, or the Arkansas 7 Constitution; 8 (2) "District" means a property assessed energy improvement 9 district established in this state by law for the express purpose of managing 10 the PACE program; 11 (3) "Governmental entity" means a municipality, county, 12 combination of cities or counties or both or statewide district; 13 (4) "Owner" means an individual. DartnershiD. association. 14 corporation, or other legal entity that is recognized by law and has title or 15 interest in any real property; 16 (5) "PACE program" means a property assessed clean energy 17 program under which a real property owner can finance an energy efficiency 18 improvement, a renewable energy project, and a water conservation improvement 19 on the real property; and 20 (6) "Person" means an individual, partnership, association, 21 corporation, or other legal entitv recognized by law as having the Dower to 22 contract. 23 24 8-15-103. Legislative findings. 25 The General Assembly finds that: 26 (1) It is in the best interests of the state to authorize 27 districts that make available to citizens one (1) or more financing Droarams 28 including without limitation a PACE program, to fund energy efficiency 29 improvements, renewable energy projects, and water conservation improvements 30 on residential, commercial, industrial, and other real properties at the 31 request of the owner; 32 (2) The programs described in subdivision (1) of this section 33 will benefit the citizens of this state by: 34 (A) Decreasing the cost of providing funds to 35 DarticiDatina citizens and lowering the aaRreQate issuance and servicing 36 costs of loans; and 2 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5/13 S3/14/13 S3/20/13 1 (B) Making funds available to rural communities throughout 2 the state that might not otherwise create and finance the programs described 3 in subdivision (1) of this section; and 4 (3) The programs described in subdivision (1) of this section 5 will further the public purpose of: 6 (A) Creating jobs and stimulating the state's economy; 7 (B) Generating significant economic development through 8 the investment of the proceeds of loans in local communities, including 9 increased sales tax revenue; 10 (C) Protecting participating citizens from the financial 11 impact of the rising cost of electricity produced from nonrenewable fuels; 12 (D) Providing positive cash flow in which the costs of the 13 improvements are lower than the energy savings on an average monthly basis; 14 (E) Providing the citizens of this state with informed 15 choices and additional options for financing improvements that may not 16 otherwise be available; 17 (F) Increasing the value of the improved real property for 18 participating citizens; 19 (G) Improving the state's air quality and conserving 20 natural resources, including water; 21 (H) Attracting manufacturing facilities and related jobs 22 to the state; and - 23 (I) Promoting energy independence and security for the 24 state and the nation. 25 26 8-15-104. Immunity. 27 (a) The powers and duties of a district conferred by this chapter are 28 public and governmental functions exercised for a public purpose and for 29 matters of public necessity. 30 (b) The district and its personnel are immune from suit in tort for 31 the performance of its duties under this chapter unless immunity from tort is 32 expressly waived in writing. 33 34 8-15-105. Authority to create. 35 (a) A governmental entity legally authorized to issue general revenue 36 bonds may create a district by adoption of an ordinance. 3 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5/13 S3/14/13 S3/20/13 SB640 1 (b) A combination of governmental entities may create a district by 2 each governmental entity: 3 (1) Adopting an ordinance that provides for the governmental 4 entity's participation in the district; and 5 (2) Entering into a joint agreement with one (1) or more other 6 participating governmental entities. 7 (c) This section shall not limit additional governmental entities from 8 becoming members of the district under § 8-15-106. 9 10 8-15-106. Membership in an existing district. 11 (a) To become a member of an existing district, the governing body of 12 a governmental entity shall: 13 (1) Adopt an ordinance that provides for the participation of 14 the governmental entity in the district; and 15 (2) Enter into an agreement with the other participating members 16 of the district. 17 (b) The agreement between members of a district shall establish the 18 terms and conditions of the operation of the district with the limitations 19 provided in this chapter. 20 21 8-15-107. Board of directors. 22 (a) A district created under this chapter shall be operated and 23 controlled by a board of directors. 24 (b) The board of directors shall manage and control each district, 25 including without limitation the operations, business, and affairs of the 26 district. 27 (c) The board of directors shall be solely responsible for selecting 28 the chair of the board of directors and establishing the procedures by which 29 the board of directors shall operate. 30 (d) A director shall not receive compensation in any form for his or 31 her services as a director. 32 (e) Each director shall be entitled to reimbursement by the district 33 for any necessary expenditures incurred in connection with the performance of 34 his or her general duties as a director. 35 36 8-15-108. Membership on the board of directors. 4 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5/13 S3/14/13 S3/20/13 SB640 1 (a) The board of directors of a district shall consist of at least 2 seven (7) directors. 3 (b) The board of directors shall include: 4 (1) For a statewide district, the members specified in the 5 agreement establishing the district; 6 (2) For a district composed of a combination of one (1) or more 7 counties and one (1) or more cities: 8 (A) The county judge or his or her designated 9 representative of each county that is a member of the district; 10 (B) The mayor or his or her designated representative of 11 each city that is a member of the district; and 12 (C) If the number of directors is fewer than seven (7) 13 after fulfilling the requirements of subdivisions (b)(2)(A) and (B) of this 14 section, additional members shall be appointed as specified in the agreement 15 establishing the district until a total of seven (7) directors has been 16 appointed; 17 (3) For a district composed of one (1) or more counties: 18 (A) The county judge or his or her designated 19 representative of each county that is a member of the district; and 20 (B) If the number of directors is fewer than seven (7) 21 after fulfilling the requirements of subdivision (b)(3)(A) of this section, 22 additional members shall be appointed as specified in the agreement 23 establishing the district until a total of seven (7) directors has been 24 appointed; and 25 (4) For a district composed of one (1) or more cities: 26 (A) The mayor or his or her designated representative of 27 each city that is a member of the district; and 28 (B) If the number of directors is fewer than seven (7) 29 after fulfilling the requirements of subdivision (b)(4)(A) of this section, 30 additional members shall be appointed as specified in the agreement 31 establishing the district until a total of seven (7) directors has been 32 appointed. 33 (c) The designated representative of a county judge or mayor under 34 subsection (b) of this section shall be a qualified elector of the 35 iurisdiction that the designated representative is appointed to represent. 36 5 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5/13 S3/14/13 S3/20/13 SB640 1 8-15-109. Terms of directors. 2 (a) A director who is a public official may serve on the board of 3 directors of a district during his or her term of office as the county judge 4 or mayor of a member of a district. 5 (b) A director who is the designated representative of the mayor or 6 county judge of a member of the district serves at the pleasure of the mayor 7 of the city or the county judge of the county that is a member of the 8 district. 9 10 8-15-110. District boards of directors — Meetings. 11 (a) The board of directors of a district shall hold quarterly meetings 12 and special meetings, as needed, in the courthouse or other location within 13 the district. 14 (b) The time and place of the quarterly meetings shall be on file in 15 the office of the district board of directors. 16 17 8-15-111. District boards of directors — Powers and duties. 18 (a) The board of directors of a district may: 19 (1) Issue revenue bonds on behalf of the district; 20 (2) Make and adopt all necessary bylaws for its organization and 21 operation; 22 (3) Elect officers and employ personnel necessary for its 23 operation; . 24 (4) Operate, maintain, expand, and fund a PACE project; 25 (5) Apply for, receive, and spend grants for any purpose under 26 this chapter; 27 (6) Enter into agreements and contracts on behalf of the 28 district; 29 (7) Receive property or funds by gift or donation for the 30 finance and support of the district; 31 (8) Reimburse a governmental entity for expenses incurred in 32 performing a service for the district; 33 (9) Assign assessments to a private lending institution; and 34 (10) Do all things necessary or appropriate to carry out the 35 powers expressly granted or duties expressly imposed under this chapter. 36 (b) The board of directors shall: 6 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5/13 S3/14/13 S3/20/13 SB640 1 (1) Allow a commission of: 2 (A) One and five -tenths percent (1.5%) for the extension 3 of district assessments by the county assessor or county clerk; 4 (B) One and five -tenths percent (1.5%) for the collection 5 of district assessments by the county collector; and 6 (C) One -eighth percent (0.125%) for services of a county 7 treasurer in disbursing the moneys collected for district assessments; and 8 (2) Adopt rules consistent with this chapter or with other 9 legislation that in its iudgment may be necessary for the property 10 enforcement of this chapter. 11 12 8-15-112. Reporting requirement — Collection of assessments. 13 (a)(1)(A) By March 1 of each year or upon the creation of a district 14 that uses or intends to use the county collector for collection of district 15 assessments shall file an annual report with the county clerk in any county 16 in which a portion of the district is located. 17 (B) The annual report required under this section shall be 18 available for inspection and copying by assessed landowners in the district. 19 (C) The county clerk shall not charge any costs or fees 20 for filing the annual report required under this section. 21 (D) The district shall deliver a filed copy of the annual 22 report required under this section to the county collector within five (5) 23 days of filing. 24 (2) The annual report required under this section shall contain 25 the following information as of December 31 of the current calendar year: 26 (A) A list of contracts, identity of the parties to the 27 contracts, and obligations of the district; 28 (B) Any indebtedness, including bonded indebtedness, and 29 the reason for the indebtedness, including the following: 30 (i) The stated payout or maturity date of the 31 indebtedness, if any; and 32 (ii) The total existing delinquent assessments and 33 the party responsible for the collection; 34 (C) Identification of each member of the board of 35 directors of the district and each member's contact information; 36 (D) The date, time, and location for any scheduled meeting 7 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5/13 S3/14/13 S3/20/13 SB640 1 of the district for the following year; 2 (E) The contact information for the district assessor; 3 (F) Information concerning to whom the county treasurer is 4 to pay district assessments; 5 (G) An explanation of the applicable statutory penalties, 6 interest and costs; 7 (H) The method used to compute district assessments; and 8 (1) A statement itemizing the income and expenditures of 9 the district, including a statement of fund and account activitv for the 10 district. 11 (b)(1) A district that does not comply with subsection (a) of this 12 section commits a violation punishable by a fine of not less than one hundred 13 dollars ($100) nor more than one thousand dollars ($1,000) for each offense. 14 (2) A fine recovered under subdivision (b)(1) of this section 15 shall be deposited into the county clerk's cost fund. 16 (c)(1) On or before December 31, the district shall file its list of 17 special assessments for the following calendar year with the county clerk. 18 (2)(A) After filing the list of special assessments under 19 subdivision (c)(1) of this section, the district shall deliver a copy of the 20 filed list of special assessments to the preparer of the tax books. 21 (B) If the county collector is not the designated preparer _ 22 of the tax books, the district shall deliver a copy of the filed list of 23 special assessments to the county collector. 24 (3) The list of special assessments required under subdivision 25 (c)(1) of this section shall contain: 26 (A) A list of each parcel with an assessment levied 27 against it within the district; and 28 (B) The contact information for the district assessor. 29 (4) The list of special assessments required under subdivision 30 (c)(1) of this section shall not include assessments on parcels that 31 otherwise would not appear on the tax books for the following year. 32 (5) After the December 31 deadline to file the list of special 33 assessments required under subdivision (c)(1) of this section, the county 34 collector may reject an assessment submitted by the district for inclusion in 35 the list of special assessments. 36 (d)(1) After the district files the list of special assessments 8 02-28-2013 13:08:57 JLL152 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 As Engrossed: S3/5/13 S3/14/13 S3/20/13 SB640 required under subsection (c), the county collector shall collect the assessments at the same time the county collector collects the other taxes on the property. (2) The county collector shall pay the funds collected under subdivision (d)(1) of this section to the county treasurer at the same time that the county collector pays all other taxes to the county treasurer. (3) The county treasurer shall distribute the funds received under subdivision (d)(2) of this section to the district in the same manner as he or she distributes funds to other tax entities. 8-15-113. Financing projects. (a) A district may establish a PACE program to provide loans for the initial acquisition and installation of energy efficiency improvements, renewable energy projects, and water conservation improvements with consenting real property owners of existing real property and new construction. (b)(1) The district may authorize by resolution the issuance of bonds or the execution of a contract with a governmental entity or a private entit to provide the loans under subsection (a) of this section. (2) The resolution shall include without limitation the following: _ (A) The type of renewable energy project, water conservation improvement, or energy efficiency improvement for which the loan may be offered; (B) The proposed arrangement for the loan program, including without limitation: (i) A statement concerning the source of funding that will be used to pay for work performed under the loan contract; (ii) The interest rate and time period during which contracting real property owners would repay the loan; and (iii) The method of apportioning all or any portion of the costs incidental to the financing, administration, and collection of the arrangement among the consenting real property owners and the governmental entity; (C) A minimum and maximum aaareaate dollar amount that may be financed per propert 9 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5/13 S3/14/13 S3/20/13 1TI 1 (D)(i) A method for prioritizing requests from real 2 property owners for financing if the requests appear likely to exceed the 3 authorization amount of the loan program. 4 (ii) Priority shall be given to those requests from 5 real property owners that meet the eligibility requirements on a first come, 6 first served basis. 7 (E) Identification of a local official authorized to enter 8 into loan contracts on behalf of the district; and 9 (F) A draft contract specifying the terms and conditions 10 proposed by the district. 11 (c)(1) The district may combine the loan payment required by the loan 12 contract with the billing for the real property tax assessment for the real 13 property where the renewable energy project, water conservation improvement, 14 or the energy efficiency improvement is installed. 15 (2) The district may establish the order in which a loan payment 16 will be applied to the different charges. 17 (3) The district may not combine the billing for a loan payment 18 required by a contract authorized under this section with a billing of 19 another county or political subdivision unless the county or political 20 subdivision has given its consent by a resolution or ordinance. 21 (d) The district shall offer private lending institutions the 22 opportunity to participate in local loan programs established under this 23 section. 24 (e)(1)(A) In order to secure a loan authorized under this section, the 25 district may place a lien equal in value to the loan against any real 26 property where the renewable energy project, water conservation improvement, 27 or the energy efficiency improvement is installed. 28 (B) The lien shall attach to the real property when it is 29 filed in the county recorder's office for record. 30 (2)(A)(i) The priority of the lien created under this chapter is 31 determined based on the date of filing of the lien. 32 (ii) Except as provided in subdivision 33 (e)(2)(A)(iii) of this section, the priority of the lien shall be determined 34 in the same manner as the priority for other real property tax and assessment 35 liens. 36 (iii) A lien created under this chapter shall be 10 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5/13 S3/14/13 S3/20/13 1 subordinate to any real or personal property tax liens. :: •Z'it) 2 (iv) A district shall discharge the lien created 3 under this chapter upon full payment of the lien. 4 (B) If the real property is sold, the lien shall stay 5 attached to the real property, and the loan created under this chapter will 6 be owed by the new real property owner. 7 (C) If the real property enters into default or 8 foreclosure: 9 _W Payment of the assessment shall not be sought 10 from a member of the district who does not own the real property that entered 11 into default or foreclosure; 12 (ii) Repayment of the assessment shall not be 13 accelerated automatically; and 14 (iii) The balance of the assessment shall be repaid 15 according to the terms of the agreed -upon schedule. 16 (3) The district may bundle or package the loans for transfer to 17 private lenders in a manner that would allow the liens to remain in full 18 force to secure the loans. 19 (f)(1) Before the enactment of an ordinance under this section, a 20 public hearing shall be held at which interested persons may object to or 21 inquire about the proposed loan program or any of its particulars. 22 (2) The public hearing shall be advertised one (1) time per week 23 for two (2) consecutive weeks in a newspaper of general circulation in the 24 district. 25 26 8-15-114. Program guidelines. 27 The board of directors, together with any third -party administrator it 28 may select, shall determine: 29 (1) The guidelines of the PACE program, including without 30 limitation that: 31 (A) The base energy performance evaluation shall be 32 completed by a certified and qualified energy evaluation professional to 33. determine existing energy use and options for improved energy efficiency; 34 (B) The approved improvements create a positive cash flow; 35 (C) Work shall be performed by qualified and certified 36 contractors in the field of energy efficiency and methods of renewable energy 11 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5/13 S3/14/13 S3/20/13 1 installation; SB 640 2 (D) Performance testing and verification shall be 3 performed by a qualified professional after the work is completed; 4 (E) Adequate consumer protections are in place; and 5 (F) The applicable underwriting standards for the 6 participants in the program are established; 7 (2) The qualifications of the vendors performing installations 8 under this chapter; 9 (3) The mechanisms by which the district will remit the received 10 special assessment payments and any cost reimbursement; and 11 (4) Any other matters necessary to implement and administer the 12 PACE program. 13 14 8-15-115. Payment by special assessments. 15 The credit and taxing power of the State of Arkansas will not be 16 pledged for the debt evidenced by the bonds, which will be payable solely 17 from the revenues received from the special assessments on the participants' 18 real property under this chapter. 19 20 8-15-116. Bonds. 21 (a) A district may: _ 22 (1) Issue bonds to provide the PACE program loans authorized by 23 this chapter: and 24 (2) Create a debt reserve fund of legally available moneys from 25 nonstate sources as partial security for the bonds. 26 (b) Bonds issued under this chapter and income from the bonds, 27 including any profit made on the sale or transfer of the bonds, are exempt 28 from taxation in this state. 29 (c) Bonds issued under this chapter shall: 30 (1)(A) Be authorized by a resolution of the board of directors. 31 (B) The authorizing bond resolution may contain any terms, 32 covenants, and conditions that the board of directors deems to be reasonable 33 and desirable; and 34 (2) Have all of the qualities of and shall be deemed to be 35 negotiable instruments under the laws of the State of Arkansas. Ca 12 02-28-2013 13:08:57 JLL152 1 2 3 4 5 6 7 8 9 10 it 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 As Engrossed: S3/5/13 S3/14/13 S3/20/13 SB640 8-15-117. Sale. The bonds may be sold in such a manner, either at public or private sale, and upon such terms as the board of directors of a district shall determine to be reasonable and expedient for effectuating the purposes of this chapter. 8-15-118. Revolving fund. (a) A district may maintain a revolving fund to be held in trust by a banking institution chosen by the board of directors separate from any other funds and administered by the board of directors. (b) A district may transfer into its revolving fund money from any permissible source, including: (1) Bond revenues; (2) Contributions; and (3) Loans. 8-15-119. Notice to mortgage lender. At least thirty (30) days before the execution of an agreement with a district, an owner shall provide written notice to each mortgage lender holding a lien on the owner's property of the owner's application to articipate_ in a PACE program. Is/D. Johnson APPROVED: 0411112013 13 02-28-2013 13:08:57 JLL152 •fT1 1 1 Departmental Correspondence RKANSAS Kit Williams City Attorney Jason B. Kelley Assistant City Attorney TO: MAYOR & CITY COUNCIL FROM: JASON KELLEY, ASST. CITY ATTORNEY. THRU: KIT WILLIAMS, CITY ATTORNEY DATE: SEPTEMBER 30, 2013 RE: ENERGY IMPROVEMENT DISTRICTS/ PACE BONDS To my knowledge, Fayetteville is the first governmental entity to make use of the new Property Assessed Clean Energy Act. The Act authorizes the creation of "Energy Improvement Districts" which are independent legal entities (akin to other types of improvement districts in the City) authorized to create, finance and manage programs promoting renewable energy, energy efficiency and water conservation improvements on residential, commercial and industrial property. The districts have the authority to issue bonds, which are characterized in the enabling legislation as revenue bonds. These bonds would provide further funding for loans to be made to individual property owners for purposes of financing energy improvements. Repayment of the loans is tied to the collection of real property taxes and is handled through the normal county property tax collection process. The enabling legislation is silent on the method of appointment of the board of directors when only one city is creating a district. The Act provides that when "a district is composed of one (1) or more cities ... members shall be appointed as specified in the agreement establishing the district[.]" Ark. Code Ann. § 8-15-108(b)(4). Obviously, when only one city is participating, there is no one else to enter an "agreement." The Act specifically states that these districts are created "by adoption of an ordinance" and not through an agreement. Ark. Code Ann. § 8-15-105(a). Thus, I have drafted this proposed ordinance to provide for appointment of members to the board of directors. However, the draft also provides that if another governmental entity desires to join, the makeup of the board would be as determined in the agreement between Fayetteville and the joining entity. It is my opinion that the provision in the draft ordinance clarifying and re- asserting the legal and financial independence of this District from the City is important due to the constitutional prohibition the City must follow restricting it from appropriating money or loaning credit for the benefit of any corporation or private individual. Ark. Const. Art. 12, § 5 & Art. 16, § 1. State created improvement districts have greater leeway in this area. See generally Fitzgerald v. Walker, 55 Ark. 148, 17 S.W. 702 (1891), Nakdimen v. Fort Smith & Van Buren Bridge Dist., 115 Ark. 194, 172 S.W. 272 (1914), Ray v. City of Mountain Home, 228 Ark. 885, 311 S.W.2d 163 (1958); Bell v. Fulkerson, 291 Ark. 604, 727 S.W.2d 141 (1987). Protecting this legal distinction is important for the future viability of the potential future bonds, both for the District and for the City. ffieville ARKANSAS® Departmental Correspondence TO: Mayor Jordan Don Marr, Chief of Staff Paul Becker, Finance Director Peter Nierengarten, Sustainability & Strategic Planning FROM: Kit Williams, City Attorney DATE: January 28, 2013 RE: Energy Improvement Districts Bill Priority Status of Property Assessed Clean Energy Bonds Ki Kit Williams City Attorney Jason B. Kelley Assistant City Attorney You asked me to answer Kenton Smith's e-mail questions about the draft bill establishing Property Assessed Clean Energy (PACE) bonds. §8-15-112 Financing projects (e) (2) (A) refers to the priority to be given to PACE bonds. "(2) (A(i) The priority of the lien created under this chapter is determined based on the date of filing of the lien. (ii) The priority of the lien shall be determined in the same manner as the priority for other real property tax and assessment liens." This language is not perfectly clear. Priority for real estate taxes is very clear: "Taxes assessed upon real and personal property shall bind them and be entitled to preference over all judgments, executions, encumbrances, or liens whensoever created." A.C.A. §26-34-101 (a). Real estate taxes are owned to a governmental entity and will be paid during a sale or foreclosure BEFORE all other liens and mortgages. Will PACE bonds receive such preferential status? Not during a sale. As opposed to a tax lien, the lien supporting a PACE bond does not become fully due upon the sale, but transfers through the sale to remain a lien on the property to be paid by the purchaser (new owner). This appears to be the case upon default or foreclosure also. However, A.C.A. §80-50-108 Effect of sale in the Statutory Foreclosure subchapter states: "A sale made by a mortgagee or trustee shall foreclose and terminate all interest in the trust property of all persons to whom notice is given under § 18-50-104 ...." A.C.A. §18-50-104 requires that notice be given to "(a)ny person having a lien or interest subsequent to the interest of the mortgage or trustee ...." All such normal liens would be revoked and invalidated by the statutory foreclosure action in favor of a mortgage entered into prior to the filing of these other liens. Tax liens and apparently PACE bond liens will not be cut off, but will survive a statutory foreclosure sale. The tax lien would have to be paid off, while the PACE bond lien would simply still attach to the property and not be extinguished by the foreclosure of the property despite § 18-50-108 (a). This is further bolstered by the proposed §8-15-112 (e)(2)(B) & (E) subsections: "(B) If the real property is sold, the lien shall stay attached to the real property, and the loan created under this chapter will be owed by the new real property owner. (C) If the real property enters into default or foreclosure: (i) Repayment of the assessment shall not be accelerated automatically; and (ii) The balance of the assessment shall be repaid according to the terms of the agreed -upon schedule." CONCLUSION All this proposed language appears to give a qualified preference for PACE bond liens. I believe these liens will remain attached to the real property's title until they are fully paid. A sale, default, or statutory foreclosure does not require PACE bonds to be paid during these events (as taxes would be). However, it appears the PACE bonds will survive any of these events so that the new owner will still have to pay off the PACE bonds pursuant to the original terms of the bonds. 2 POSITIVE CASH FLOW A positive cash flow from sufficient savings of utility or other costs must be established by the PACE Board of Directors before bonds can be sold or funds loaned to a property owner desiring to use PACE funds for improved energy efficiency. §8-15-113 (1)(B). There is no definition of "positive cash flow" in the proposed statute nor any description or requirements about how to determine that a "positive cash flow" would exist. Most of the "positive cash flow" analysis will be determined by how long the payback period would be (10 years to 30 years?) and what percentage will be applied to repay the loan. If a thirty year payback period at a very low interest rate is used (as was for our new Energy Efficiency Code requirements), a "positive cash flow" could likely be achieved. More realistic assumptions would make a positive cash flow determination less likely to be achieved. We also remain concerned that a PACE program established under this statute by City Ordinance should not be allowed to run afoul of Article 16 § 1 of the Arkansas Constitution: "Neither the State nor any city ... shall ever lend its credit for any purpose whatsoever, nor shall any county, city or town or municipality ever issue any interest bearing evidences of indebtedness ...." The proposed statute does not appear to violate Article 16 § 1 of the Constitution. However, the PACE District Board of Directors is authorized to issue bonds whose "resolution may contain any terms, covenants, and conditions that the board of directors deem reasonable and desirable." { § 8-15-115 (c)(1) ) Such terms and conditions must not pledge tax revenue, nor any revenue not derived from repayment of bonds, non -city "contributions" or bond revenue. W aaea ARKANSAS ADVANCED ENERGY A,%OCIATIGN October 7, 2013 Mayor and City Council Members City of Fayetteville 113 W. Mountain Fayetteville, AR 72701 RE: Proposed Ordinance to Create an Energy Improvement District Ladies and Gentlemen, On behalf of the Arkansas Advanced Energy Association (AREA), I want to express our strong support for your adoption of the proposed ordinance that would create an energy improvement district under terms of the Arkansas Property Assessed Clean Energy Act. This is an exciting opportunity for the City of Fayetteville to become the first local jurisdiction to take advantage of enabling legislation adopted by the Arkansas General Assembly this year that creates a voluntary financing option for energy improvements to reduce energy costs for commercial property owners and ignite job expansion in the advanced energy sector. As a strong advocate for adoption of the PACE Act by the General Assembly, AAEA consulted a list of key stakeholders to incorporate their concerns and best practices into the Arkansas law. These included the Association of Arkansas Counties, Arkansas Municipal League, Arkansas County Collectors Association, Arkansas Bankers Association and Arkansas Association of General Contractors. This resulted in a well -crafted document that protects cities and counties from credit risk while giving them the local option to enable private investment in energy savings that create jobs and increase cash flow for property owners. Eligible projects under the Arkansas PACE law include energy efficiency, renewable energy and water conservation. Since the first PACE financing mechanism was enacted by the State of California in 2008, 30 states have adopted PACE -enabling legislation with 24 having actually launched programs. AAEA continues to monitor and analyze these programs to create a catalogue of best practices and case studies from participating regions that demonstrate clear advantages for communities, commercial property owners and the energy savings industry. Here are just some of the conclusions we can draw: Arkansas Advanced Energy Association • www.arkansasadvancedenergy.com info@arkansasadvancedenergy.com • (501) 537-0190 • Interest rates on PACE loans that account for 100 percent of the project cost are averaging between 4.75% and 7% across the country; • Size of projects range from around $20,000 for a small business to millions of dollars for large properties like shopping centers or office complexes; • Business owners are increasing their company's cash flow enabling them to retain jobs and become more competitive in the marketplace; • Existing mortgage lenders support projects that meet their clients objectives and increase value of their collateral; • Energy service contractors are generating new sales as a result of PACE programs; • Local governments like PACE because it creates jobs, generates economic activity with no added credit risk; • Private market investors like PACE because assessment liens are a proven, strong credit. PACE addresses one of the largest barriers to energy savings retrofits — up front financing and short-term loans. In testimony before legislative committees during General Assembly consideration of PACE earlier this year, AAEA energy savings company CEOs estimated potential job growth for their companies at 30 percent once PACE is deployed in their respective regions. Thank you for the opportunity to comment on the Fayetteville City Council's consideration of the proposed ordinance to create the state's first Energy Improvement District. The City of Fayetteville has previously established an exemplary record of promoting sustainable building practices. Adding property assessed clean energy financing to the mix, will unleash the transformational economic power of a vigorous energy savings program for existing buildings throughout your community. Sincerely, Steve Patterson Executive Director Arkansas Advanced Energy Association • www.arkansasadvancedenergy.com info@arkansasadvancedenergy.com • (501) 537-0190 Washington County Assessor's Office 280 N. College Suite # 250, Fayetteville, AR 72701 Phone: (479)444-1500, Fax: (479)444-1518 October 101h, 2013 The Honorable Mayor and City Council Members City of Fayetteville, Arkansas The Washington County Assessor's Office looks forward to working with the Fayetteville Energy Improvement District on the establishment of and implementation of the energy improvement district in the City of Fayetteville. The responsibilities of the Washington County Assessor's Office as outlined in A.C.A. § 8- 15-101 et seq. (the "Property Assessed Clean Energy Act") are easily implemented and would not create any additional burden on my offices operations. In fact as an advocate, from the beginning, of this legislation I look for the creation of the district. Sincerely, Jeff Williams Washington County Assessor 1AA►Q�iF.! G�ItTp9GAT! OF [lCCWLWCtl PV g55tySMEM'AOMIHKTIlIV TIOH NORTHWEST ARKANSAS DEMOCRAT -GAZETTE NORTHWESTARKANSAS THE MORNING NEWS OFSPRINGDALE S-PM--ER.SLLC THE MORNING NEWS OF ROGERS NORTHWEST ARKANSAS TIMES BENTON COUNTY DAILY RECORD 212 NORTH EAST AVENUE, FAYETTEVILLE, ARKANSAS 72701 1 P.O. BOX 1607, 72702 1 479.442.1700 1 WWW.NWANEWS.COM AFFIDAVIT OF PUBLICATION I, Holly Andrews, do solemnly swear that I am the Legal Clerk of the Northwest Arkansas Newspapers, LLC, printed and published in Washington and Benton County, Arkansas, bona fide circulation, that from my own personal knowledge and reference to the files of said publication, the advertisement of: City of Fayetteville - Ordinance 5624 Was inserted in the Regular Editions on: October 24, 2013 Publication Charges: $ 155.64 Holly Andrews Subscribed and sworn to before me This-,,7 I day of d &-- , 2013. 06c� Notary Public My Commission Expires: Z�Zo,Zot C,: c "+ .. r �..; `.V1 f c llm:isston L;Ss ury 20iz! **NOTE** Please do not pay from Affidavit. Invoice will be sent. RECEIVED OCT 2 9 2013 CITY OF FAYETTEVILLE CITY CLERK'S OFFICE AGREEMENT FOR SERVICES BY AND BETWEEN THE FAYETTEVILLE ENERGY IMPROVEMENT DISTRICT NO. 1, AND ARKANSAS ADVANCED ENERGY EQUITY, LLC. This Agreement (the "Agreement") is made this f 3yttday of Od' O' U 9- , 2014, by and between the FAYETTEVILLE ENERGY IMPROVEMENT DISTRICT NO. 1 (the "DISTRICT"), having its principal place of business at 113 W. Mountain Street, Fayetteville, AR 72701 and ARKANSAS ADVANCED ENERGY EQUITY, LLC ("A2E2"), an Arkansas limited liability company having its principal place of business at 124 W. Capitol Ave., Ste. 1630, Little Rock, AR 72201. WITNESSETH TRAT: WHEREAS, the City of Fayetteville has created, by ordinance, the DISTRICT, and the DISTRICT is authorized to create special tax assessments for the financing of energy efficiency improvements, renewable energy and weatherization projects and water conservation improvements to privately owned property located in the City of Fayetteville as enabled by Property Assessed Clean Energy (PACE) legislation (the "PACE Program"); and WI-IEREAS, A2E2 is a joint venture of Energy Equity Funding, LLC and the Arkansas Advanced Energy Association, LLC., that was formed to contract to provide the services proposed in the Response to RFP 14-10 incorporated herein as Appendix III; and WHEREAS, the DISTRICT desires to engage A2E2 to provide the services of Program Administrator in connection with the PACE Program. NOW, "THEREFORE, the DISTRICT and A2F2, for the mutual consideration, the sufficiency of which is acknowledged, and under the terms and conditions hereinafter set forth, do agree as follows: 1. SCOPE OF SERVICES TO BE PERFORMED A2E2 agrees to perform the services described in Appendix I, attached hereto and incorporated herein by this reference. The services to be performed by A2E2, described in Appendix I and in the balance of this Agreement, are hereinafter referred to as the "Services." A2E2 shall have sole responsibility for the performance of the Services, including all tasks and deliverables thereunder. H. PROJECTS For purposes of this Agreement, "Project" means a specific instance of financing under the PACE Program. A2E2 is not responsible for the management of any Project under the PACE Program, and is not acting as a contractor or subcontractor of any Project under the PACE Program. The selection of contractors, subcontractors, or service providers for any Project under the PACE Program is the sole responsibility of and shall be at the sole discretion of the owner of the Project, subject to A2E2's approval of the contractor as meeting or being exempt from the contractor qualifications of the PACE Program. 0 III. TIME OF PERFORMANCE The Services of A2E2 will commence upon execution hereof and will terminate upon the expiration of the term of this Agreement or the termination of this Agreement pursuant to Section V, below, which ever occurs first. The DISTRICT shall cooperate with A2E2 in providing the agreed upon information and access to information as necessary for A2E2 to render the Services. IV. COMPENSATION A2E2 will be compensated for the Services by charging a three -percent (3%) administrative fee (the "Administrative Fee") to all Projects. The Administrative Fee will be capitalized with the Project's financing. The Administrative Fee will be AM's sole compensation under this Agreement. No compensation will be paid directly to A2E2 by the DISTRICT. V. TERM AND TERMINATION The initial term of this Agreement shall be two (2) years from the date this Agreement is approved by the DISTRICT. This Agreement shall automatically renew for up to three (3) additional one (1) year terms, for a total term of up to five (5) years, unless a non -renewing party provides the other party with a written notice of non -renewal not less than thirty (30) days prior to the effective date of the next renewal term. This Agreement may be terminated by either party by the terminating party giving the non - terminating party written notice of intent to terminate not less than thirty (30) days prior to the effective date of the termination. The DISTRICT may, from time to time, request changes in the Services to be performed hereunder, including revisions due to the DISTRICT's adjustments in scope or quality of the PACE Program, or due to the enlargement of the DISTRICT. Such changes, and any other changes to the Agreement which are mutually agreed upon by and between the DISTRICT and A2E2, shall become effective only if incorporated in written amendments to the Agreement and executed by both parties hereto. VILL PUBLICITY The DISTRICT agrees to credit A2E2 by name and title in all publicity involving the PACE Program and/or any Project. A2E2 will reveal information about the PACF, Program and/or any Project only upon the DISTRICT's prior written approval. A2E2 may issue marketing and promotional material, including press releases, regarding general information about the PACE Program and Projects participating in the PACE Program. Any public disclosure of information concerning a specific and identifiable Project shall be made only with the written approval of the owner of the property that is the subject of the Project. VIIL PERSONNEL All personnel involved in the provision of the Services will be under the supervision of A2E2 and shall be fully qualified and shall be authorized or permitted under the state and local law to perform such Services. A2E2 shall remain responsible for the satisfactory completion of all Services in accordance with the terms and conditions of this Agreement. IX. DISCRIMINATION PROHIBITED A. I.n all hiring or employment made possible by or resulting from this Agreement, there shall not be any discrimination against any employee or applicant for employment because of real or perceived race, ethnicity, religion, sex, age, physical handicap, sexual orientation, gender identity, gender expression, marital status, familial status, national origin, socioeconomic background or veteran status. B. No person shall, on the grounds of real or perceived race, ethnicity, religion, sex, age, physical handicap, sexual orientation, gender identity, gender expression, marital status, familial status, national origin, socioeconomic background or veteran status, be excluded from participation in, be denied the benefits of, or be subject to discrimination under any program or activity made possible by or resulting from this Agreement. C. No otherwise qualified person shall, on the grounds of handicap or mental disability, be excluded from participation in, be denied the benefits of, or be subject to discrimination under any program or activity made possible by or resulting from this Agreement. A2E2 shall comply with all requirements and regulations imposed by or pursuant to the Americans with Disabilities Act. X. COMPLIANCE WITH LAWS A2E2 shall comply with all federal, state, and local laws, ordinances, and regulations applicable to the work, including but not limited to the Title VII of the Civil Rights Act of 1964 and non- discrimination clauses incorporated herein. XI. ASSIGNMENT OR TRANSFER A2E2 shall not assign the whole or any part of this Agreement or any monies due or to become due hereunder without written consent of the City of Fayetteville or the DISTRICT. In the event A2E2 assigns all or part of any monies due or to become due under this Agreement, the instrument of assignment shall contain a clause substantially to the effect that it is agreed that the right of the assignee in and to any monies due or to become due to A2E2 shall be subject to prior liens of all persons, firms, and corporations for services rendered or materials supplied in connection with the performance of the Services. XH. SUBCONTRACTING A. Core administrative, program design, and marketing components of the PACE Program will be performed by A2E2 and will not be subcontracted without prior written approval of the DISTRICT. The DISTRICT acknowledges that on page 13 of the RFP Response A2E2 identified members of the Fayetteville PACE Administrative Team. The DISTRICT agrees that, when they are working for A2E2 in their capacity as a member of the Fayetteville PACE Administrative Team, the members of the Fayetteville PACE Administrative Team shall not be considered subcontractors of A2F2 requiring prior approval of .DISTRICT. B. Subject to the terms, conditions, and restrictions of this Agreement, DISTRICT authorizes A2E2 to retain and use subcontractors as A2E2, in the good faith exercise of its judgment and discretion, determines are necessary to fully, effectively, and efficiently perform components of the Services other than core administrative, program design, and marketing. Such subcontractors include, without limitation, a subcontractor for web coding, and subcontractors for web design and the design of marketing materials. C. To the maximum extent possible, A2E2 will use qualified local companies and providers as subcontractors. D. A2E2 shall remain responsible for the satisfactory completion of all Services in accordance with the terms and conditions of this Agreement, including those Services performed by any subcontractors to AM. 1. The provisions of this Agreement flow down to all subcontractors. Any approved subcontracting of the work shall in no way relieve A2E2 of its primary responsibility for the quality and performance of the Services. A2E2 shall be fully responsible to the DISTRICT for the acts and omissions of its subcontractors and of persons either directly or indirectly employed by them. AM shall include in each subcontract appropriate provisions to require compliance by all subcontractors with the provisions of this Agreement. Fees and expenses for any subcontracts entered into by A2E2 shall be the sole responsibility of AM. XIII. CONFLICTS OF INTEREST A. INTEREST OF A2E2 As an inducement to the execution of the Agreement by the DISTRICT, A2E2 represents and agrees that it has not employed any person to solicit or procure the Agreement, and has not made and will not make any payment or any agreement for the payment of any compensation in connection with the procurement of the Agreement. As required in RFP 14-10, attached hereto as Appendix I1, AM shall promptly notify the Purchasing Agent for the City of Fayetteville, in writing, of any potential conflicts of interest for any prospective business association, interest, or other circumstance which may influence or appear to influence AM's judgment or quality of the Services being provided. B. NO PREFERENCES No member, member of the governing board, manager, employee, officer, or agent of A2E2, of the DISTRICT, of the City of Fayetteville, or of the Fayetteville PACE Administrative Team, and no member of the Arkansas Advanced Energy Association, shall receive any special or preferential treatment under the PACE Program. C. INTEREST OF OTHER LOCAL PUBLIC OFFICIALS No member of the governing body of the City of Fayetteville and no other public official or employee of the City who exercises any functions or responsibilities in the review or approval of the carrying out of this Agreement shall have any personal interest, direct or indirect, in the Agreement. XIV. GOVERNING LAW, VENUE. AND ATTORNEYS' FEES The law of the State of Arkansas shall govern the validity, interpretation, enforcement, and any suit or action arising out of this Agreement unless preempted by federal law. Any suit or action to enforce or arising out of this Agreement shall be brought in any state court located in Washington County, Arkansas, or in the federal court located in the Western District of Arkansas. Each party consents to personal jurisdiction and venue by such courts over such party. The parties hereby expressly and irrevocably waive any claim or defense in any such suit or action based on any alleged lack of jurisdiction, improper or inconvenient venue, or any similar basis. In any suit or action to enforce or arising out of this Agreement, the prevailing party shall be entitled to recover its attorneys' fees, expenses, and costs incurred in prosecuting or defending the suit or action. XV. NO WAIVER BY THE DISTRICT The failure of the DISTRICT in any instance to insist upon strict performance of any of the terms hereunder or to exercise any rights conferred herein shall not be construed as a waiver or relinquishment to any extent of the right to assert or rely upon any such terms or rights on any future occasion. XVI. NOTICE Any notices, consents, requests and demands required or permitted under the terms of the Agreement shall be in writing and shall be deemed to have been duly served, given or made when personally delivered or delivered by registered or certified mail, return receipt requested or by facsimile and addressed as follows: a. To the DISTRICT: Peter Nierengarten Sustainability & Resilience Department Director City of Fayetteville, Arkansas 113 W. Mountain St. Fayetteville, AR 72701 b. To A2E2: Steve Patterson Manager Arkansas Advanced Energy Equity, LLC 124 W. Capitol Ave., Ste. 1630 Little Rock, AR 72201 With copy to: Benjamin D. Brenner Mitchell, Williams, Selig, Gates & Woodyard P.L.L.C. 425 W. Capitol Avenue, Ste. 1800 Little Rock, AR 72201 or at such other address as either party may specify, in writing, from time to time. All notices shall be deemed to have been received on the date delivered in the case of personal delivery or on the second business day subsequent to the date of the U.S. Postal Service postmark after being deposited in the United States mail, postage prepaid, registered or certified (return receipt requested), or in the case of overnight courier service, one day after delivery to the overnight courier service, or in the case of facsimile notice, when sent and verification is received. XVH. SUCCESSORS IN INTEREST The Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and by their respective successors and assigns. XVHL INDEMNIFICATION A2E2 shall indemnify, and hold the City of Fayetteville, the DISTRICT, their employees, agents and officials harmless from any and all losses, damage, liability cost and expense (including reasonable attorneys' fees) to the extent caused by the negligent acts, errors or omissions of A2E2 (or any individual or entity for whom A2E2 shall bear legal liability for the acts or omissions thereof) in the performance of professional work pursuant to this Agreement. XIX. INSURANCE A2E2 shall maintain liability insurance with policy limits of $1,000,000. DISTRICT shall be named as an additional insured on such insurance policy. A2E2 shall obtain the insurance policy within sixty (60) days of the closing of the first Project. A2E2 shall maintain such insurance, or an equivalent policy, until the expiration or termination of this Agreement. XX. ATTACHMENTS This Agreement consists of the terms of this Agreement and the Appendices listed below. The following Appendices are each made a part of this Agreement and are hereby incorporated by reference into this Agreement as though fully set forth herein: Appendix I — Scope of Services Appendix II — RFP 14-10 Appendix III — Response of A2E2 to RFP 14-10 (including Appendices and Exhibits submitted therewith) XXI. FREEDOM OF INFORMATION If a Freedom of Information Act request is presented to the City of Fayetteville or the DISTRICT then AM will do everything possible to provide the documents in a prompt and timely manner as prescribed in the Arkansas Freedom of Information Act (A.C.A. 25-19-101 et.seq.). XXH. AUTHORIZATION A2E2 warrants and represents that it has the appropriate authorization to enter into this Agreement with the DISTRICT and that the individual executing this Agreement on behalf of A2E2 is authorized to do so. XXM. DISCLOSURE OF PROJECT INFORMATION Each Project will be undertaken pursuant to a project -specific written agreement. Each project - specific agreement will contain provisions necessary to protect Project information that is proprietary, (including trade secrets), from use or disclosure without the written consent of the party claiming protection over the information. Notwithstanding the foregoing, A2E2 may use 6 and disclose such information in connection with the performance of this Agreement and the Services or as required by law. XXIV. ENTIRE AGREEMENT A. This Agreement represents the full and final agreement of the parties as to the subject matter of this Agreement. It is fully integrated and supersedes any and all prior discussions or negotiations, whether written or oral, pertaining to the subject matter of this Agreement. Neither party has been induced to enter into this Agreement by reason of any agreement or representation, whether oral or in writing, other than as contained herein. B. In the event of a conflict between the specific terms of this Agreement and the contents of either RFP 14-10 or the Response of A2E2 to RFP 14-10, the terms of this Agreement shall govern. XXV. EXECUTION IN COUNTERPARTS This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF the Parties have caused this instrument to be executed by their respective proper officials: Executed by A2E2 the / 3 day of 49(2 'k k: Y , 2014. Executed by the DISTRICT the 3 day of 2014 ARKANSAS ADVANCED ENERGY EQUITY, LLC Steve Patterson Member FAYETTEVILLE ENERGY IMPROVEMENT DISTRICT NO.1 rivitt, Board Chair — APPENDIX I SCOPE OF SERVICES As Program Administrator, Arkansas Advanced Energy Equity, LLC, will be responsible for the implementation and day-to-day operations of the PACE Program, as follows: A. Commercial Program 1. Acquisition and assessment of potential commercial energy efficiency projects. • Marketing and Outreach. A2E2 will seek participation of the broadest possible ' base of commercial Projects. The PACE Program will be marketed throughout the commercial community by utilizing, without limitation, trade alliances between energy auditors and consultants, energy service companies (ESCOs), home and commercial contractors and Realtors, utility energy efficiency contractor lists, and financial partners to secure program participants. A2E2 will use its best efforts to develop a broad base of participating contractors and lenders. • Conduct community outreach to property managers and owners. • Oversight of preliminary credit reviews within 48 hours of application to determine basic eligibility and potential scope of each project and analysis of energy efficiency needs. • Maintenance and provision of program application in different formats including hard copy and an online program web portal. 2. Loan application. • Determine the type and structure of financing appropriate for the prospective project. • Ensure that the design, construction documents and scope of work for each project are complete and ready for submission along with the full application to the lending institution. (Any fees associated with the Program will be capitalized with the Project financing. The Program Administrator will charge a 3% administrative fee to all Projects.) • Ensure timely closing of project loans which is anticipated to take anywhere from 30 to 45 days once the full application has been submitted with the supporting documentation. 3. Construction phase. • Consult with property owners and lender to determine if project financing has been approved. • If progress payments are to be made, ensure that progress inspections and verifications required for the actual construction, such as building permits are completed. 4. Project verification and quality control. • Verification of project completion with the property owners and lending institution. • Ensure all construction liens have been signed off on and that all funding has been completed. • Provide a sampling of project data for quality control. 8 5. Post improvement measurement and verification. • Providing property owners with Consent to Release Utility Data forms to allow the Program Administrator access to utility bills for the year prior to improvements through the completion of the improvements and the final payment of the loan. • If the Program Administrator determines that the subject property is not performing as projected, provide follow up with the property owner to identify potential causes. • Determining if deviations from projections are caused by external variables, such as weather or usage, if not, then analysis of the improvements will be necessary to verify that they were installed correctly and whether corrections may be warranted. • If the subject property is performing as projected with the improvements, sharing this information with the property owner. • Providing the DISTRICT with the Annual Report described in and required by the RFP by February 1 of the year following the report year. in addition to providing the Annual Report, A2E2 will provide DISTRICT with ongoing data regarding the PACE Program and the performance of the Projects. 6. Ongoing payments and default. • Ensure that the property owner is making payments per the terms of the loan agreement directly to the lending institution. • Confirm that assessment contracts are recorded with the office of the Washington County Circuit Clerk. B. Residential Program There is a limitation on availability for PACE financing for residential properties due to concerns raised by the Federal Housing Finance Agency (FHFA). Currently, only residential property owners who own their home without an existing mortgage can qualify for actual property assessed financing. A2E2 will design and structure the PACE Program to accommodate financing for energy efficiency, renewable energy, weatherization, and water conservation projects by owners of residential property that do not qualify for property assessed financing. This will be accomplished by, to the greatest extent practical, making alternative financing options available through the PACE Program, including home equity financing or energy efficiency mortgages (aka, "EEMs"). The residential. PACE Program will be modeled on the commercial PACE Program, and will include the following components: I. Acquisition and assessment of potential residential energy efficiency Projects. A2E2 will seek participation of the broadest possible base of residential Projects, including those that qualify for both actual property -assessed financing, and those using traditional financing. Due to the FHFA concerns discussed above, A2E2 contemplates that the first phase of the residential PACE Program will be comprised largely of Projects that do not involve property -assessed financing. 2. Market outreach into the community. A2E2 will seek participation of the broadest possible base of residential Projects by marketing the PACE Program through community outreach and strategic partnerships utilizing trade alliances between 9 energy auditors, home performance and/or energy efficiency contractors, and Realtors, as well as financial partners and utilities that would serve to direct applicants into the PACE Program. 3. Prequalification and initial screening. A2E2 will prequalify program applicants and make eligibility determinations by credit analysis and by determining if the property meets the required underwriting criteria. 4. Energy audits of potential project properties. • Providing property owners with list of energy auditors that are participating in the PACE Program for selection of a qualified energy auditor. If the property owner has been referred to the PACE Program by an energy auditor, they can submit that auditor's information on the application and that auditor will be the default vendor for the energy audit. 5. Collecting required loan documents including but not limited to the loan application, scope ol'work, and audit documents from property owners, and forwarding the documents to the lending institution for loan approval. 6. Coordinating loan approval, including notification to the energy auditor and contractor of each loan and notification to commence work on the improvements. 7. Obtaining homeowner sign off on the work verification and, for property -assessed Projects, execution of the assessment contract, and forwarding these documents to the lending institution. A2E2 will also provide property owners with Consent to Release Utility Data forms allowing A2E2 access to utility bills for the year prior to improvements and through completion of the improvements and the final payment of the loan. , 8. For property -assessed Projects, confirming that assessment contracts are recorded with the office of the Washington County Circuit Cleric. 9. Data collated and quality control. A sampling of Projects will be reviewed for quality assurance, with the samplings focused on making sure that as many contractors/auditors are reviewed as possible. As Projects are completed, the improvements and utility data will be collated to generate reports to track the PACE Program's proliferation and overall efficacy at increasing energy efficiency and carbon emission reduction. C. PACE Program Policies A21:2 shall develop the following "PACE Program Policies" for DISTRICT: • Participant Eligibility Requirements • Project Eligibility Requirements • Contractor Qualifications • Program Fee Schedule The PACE. Program Policies shall be approved by DISTRICT. 10 D. Project Contractors: Qualifications, Training, and Engagement A2E2 will seek involvement of the broadest possible base of contractors in the PACE Program, with an emphasis on contractors located in the Fayetteville, Arkansas market. A2E2 will be responsible for: 1. Developing and maintaining a list of approved contractors under the PACE Program (the "Approved Contractors List"). A contractor must meet the Contractor Qualifications to be included on the Approved Contractors List. A2E2 will screen and process applications for inclusion on the Approved Contractors List, The Approved Contractors List will be made available online. Project owners may select Project contractors from the Approved Contractors List, in which case no further approval of the selected contractor will be required prior to the start of work on the Project. In the event that the owner of a Project wishes to use a contractor that is not on the approved list of contractors, A2E2 shall ensure that the contractor meets the Contractor Qualifications or, in the reasonable judgment and discretion of AM, shall determine that waiver of some or all of the Contractor Qualifications is appropriate. 2. Providing training to contractors (if needed). 3. Conducting outreach to the Arkansas contractor community to broaden awareness of the PACE Program and make available the opportunity for contractors to participate in Projects under the PACE Program by, among other activities: leveraging relationships of the Fayetteville PACE Administrative Team and through financial partners; organizing and publically promoting contractor seminars; utilizing existing contractor networks or developing new contractor networks, trade groups, and regional utility contractor lists; and through the member lists of Chambers of Commerce. M Branson, Lisa From: Marr, Don Sent: Monday, October 20, 2014 5:33 PM To: Branson, Lisa Cc: Hertweck, Marsha Subject: FW: Moving Lisa —Jud Jacobs will need to be replaced (see resignation below) on the Audit Committee. Will you please make sure that this position is in the listing for the next appointments posting by the City Council. Thanks, Don From: judy jacobs(mailto:judymjacobs@hotmail.com] Sent: Monday, October 20, 2014 5:06 PM To: Marr, Don; Hertweck, Marsha Subject: Moving Don, Marsha just want you to know that I have sold my condo and have bought a house in Bella Vista. I am excited about the move, but am sad I will have to resign from the audit committee. I will be closing on the new place Nov 6 but will probably still be in my condo until renovations are done or Dec 1 whichever is earlier. (Buyers of my condo live in Dallas and will be moving to Fayetteville when they sell their house.) I have so enjoyed my time on the audit committee and knowing all of you. All the best, Judy i Appendix II - RFP 14-10 TyPVI r T 11e ARKANSAS City of Fayetteville, Arkansas Purchasing Division — Room 306 113 W. Mountain Fayetteville, AR 72701 Phone: 479.575.8220 TDD (Telecommunication Device for the Deaf): 479.521.1316 RFP 14-10, Property Assessment Clean Energy (PACE) Administrator DEADLINE: Friday, June 27, 2014 before 2:00:00 PM, local time RFP DELIVERY LOCATION: Room 306 —113 W. Mountain, Fayetteville, AR 72701 PURCHASING AGENT: Andrea Foren, CPPO, CPPB, aforen@fayetteville-ar.gov DATE -OF ISSUE AND ADVERTISEMENT: Wednesday, June 04, 2014 REQUEST FOR PROPOSAL RFP 14-_10, Property Assessment Clean Energy (PACE) Administrator No late proposals shall be accepted. RFP's shall be submitted in sealed envelopes labeled with the project number and name as well as the name and address of the firm. All proposals shall be submitted in accordance with the attached City of Fayetteville specifications and bid documents attached hereto. Each Proposer is required to fill in every blank and shall supply all information requested; failure to do so may be used as basis of rejection. Any bid, proposal, or statements of qualification will be rejected that violates or conflicts with state, local, orfederal laws, ordinances, or policies. The undersigned hereby offers to furnish & deliver the articles or services as specified, at the prices & terms stated herein, and in strict accordance with the specifications and general conditions of submitting, all of which are made a part of this offer. This offer is not subject to withdrawal unless upon mutual written agreement by the Proposer/Bidder and City Purchasing Agent. Name of Firm: Contact Person: E-Mail: Business Address: City: Signature: State: City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 1 of 19 Title: Phone: Date: Zip: City of Fayetteville RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Advertisement City of Fayetteville, AR Request for Proposal RFP 14-10, Property Assessment Clean Energy (PACE) Administrator The City of Fayetteville, Arkansas has established an Energy Improvement District to help create jobs, retain wealth and grow Arkansas's economy by enabling Property Assessed Clean Energy Financing. The City on behalf of the Fayetteville Energy Improvement District No. 1 is requesting proposals from firms capable of developing and administering an innovative program for marketing financing and encouraging participation in renewable energy, energy efficiency, weatherization and water conservation projects in the City of Fayetteville. All interested parties shall understand and be aware any resulting contract from this RFP will be between the PACE District and the selected vendor. To be considered, proposals shall be received at the City Administration Building, City Hall, Purchasing — Room 306, 113 West Mountain, Fayetteville, Arkansas, by Friday, June 27, 2014 before 2:00:00 PM, local time. No late submittals shall be accepted. Forms & addendums can be downloaded from the City's web site at http://www.accessfayetteville.org. All questions regarding the process should be directed to Andrea Foren, CPPB, CPPO at aforen@fayetteville-ar.gov or (479)575-8220. Proposals submitted shall be qualified to do business and licensed in accordance with all applicable laws of the state and local governments where the project is located. Pursuant to Arkansas Code Annotated §22-9-203 The City of Fayetteville encourages all qualified small, minority and women business enterprises to bid on and receive contracts for goods, services, and construction. Also, City of Fayetteville encourages all general contractors to subcontract portions of their contract to qualified small, minority and women business enterprises. The PACE District reserves the right to reject any or all proposals and to waive irregularities therein, and all Proposers shall agree that such rejection shall be without liability on the part of the City of Fayetteville or the PACE District for any damage or claim brought by any Proposer because of such rejections, nor shall the Proposers seek any recourse of any kind against the City of Fayetteville or PACE District because of such rejections. The filing of any Proposal in response to this invitation shall constitute an agreement of the Proposer to these conditions. CITY OF FAYETTEVILLE By: Andrea Foren, CPPO, CPPB Title: Purchasing Agent Ad date: 06/04/2014 City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 2 of 19 City of Fayetteville RFP 14-10, Property Assessed Clean Energy (PACE) Administrator SECTION A: General Terms & Conditions 1. NOTICE TO ALL INTERESTED PARTIES: a. The City of Fayetteville is aiding in the administering of this Request for Proposal (RFP). All interested parties shall be fully aware the resulting contracting parties include the PACE District and the selected Proposer. The City of Fayetteville is not a party to a resulting contract of this RFP. b. Due to this RFP resulting in a contract between the Vendor and the PACE District, all instances in this RFP referring to the "City" or "City of Fayetteville" should be interchangeably used with "PACE District", "District" or "Fayetteville Energy Improvement District No. 1 " due to the fact that the Fayetteville Energy Improvement District No. 1 is the actual contracting entity. 2. SUBMISSION OF A PROPOSAL SHALL INCLUDE: a. A written narrative describing the method or manner in which the Proposer proposes to satisfy requirements of this RFP in the most cost effective manner. b. A description of the Proposer's experience'in providing the same or similar services as outlined in the RFP. This description should include the names of the person(s) who will provide the services, their qualifications, and the years of experience in performing this type of work. Also, include the reference information requested in this RFP. c. Statement should be no more than twenty five (25) pages; single sided, standard, readable, print on standard 8.5x11 papers. Proposers shall also submit a three (3) page (maximum) executive summary. The following items will not count toward the page limitations: appendix, cover sheet, 3-page executive summary, resumes (resumes shall be no more than 1 page per person), and forms provided by the City for completion. All Proposers shall submit eight (8) sets of their proposal as well as one (1) electronic copy on a properly labeled CD or other electronic media device. The electronic copy submitted should be contained into one (1) file. The use of Adobe PDF documents is strongly recommended. Files contained on the CD or electronic media shall not be restricted against saving or printing. The electronic copy shall be identical to the original papers submitted. Electronic copies shall not be submitted via e-mail to City employees by the Proposer. e. Proposals will be reviewed following the stated deadline, as shown on the cover sheet of this document. Only the names of Proposer's will be available after the deadline until a contract has been awarded by the Fayetteville City Council. All interested parties understand proposal documents will not be available until after a valid contract has been executed. f. Proposers shall submit a proposal based on documentation published by the Fayetteville Purchasing Division. Proposals shall be enclosed in sealed envelopes or packages addressed to the City of Fayetteville, Purchasing Division, Room 306, 113 W. Mountain, Fayetteville, AR 72701. The name, address of City of Fayettevihe, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 3 of 19 the firm and Bid, RFP, or RFQ number shall be on the outside of the packaging as well as on any packages enclosed in shipping containers or boxes. h. Proposals must follow the format of the RFP. Proposers should structure their responses to follow the sequence of the RFP. i. Proposers shall have experience in work of the same or similar nature, and must provide references that will satisfy the City of Fayetteville. Proposer may furnish a reference list of clients for whom they have performed similar services and must provide information as requested in this document. j. Proposer is advised that exceptions to any of the terms contained in this RFP or the attached service agreement must be identified in its response to the RFP, Failure to do so may lead the City to declare any such term non-negotiable. Proposer's desire to take exception to a non- negotiable term will not disqualify it from consideration for award. k. Local time shall be defined as the time in Fayetteville, Arkansas on the due date of the deadline. Documents shall be received before the deadline time as shown by the atomic clock located in the Purchasing Division Office. 3. WRITTEN REQUESTS FOR INTERPRETATIONS OR CLARIFICATION: No oral interpretations will be made to any firms as to the meaning of specifications or any other contract documents. All questions pertaining to the terms and conditions or scope of work of this proposal must be sent in writing via e-mail to the Purchasing Department. Responses to questions may be handled as an addendum if the response would provide clarification to the requirements of the proposal. All such addenda shall become part of the contract documents. The City will not be responsible for any other explanation or interpretation of the proposed RFP made or given prior to the award of the contract. 4. RIGHTS OF CITY OF FAYETTEVILLE IN REQUEST FOR PROPOSAL PROCESS: (revised for PACE District) In addition to all other rights of the City of Fayetteville, under state law, the City and the PACE District specifically reserves the following: a. The City and PACE District reserves the right to rank firms and negotiate with the highest-ranking firm. Negotiation with an individual Proposer does not require negotiation with others. b. The City and PACE District reserve the right to select the proposal it believes will serve the best interest of the City and PACE District. C. The City of Fayetteville and Pace District reserves the right to accept or reject any or all proposals. d. The City of Fayetteville and PACE District reserve the right to cancel the entire request. e. The City of Fayetteville and PACE District reserve the right to remedy or waive technical or immaterial errors in the request for proposal or in proposals submitted. City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 4 of 19 f. The City of Fayetteville and PACE District reserve the right to request any necessary clarifications, additional information, or proposal data without changing the terms of the proposal. g. The City of Fayetteville and PACE District reserve the right to make selection of the Proposer to perform the services required on the basis of the original proposals without negotiation. 5. EVALUATION CRITERIA: The evaluation criterion defines the factors that will be used by the selection committee to evaluate and score responsive, responsible and qualified proposals. Proposers shall include sufficient information to allow the selection committee to thoroughly evaluate and score proposals. Each proposal submitted shall be evaluated and ranked by a selection committee. The contract will be awarded to the most qualified Proposer, per the evaluation criteria listed in this RFP. Proposers are not guaranteed to be ranked. 6. COSTS INCURRED BY PROPOSERS: All expenses involved with the preparation and submission of proposals to the City, or any work performed in connection therewith, shall be borne solely by the Proposer(s). No payment will be made for any responses received, or for any other effort required of, or made by, the Proposer(s) prior to contract commencement. 7. ORAL PRESENTATION: An oral presentation and/or interview may be requested of any firm, at the selection committee's discretion. 8. CONFLICT OF INTEREST: a. The Proposer represents that it presently has no interest and shall acquire no interest, either direct or indirect, which would conflict in any manner with the performance or services required hereunder, as provided in City of Fayetteville Code Section 34.26 titled "Limited Authority of City Employee to Provide Services to the City". b. The Proposer shall promptly notify Andrea Foren, City Purchasing Agent, in writing, of all potential conflicts of interest for any prospective business association, interest, or other circumstance which may influence or appear to influence the Proposer's judgment or quality of services being provided. Such written notification shall identify the prospective business association, interest or circumstance, the nature of which the Proposer may undertake and request an opinion to the City as to whether the association, interest or circumstance would, in the opinion of the City, constitute a conflict of interest if entered into by the Proposer. The City agrees to communicate with the Proposer its opinion via e-mail or first-class mail within thirty days of receipt of notification. 9. WITHDRAWAL OF PROPOSAL: a. A proposal may be withdrawn at any time. City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 5of19 10. LATE PROPOSAL OR MODIFICATIONS: a. Proposal and modifications received after the time set fort he proposal submittal shall not be considered. Modifications in writing received prior to the deadline will be accepted. The City will not be responsible for misdirected bids. Proposers should call the Purchasing Division at (479) 575-8220 to insure receipt of their submittal documents prior to opening time and date listed. ' b. The time set for the deadline shall be local time for Fayetteville, AR on the date listed. All proposals shall be received in the Purchasing Division BEFORE the deadline stated. The official clock to determine local time shall be the atomic clock located in the Purchasing Division, Room 306 of City Hall, 113 W. Mountain, Fayetteville, AR. 11. LOCAL, STATE, AND FEDERAL COMPLIANCE REQUIREMENTS: a. The laws of the State of Arkansas apply to any purchase made under this request for proposal. Proposers shall comply with all local, state, and federal directives, orders and laws as applicable to this proposal and subsequent contract(s) including but not limited to Equal Employment Opportunity (EEO), Disadvantaged Business Enterprises (DBE), & OSHA as applicable to this contract. b. Pursuant to Arkansas Code Annotated §22-9-203 The City of Fayetteville encourages all qualified small, minority and women business enterprises to bid on and receive contracts for goods, services, and construction. Also, City of Fayetteville encourages all general contractors to subcontract portions of their contract to qualified small, minority and women business enterprises. 12. COLLUSION: The Proposer, by affixing his or her signature to this proposal, agrees to the following: "Proposer certifies that his proposal is made without previous understanding, agreement, or connection with any person, firm or corporation making a proposal for the same item(s) and/or services and is in all respects fair, without outside control, collusion, fraud, or otherwise illegal action." 13. RIGHT TO AUDIT, FOIA, AND JURISDICITON: a. The City of Fayetteville and PACE District reserve the privilege of auditing a vendor's records as such records relate to purchases between the City or PACE District and said vendor. b. Freedom of Information Act: City contracts and documents prepared while performing City contractual work are subject to the Arkansas Freedom of Information Act. If a Freedom of Information Act request is presented to the City of Fayetteville or PACE District, the (Contractor) will do everything possible to provide the documents in a prompt and timely manner as prescribed in the Arkansas Freedom of Information Act (A.C.A. §25-19-101 et. seq.). Only legally authorized photocopying costs pursuant to the FOIA may be assessed for this compliance. City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 6 of 19 c. Legal jurisdiction to resolve any disputes shall be Arkansas with Arkansas law applying to the case. 14. CITY INDEMNIFICATION: The successful Proposer(s) agrees to indemnify the City and PACE District and hold it harmless from and against all claims, liability, loss, damage or expense, including but not limited to counsel fees, arising from or by reason of any actual or claimed trademark, patent or copyright infringement or litigation based thereon, with respect to the services or any part thereof covered by this order, and such obligation shall survive acceptance of the services and payment thereof by the City and PACE District. 15. VARIANCE FROM STANDARD TERMS & CONDITIONS: All standard terms and conditions stated in this request for proposal apply to this contract except as specifically stated in the subsequent sections of this document, which take precedence, and should be fully understood by Proposers prior to submitting a proposal on this requirement. 16. ADA REQUIREMENT FOR PUBLIC NOTICES & TRANSLATION: Persons with disabilities requiring reasonable accommodation to participate in this proceeding/event, should call 479.521.1316 (telecommunications device for the deaf), not later than seven days prior to the deadline. Persons needing translation of this document shall contact the City of Fayetteville, Purchasing Division, immediately. 17. PAYMENTS AND INVOICING: The Proposer must specify in their proposal the exact company name and address which must be the same as invoices submitted for payment as a result of award of this RFP. Further, the successful Proposer is responsible for immediately notifying the Purchasing Division of any company name change, which would cause invoicing to change from the name used at the time of the original RFP. Payment will be made within thirty days of invoice received. The City of Fayetteville is very credit worthy and will not pay any interest or penalty for untimely payments. Payments can be processed through Proposer's acceptance of Visa at no additional costs to the City for expedited payment processing. The City will not agree to allow any increase in hourly rates by the contract without PRIOR Fayetteville City Council approval. 18. CANCELLATION: The City reserves the right to cancel this contract without cause by giving sixty (60) days prior notice to the Contractor in writing of the intention to cancel or with cause if at any time the Contractor fails to fulfill or abide by any of the terms or conditions specified. b. Failure of the contractor to comply with any of the provisions of the contract shall be considered a material breach of contract and shall be cause for immediate termination of the contract at the discretion of the City of Fayetteville. City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 7 of 19 c. In addition to all other legal remedies available to the City of Fayetteville, the City reserves the right to cancel and obtain from another source, any items and/or services which have not been delivered within the period of time from the date of order as determined by the City of Fayetteville. d. In the event sufficient budgeted funds are not available for a new fiscal period, the City shall notify the vendor of such occurrence and contract shall terminate of the last day of the current fiscal period without penalty or expense to the City. 19. ASSIGNMENT, SUBCONTRACTING, CORPORATE ACQUISITIONS AND/OR MERGERS: a. The Contractor shall perform this contract. No assignment of subcontracting shall be allowed without prior written consent of the City. If a Proposer intends to subcontract a portion of this work, the Proposer shall disclose such intent in the proposal submitted as a result of this RFP. b. In the event of a corporate acquisition and/or merger, the Contractor shall provide written notice to the City within thirty (30) calendar days of Contractor's notice of such action or upon the occurrence of said action, whichever occurs first. The right to terminate this contract, which shall not be unreasonably exercised by the City, shall include, but not be limited to, instances in which a corporate acquisition and/or merger represent a conflict of interest or are contrary to any local, state, or federal laws. Action by the City awarding a proposal to a firm that has disclosed its intent to assign or subcontract in its response to the RFP, without exception shall constitute approval for purpose of this Agreement. 20. NON-EXCLUSIVE CONTRACT: Award of this RFP shall impose no obligation on the City or PACE District to utilize the vendor for all work of this type, which may develop during the contract period. This is not an exclusive contract. The City and PACE District specifically reserve the right to concurrently contract with other companies for similar work if it deems such an action to be in the City's best interest. In the case of multiple -phase contracts, this provision shall apply separately to each item. 21. ADDITIONAL REQUIREMENTS: The City and PACE District reserve the right to request additional services relating to this RFP from the Proposer. When approved by the PACE District as an amendment to the contract and authorized in writing prior to work, the Contractor shall provide such additional requirements as may become necessary. 22. SERVICES AGREEMENT: A written agreement, in substantially the form attached, incorporating the RFP and the successful proposal will be prepared by the City or PACE District, signed by the successful Proposer and presented to the PACE District for approval by the PACE District Board. 23. INTEGRITY OF REQUEST FOR PROPOSAL (RFP) DOCUMENTS: City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 8 of 19 Proposers shall use the original RFP form(s) provided by the Purchasing Division and enter information only in the spaces where a response is requested. Proposers may use an attachment as an addendum to the RFP form(s) if sufficient space is not available on the original form for the Proposer to enter a complete response. Any modifications or alterations to the original RFP documents by the Proposer, whether intentional or otherwise, will constitute grounds for rejection of such RFP response. Any such modifications or alterations a Proposer wishes to propose shall be clearly stated in the Proposer's RFP response and presented in the form of an addendum to the original RFP documents. 24. OTHER GENERAL CONDITIONS: a. Proposers must provide the City with their proposals signed by an employee having legal authority to submit proposals on behalf of the Proposer. The entire cost of preparing and providing responses shall be borne by the Proposer. b. The City reserves the right to request any additional information it deems necessary from any or all Proposers after the submission deadline. c. This solicitation is not to be construed as an offer, a contract, or a commitment of any kind; nor does it commit the city to pay for any costs incurred by Proposer in preparation. It shall be clearly understood that any costs incurred by the Proposer in responding to this request for proposal is at the Proposer's own risk and expense as a cost of doing business. The City of Fayetteville shall not be liable for reimbursement to the Proposer for any expense so incurred, regardless of whether or not the proposal is accepted. d. if products, components, or services other than those described in this bid document are proposed, the Proposer must include complete descriptive literature for each. All requests for additional information must be received within five working days following the request. e. Any uncertainties shall be brought to the attention to Andrea Foren immediately via telephone (479.575.8220) or e-mail (aforen@fayetteville-ar.gov). It is the intent and goal of the City of Fayetteville Purchasing Division to provide documents providing a clear and accurate understanding of the scope of work to be completed and/or goods to be provided. We encourage all interested parties to ask questions to enable all Proposers to be on equal terms. f. Any inquiries or requests for explanation in regard to the City's requirements should be made promptly to Andrea Foren, City of Fayetteville, Purchasing Agent via e-mail (aforen@fayetteville- ar.gov) or telephone (479.575.8220). No oral interpretation or clarifications will be given as to the meaning of any part of this request for proposal. All questions, clarifications, and requests, together with answers, if any, will be provided to all firms via written addendum. Names of firms submitting any questions, clarifications, or requests will not be disclosed until after a contract is in place. g. At the discretion of the City or PACE District, one or more firms may be asked for more detailed information before final ranking of the firms, which may also include oral interviews. City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 9 of 19 h. Any information provided herein is intended to assist the Proposer in the preparation of proposals necessary to properly respond to this RFP. The RFP is designed to provide qualified Proposers with sufficient basic information to submit proposals meeting minimum specifications and/or test requirements, but is not intended to limit a RFP's content or to exclude any relevant or essential data. i. Proposers irrevocably consent that any legal action or proceeding against it under, arising out of or in any manner relating to this Contract shall be controlled by Arkansas law. Proposer hereby expressly and irrevocably waives any claim or defense in any said action or proceeding based on any alleged lack of jurisdiction or improper venue or any similar basis. The successful Proposer shall not assign the whole or any part of this Contract or any monies due or to become due hereunder without written consent of City of Fayetteville or PACE District. In case the successful Proposer assigns all or any part of any monies due or to become due under this Contract, the Instrument of assignment shall contain a clause substantially to the effect that is agreed that the right of the assignee in and to any monies due or to become due to the successful Proposer shall be subject to prior liens of all persons, firms, and corporations for services rendered or materials supplied for the performance of the services called for in this contract. k. The successful Proposer's attention is directed to the fact that all applicable Federal and State laws, municipal ordinances, and the rules and regulations of all authorities having jurisdiction over the services shall apply to the contract throughout, and they will be deemed to be included in the contract as though written out in full herein. The successful Proposer shall keep himself/herself fully informed of all laws, ordinances and regulations of the Federal, State, and municipal governments or authorities in any manner affecting those engaged or employed in providing these services or in any way affecting the conduct of the services and of all orders and decrees of bodies or tribunals having any jurisdiction or authority over same. if any discrepancy or inconsistency should be discovered in these Contract Documents or in the specifications herein referred to, in relation to any such law, ordinance, regulation, order or decree, s/he shall herewith report the same in writing to the PACE District. 25. OTHER GENERAL CONDITIONS: a. Appendix A. Ordinance 5624 (28 pages attached) City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 10 of 19 City of Fayetteville RFP 14-10, Property Assessed Clean Energy (PACE) Administrator SECTION B: Scope of Services and General Information 1.) Introduction The City of Fayetteville, Arkansas — Energy Improvement District No. 1 is interested in contracting with a company to provide services to establish and administer a financing program for private property owners to implement energy efficiency improvements utilizing Property Assessed Clean Energy financing. The program must consist of: 1) the creation of a financing instrument for property owners with corresponding marketing, application and processing documents, 2) verification and quality control procedures including contractor recruitment, training and management, and 3) program data acquisition and reporting. In an effort to create jobs, retain wealth and grow Arkansas's economy the City of Fayetteville has created, by ordinance, Energy Improvement District No. 1 (Reference Appendix A) that is authorized to create special tax assessments for financing renewable energy, energy efficiency and water conservation improvements on real property. This method of financing, enabled by Arkansas Code Annotated § 8-15 the "Property Assessed Clean Energy (PACE) Act", will be implemented by the administrator on a city- wide basis through this program. This program will be self -financed, with the program fees and financing costs charged to property owners and contractors covering any compensation and program costs. Interested parties can visit the City of Fayetteville's website for current Energy Improvement District information at: http://www.accessfayettev'ille.org/government/city clerk boards and commissions/Engery Im rovem ent District /index.cfm 2.) Elements which shall be incorporated into the Program a. Administration: The Administrator shall manage the PACE program for the District. This includes, but is not limited to, processing applications, providing customer service, management of assessments and payments, recruitment of applicants, engagement with contractors who perform the qualifying improvements and ongoing program support. b. Financing: As part of the PACE program, the Administrator shall develop and/or facilitate the process for financing the qualifying improvements. The financing can be secured by a lien placed on the property and the loan(s) may be repaid by a special assessment imposed against the property. It is anticipated that this special assessment will be placed on the property's tax bill. c. Marketing: The Administrator shall implement a marketing plan for the PACE program. As a part of this marketing plan, the Administrator shall provide a unique, program -specific website outlining the specifics of the PACE program, provide educational and training materials for those interested in participating in the program and manage the local outreach City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 11 of 19 program utilizing the web, local media, and other means. To ensure optimization of program results, the administrator shall also provide an analysis of existing building stock and target marketing toward opportunities for greatest program impact. d. Contractor Certification, Workforce Development and Training. The Administrator shall develop and implement a program focused on getting local contractors trained and certified to participate in the PACE program though its own initiatives or through cooperation with programs and/or partners in the region. e. QuolityAssuronce and Program Reporting: The Administrator shall develop a quality assurance, verification and reporting protocol for the program. Compensation: This program will be self -financed, with the program fees and financing costs charged to property owners and contractors covering any compensation and program costs. 3.) Project Schedule Overview The Energy Improvement District anticipates the launch of the Program within S months of the hiring of the selected administrator. 4.) Scope of Work Considerations Administrators are asked to submit detailed proposals for providing the following services or deliverables to be rendered: Administration/Program Structure— Provide your firm's proposal for program design, implementation and administration. A detailed description should outline the necessary steps for developing the following program parameters: a. How a PACE project would be conducted within the District, including processing applications, providing customer service and engagement with contractors. b. The minimum criteria for a property owner to qualify for PACE financing. c. Minimum project parameters regarding size and scope of the project. d. Minimum underwriting requirements from the District and local partners under which any financing contract could proceed. e. Coordination of implementation with mortgage lenders including consent. f. Utilization of, and criteria for, energy surveys or audits to be performed on properties that are the subject of a project. g. The method of contractor selection. Will the vendor responsible for making energy improvements be selected by the applicant or pre-screened, and will any standards to be applied? h. A process for the verification of the installed improvements. i. Collection of data necessary to evaluate the efficacy of the overall program as it progresses over time. j. Delineation of anticipated roles and responsibilities between the District, the Administrator, and any other partner or entity. k. A description of how this program could be scaled up to include surrounding Cities and/or City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 12 of 19 Counties. Financing -This program will be self -financed, with the program fees and financing costs charged to property owners and contractors covering any compensation and program costs. Describe your firm's program structure relating to financing and plans to recover administrative and finance cost associated with the program in a manner that is affordable to the consumer and attractive for investors. Please provide a detailed description of the following program parameters and requirements (for information that is not available at this time, include a description of the process for developing the parameters and requirements): a. Verification of financial stability and financial worthiness of related financial participants and program lenders. b. Statement of financial commitment of funds dedicated to forming the program. c. Identify and discuss the source of initial capital to fund PACE projects within the District. d. Funding sources for PACE program (self -funded vs. banks) — List sources if applicable. e. Document commitment of financing partners for this program in writing from each -partner. f An assessment of the risk and cost to the District in the event a property owner enrolled in the program defaults on payments under the proposed structure. g. Maximum and minimum PACE finance amounts. h. Interest rates (adjustable or fixed) loan term options — (5yr, 10yr, 20yr). i. Preferred method used to calculate the cost of credit to individual property owners. j. Estimate of the actual cost of PACE credit to property owners. Assume financing amount of $100,000 for basis of estimate (assume maximum allowed commission under ACA § 8-15- 111(b)(1) of 3.125% for the County assessor/clerk, collector and treasurer) k. Discussion of the optimal length of time to carry the project with regard to cash -flow and the useful life of improvements. I. Discussion of credit risk associated with project delay or cessation. m. An assessment of the amount of contingency funds necessary for handling any defaults in this program, and how a default would be handled. n. Proposed 3rd Party Administrator fees to contractor who would install improvements, if any. o. Proposed 3rd Party Administrator fees to property owner. p. Re -occurring fees to property owner, if any. q. Early repayment penalties (Y/N)? If yes how determined? r. Delineation of anticipated roles and responsibilities between the District, the firm, and any other partner or entity. s. Costs associated with Property Appraiser, and Closing. Marketing —Provide your firms proposal to develop and implement an aggressive marketing strategy to reach property owners in all asset classes. A detailed description should include but not be limited to the following parameters: Partnerships to develop or expand. A unique, program -specific website or portal. Educational and training materials for those interested in participating in the program. d. Locai outreach program utilizing the web, local media, and other means. e. Delineation of anticipated roles and responsibilities between the County, Elected Officials, the Administrator and any other partner or entity. f. An analysis of existing building stock and target marketing toward opportunities for greatest City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 13 of 19 program impact Contractor Certification, Workforce Development and Training - Provide your firms proposal to develop and implement a workforce development, training and contactor recruitment program. A detailed description should include but not be limited to: Plans to recruit and maintain a list of contractors eligible to participate in the program and verify qualifications. Contractors will provide proof of qualifications and participation will be contingent on the following: • Attendance in a program training class, as established by the Administrator. • Provide proof of certification, as needed (i.e., BPI certification for residential energy auditors, ASHRAE or other certification for commercial energy consultants). b. Opportunity for property owners to provide feedback on contractor performance. c. Workforce Development in order to support local job creation. Include information on how the program would reach out to and include women, minorities, and the long-term unemployed. Quality Assurance and Program Reporting - Demonstrate a method to maintain program integrity through quality assurance and verification with reports and data generated from the program operation. Administrator will conduct spot checks of contractor work and accumulate data from the program for the following; a. Track overall program proliferation and performance. b. Provide regular or ongoing reporting on the overall impact of program, including but not limited to: • Number of participants and average project size. • Economic development impact. • Funds disbursed. • Energy consumption reduction (actual vs. projected). • Effect on carbon inventory. Provide annual reporting by February 1 of each year to enable the Energy Improvement District to meet the requirements of ACA § 8-15-112(a). 5.) Consultation The Energy Improvement District reserves the right to negotiate a further defined scope of work with the selected administrator to best carry out the purposes of the program. The administrator shall be prepared to respond to any questions the Energy Improvement District may have about the Program, and give other information, as requested, about program details. 6.) Submittal Requirements The District Board Members will choose the most qualified administrator based upon approach, methods, qualifications experience and projected administration costs. Once an administrator is selected a detailed scope of services will be developed. This final scope of services will identify a project schedule, tasks and deliverables, and the expected cost of completing each task. The scope will also indicate respective responsibilities of the administrator, District Board Members and City staff. City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 14 of 19 All respondents shall submit the following information with submittal at a minimum: Methods and approach. Describe expected approach and identify each task. Describe the anticipated interaction with the District. Provide a detailed timeline of the anticipated schedule for completing each task. b. Scope of Work/Deliverables. Provide deliverables for the Scope of Work outlined by the District in this RFP. Qualifications and Experience. Provide relevant information regarding previous experience related to developing similar programs. References in relation to similar projects is required. All proposers shall submit a minimum of three (3) references, with work relationships within the past five (5) years. Proposers are encouraged to submit a minimum of two (2) samples of work product for similar projects. List of Project Personnel. Proposer shall include a list containing the primary contact person, partners and/or sub -consultants and the associated individual areas of expertise and responsibility. A resume of key professional or technical personnel assigned to this project shall be submitted. An organizational chart of all key personnel with identified tasks for this contract shall be provided. e. Availability. Proposers shall describe the availability of project personnel to participate in this project in the context of the administrator's other commitments. Estimated Administrative Costs. Provide a proposed program budget that shows allocations to each scope of work category in outlined in this RFP. g. Schedule of Rates and Fees. Provide estimated cost of PACE credit to property owners including detailed schedule of administrator fees and closing costs that will result from the proposed program budget. Proposers shall detail pricing as precisely as possible. Program Funding. Describe in detail how the sources of funding for loans to support the program will be developed. 7.) Proposal Content Proposals shall be prepared simply and economically, providing a straight forward, concise description its ability to meet the requirements for the project. Fancy bindings, colored displays, and promotional material are not required. Emphasis should be on completeness and clarity of content. All documents should be typewritten on standard 8 Y2" x 11" white papers and bound in one volume. Exceptions would be schematics, exhibits, or other information necessary to facilitate the City of Fayetteville's ability to accurately evaluate the proposal. Limit proposal to twenty-five (25) pages or less, excluding one -page team resumes, references, and forms required by the City for completion. 8.) Contract Formation City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 15 of 19 a. If the negotiation produces mutual agreement, a contract will be considered for approval by the Energy Improvement District Board. If negotiations with the highest ranking Proposer fail, negotiations shall be initiated with the next highest ranking Proposer until an agreement is reached. The Board reserves the right to reject all offers and end the process without executing a contract. 9.) Selection Criteria: The following criteria will be used by the Board to evaluate and score responsive proposals. Proposers shall include sufficient information to allow the Board to thoroughly evaluate and score the proposal. Each proposal submitted is not required to be ranked by the selection committee; however, all proposals will be evaluated. The contract may be awarded to the most qualified firm, per the evaluation criteria listed below, based on the evaluation of the selection committee. Following the evaluation of the proposals, the Selection Committee may request that the top ranking firm(s) make an oral presentation or be interviewed. If presentations are necessary, they will take place in Fayetteville, Arkansas. Notices will be sent by the Purchasing Division. 1) 20% Qualifications in Relation to Specific Project to be Performed: Information reflecting qualifications of the firm. Indicated specialized experience and technical competence of the firm in connection with the type and complexity of the service required. Subcontractors, if used, must be listed with information on their organization. 2) 20% Experience, Competence, and Capacity for Performance: Information reflecting the names, titles, and qualifications (including experience and technical competence) of the major personnel assigned to this specific project. 3) 20% Proposed Method of Doing Work: A proposed work plan (description of how the project would be conducted as well as other facts concerning approach to scope you wish to present) indicating methods and schedules for accomplishing scope of work. Include with this the amount of work presently underway. 4) 20% Past Performance: Previous evaluations shall be considered a significant factor. If previous evaluations with the City are not available, the professional firms past performance records with City and others will be used, including quality of work, timely performance, diligence, and any other pertinent information. Firm will provide a list of similarjobs performed and person whom the City can contact for information. 5) 20% Cost/Fees: Competitiveness program budget and the resulting fees and cost to be charged to property owners. This program will be self financed, with the program fees and financing costs Charged to property owners and contractors to cover any compensation and program costs. 10.) TERM OF CONTRACT: The initial term of the contract shall be for two years from the date approved by the Energy Improvement District with an automatic renewal option of an additional three (3) one (1) year periods, giving a total contract term of five (5) years. The contract shall be renewable by mutual consent, on a mutually agreed basis. The contract may be terminated by either party by giving the other party written notice of such intent not less than thirty (30) days prior to the effective date of the termination. City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 16 of 19 11.) ANTICIPATED PROJECT TIMELINE: subject to change Wg Deg °a� Wednesday, June 04, 2014 N/A Advertisement of RFP Before Friday, June 27, 2014 2:00:00 PM, Deadline to submit sealed Proposals local time Energy Improvement District Board Meeting to TBD 5:30 PM Review and Score Proposals TBD TBD Interviews with Short Listed Firms (if applicable) Monday, September 08, Energy improvement District Board Meeting to 5:30 PMConsider 2014 Contract City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 17 of 19 City of Fayetteville RFP 14-10, Property Assessed Clean Energy (PACE) Administrator SECTION E: Signature Submittal 1. DISCLOSURE INFORMATION Proposer must disclose any possible conflict of interest with the City of Fayetteville and PACE District, including, but not limited to, any relationship with any City of Fayetteville employee or PACE District Board Member. Proposer response shall disclose if a known relationship exists between any principal or employee of your firm and any City of Fayetteville employee, elected City of Fayetteville official, or PACE District Board Member. If, to your knowledge, no relationship exists, this should also be stated in your response. Failure to disclose such a relationship may result in cancellation of a purchase and/or contract as a result of your response. This form must be completed and returned in order for your bid/proposal to be eligible for consideration. PLEASE CHECK ONE OF THE FOLLOWING TWO OPTIONS, AS IT APPROPRIATELY APPLIES TO YOUR FIRM: 1) NO KNOWN RELATIONSHIP EXISTS 2) RELATIONSHIP EXISTS (Please explain): I certify that; as an officer of this organization, or per the attached letter of authorization, am duly authorized to certify the information provided herein are accurate and true; and my organization shall comply with all State and Federal Equal Opportunity and Non -Discrimination requirements and conditions of employment. 2. PRIMARY CONTACT INFORMATION At the discretion of the City or PACE District, one or more firms may be asked for more detailed information before final ranking of the firms, which may also include oral interviews. NOTE: Each Proposer shall submit to the City a primary contact name, e-mail address, and phone number (preferably a cell phone number) where the City selection committee or PACE District Board can call for clarification or interview via telephone. Corporate Name of Firm: Primary Contact: Phone#1 (cell preferred): E-Mail Address: 3. ACKNOWLEDGEMENT OF ADDENDA Title of Primary Contact: Phone#2: Acknowledge receipt of addenda for this invitation to bid, request for proposal, or request for qualification by signing and dating below. All addendums are hereby made a part of the bid or RFP documents to the same extent as though it were originally included therein. Proposers/Bidders should indicate their receipt of same in the appropriate blank listed herein. Failure to do so may subject vendor to disqualification. City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 18 of 19 ADDENDUM NO. SIGNATURE AND PRINTED NAME DATE ACKNOWLEDGED 4. PRICING: Pricing shall be attached as a separate form. Reference Section 6, Submittal Requirements for details on what all pricing shall include. 5. DEBARMENT CERTIFICATION: As an interested party on this project, you are required to provide debarment/suspension certification indicating in compliance with the below Federal Executive Order. Certification can be done by completing and signing this form. Federal Executive Order (E.O.) 12549 "Debarment and Suspension" requires that all contractors receiving individual awards, using federal funds, and all sub -recipients certify that the organization and its principals are not debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded by any Federal department or agency from doing business with the Federal Government. Signature certifies that neither you nor your principal is presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation in this transaction by any federal department or agency. Questions regarding this form should be directed to the City of Fayetteville Purchasing Division. NAME OF COMPANY: PHYSICAL ADDRESS: MAILING ADDRESS: PRINTED NAME: PHONE: FAX: E-MAIL: SIGNATURE: TITLE: DATE: City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 19 of 19 ORDINANCE NO.5624 AN ORDINANCE CREATING A PROPERTY ASSESSED ENERGY IMPROVEMENT DISTRICT COEXTENSIVE WITH THE CITY OF FAYETTEVILLE NAMED "ENERGY IMPROVEMENT DISTRICT NO. I" TO FACILITATE A PACE PROGRAM AND ADOPTING CERTAIN PROVISIONS RELATED THERETO WHEREAS, pursuant to the authority granted by Arkansas Code Annotated § 8-15-101 et seq. (the "Property Assessed Clean Energy Act"), the City of Fayetteville may create a Property Assessed Energy Improvement District, either solely or in combination with one or more other governmental entities; and WHEREAS, such a district, once created, has independent legal and financial authority, including the authority to issue bonds; and WHEREAS, such districts were authorized to permit the creation and implementation of, among other things, a property assessed clean energy (PACE) program under which a real property owner may finance an energy efficiency improvement, a renewable energy project, or a water conservation improvement for their property on a voluntary basis, with loan repayment tied to collection of real property taxes, NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby enacts ARTICLE XXVI ENERGY IMPROVEMENT DISTRICT NO. I to the Code of Fayetteville, which shall read as follows: "ARTICLE XXVI ENERGY IMPROVEMENT DISTRICT NO. I 33.380 Establishment and Purpose There is hereby created an Energy Improvement District No. I which territorial jurisdiction shall be coextensive with the City of Fayetteville and the territory of any other agreeing and participating governmental entity that may hereafter join. Energy Improvement District No. I shall exercise such authority and power as granted by the Property Assessed Clean Energy Act, Ark. Code Ann. § 8-15-101, et seq. within the boundaries of the District. Page 2 Ordinance No. 5624 33381 Board of Directors, Membership, Terms of Office (A) Energy Improvement District No. i shall be governed by a Board of Directors consisting of seven (7) members. One member shall be the Mayor or the Mayor's designee. Should the Mayor designate a member, said member shall serve at the pleasure of the Mayor. The remaining six (6) members shall be qualified electors of the District chosen by the Fayetteville City Council, each to serve a term of two (2) years. In making its Board appointments, the City Council shall give due consideration to candidates with connections to or relations with local utility companies, lending or bonding institutions and the advanced energy industry. City Council appointed members shall be subject to the term limit provisions of Section 33.329(B). (B) Should additional governmental entities enter into an agreement with the City of Fayetteville for participation in and addition to Energy Improvement District No. 1, the composition and terms of members of the Board of Directors shall be as agreed between the City of Fayetteville and other participating and agreeing governmental entities. 33.382 Legal and Financial Independence In the operation of its business, Energy Improvement District No. 1 is legally and financially independent of the City of Fayetteville. No debt entered into by the District shall ever be construed as an obligation of the City of Fayetteville or of any other governmental entity which may participate in the District." PASSED and APPROVED this 15th day of October, 2013 APPROVED: ATTEST: By: �(� e:�- .G SONDRA E. SMITH, City Clerk/Treasurer ,G�EFtK .. c Y 0�:4sG'� z' FA YF77,,V1t L City of Fayetteville Staff Review Form Peter Nierengarten Submitted By City Council Agenda ]Items and Contracts, Leases or Agreements 10/15/2013 City Council Meeting Date Agenda Items Only Sustainability & Strategic Planning Division Department Action i ordinance that creates an Energy Improvement District for the City of Fayetteville that manages innovative ancing programs for renewable energy, energy efficiency and water conservation improvements on residential, mmercial, industrial and other real properties at the request of the owner. This finiancing program includes property sessed clean energy (PACE) as a finiancing option. NIA Cost of this request NIA Account Number NIA Project Number Budgeted Item NIA Category / Project Budget NIA Funds Used to Date N/A Remaining Balance Budget Adjustment Attached NIA Program Category / Project Name NIA Program I Project Category Name NIA Fund Name 13 Previous Ordinance or Resolution # Date Date Finance and Internal Services Director Date Date Ap / -2 D to Original Contract Dale: Original Contract Number: Received in City Clerk's Office J L E Received in -p J Mayor's Office Revised January 15, 2009 ORDINANCE NO. AN ORDINANCE CREATING A PROPERTY ASSESSED ENERGY IMPROVEMENT DISTRICT COEXTENSIVE WITH THE CITY OF FAYETTEVILLE NAMED "ENERGY IMPROVEMENT DISTRICT NO. 1" TO FACILITATE A PACE PROGRAM AND ADOPTING CERTAIN PROVISIONS RELATED THERETO WHEREAS, pursuant to the authority granted by Arkansas Code Annotated § 8-15-101 et seq. (the "Property Assessed Clean Energy Act"), the City of Fayetteville may create a Property Assessed Energy Improvement District, either solely or in combination with one or more other governmental entities; and WHEREAS, such a district, once created, has independent legal and financial authority, including the authority to issue bonds; and WHEREAS, such districts were authorized to permit the creation and implementation of, among other things, a property assessed clean energy (PACE) program under which a real property owner may finance an energy efficiency improvement, a renewable energy project, or a water conservation improvement for their property on a voluntary basis, with loan repayment tied to collection of real property taxes, NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby enacts ARTICLE XXVI ENERGY IMPROVEMENT DISTRICT NO. 1 to the Code of Fayetteville, which shall read as follows: "ARTICLE XXVI ENERGY IMPROVEMENT DISTRICT NO. 1 33.380 Establishment and Purpose There is hereby created an Energy Improvement District No. 1 which territorial jurisdiction shall be coextensive with the City of Fayetteville and the territory of any other agreeing and participating governmental entity that may hereafter join. Energy Improvement District No. 1 shall exercise such authority and power as granted by the Property Assessed Clean Energy Act, Ark. Code Ann. § 8-15-101, et seq. within the boundaries of the District. 33.381 Board of Directors, Membership, Terms of Office (A) Energy Improvement District No. 1 shall be governed by a Board of Directors consisting of seven (7) members. One member shall be the Mayor or the Mayor's designee. Should the Mayor designate a member, said member shall serve at the pleasure of the Mayor. The remaining six (6) members shall be qualified electors of the District chosen by the Fayetteville City Council, each to serve a term of two (2) years. In making its Board appointments, the City Council shall give due consideration to candidates with connections to or relations with local utility companies, lending or bonding institutions and the advanced energy industry. City Council appointed members shall be subject to the term limit provisions of Section 33.329(B). (B) Should additional governmental entities enter into an agreement with the City of Fayetteville for participation in and addition to Energy Improvement District No. 1, the composition and terms of members of the Board of Directors shall be as agreed between the City of Fayetteville and other participating and agreeing governmental entities. 33.382 Legal and Financial Independence In the operation of its business, Energy Improvement District No. 1 is legally and financially independent of the City of Fayetteville. No debt entered into by the District shall ever be construed as an obligation of the City of Fayetteville or of any other governmental entity which may participate in the District." PASSED and APPROVED this 15a' day of October, 2013. APPROVED: ATTEST: By: By: LIONELD JORDAN, Mayor SONDRA E. SMITH, City Clerk/Treasurer • THE CITY OF FAYT ENTCO, ARKAN5A5 DEPARTMENT CORRESPONDENCE ARKANSAS CITY COUNCIL AGENDA MEMO To: Mayor Lioneld Jordan Thru: Don Marr, Chief of Staff From: Peter Nierengarten, Sustainability & Strategic Planning Director Date: September 25, 2013 Subject: Fayetteville Energy Improvement District RECOMMENDATION Staff recommends adoption of an ordinance that creates an Energy Improvement District for the City of Fayetteville that manages innovative financing programs for renewable energy, energy efficiency and water conservation improvements on residential, commercial, industrial and other real properties at the request of the owner. This financing program includes property assessed clean energy (PACE) as a financing option. 1ACKGROUND PACE is a creative financing mechanism that allows property owners to borrow money for weatherization, energy efficiency, renewable energy or water conservation improvements to their property. The security of tying the repayment of loans to property tax assessments combined with low default rates allow PACE to offer very low and extremely attractive interest rates for these improvement loans. PACE is a completely voluntary program that enables private investment for the purpose of energy savings. PACE enabling legislation was passed by the Arkansas Legislature in the 2013 session and signed by the Governor in April 2013. That legislation allows Cities, Counties or the State to create Energy Improvement Districts within the State of Arkansas. The Arkansas Legislature noted that Energy Improvement Districts would benefit Arkansas by; • Creating jobs and stimulating the economy • Generating significant economic development • Protecting citizens from the rising cost of electricity and non-renewable fuels • Providing citizens with options for financing improvements that are otherwise not available • Providing a positive cash flow on energy improvements • Increasing the value of real property • Improving the state's air quality and conserving natural resources • Promoting energy independence and security for the nation and state ENERGY IMPROVEMENT DISTRICT The Energy Improvement District should manage innovative financing programs for renewable energy, energy efficiency and water conservation improvements on residential, commercial, industrial and other real properties at the request of the owner. This financing program includes property assessed clean energy (PACE) as a financing option. According to Arkansas' PACE enabling legislation the district should be managed and controlled by a board of directors. The board should be composed of a minimum of seven directors and should at a minimum meet quarterly. The board must THE CITY OF FAYETfEVILLE, ARKANSAS have one member appointed by the Mayor. Staff recommends that the remaining six at -large members be appointed by the City Council and be made up of representatives of local utility companies, lending or bonding institutions and the advanced energy industry. The district board will establish procedures by which they will operate and may work with a third -party administrator to create program guidelines. The board should have all other powers and duties granted in Arkansas' PACE enabling legislation and should meet annual reporting requirements. DISCUSSION Staff recommends that the Energy Improvement District develop a third party administered program that manages innovative financing for renewable energy, energy efficiency and water conservation projects in the City of Fayetteville. This program could manage multiple types of renewable energy, energy efficiency and water conservation financing mechanisms including PACE, and would allow flexible financing options for the greatest number of improvement projects in Fayetteville: Third party administration of the program provides a replicable model for other municipalities in Arkansas and the most long-term sustainable financing program for Fayetteville due to the reduced municipal program development and operational cost and the reduced workload for City Staff in managing the program. Steps necessary for the Energy Imrovement District Board to implement a third party administrated program include: 1. Advertise a Request for Proposals (RFP) for third party program development and administration of the Energy Improvement District. 2. District board evaluates RFP's and selects the program administrator. 3. Work with selected program administrator to create clean energy, energy efficiency and water conservation financing programs, which would include PACE as a financing option. BUDGET EVWACT Under this recommended program there is no budget impact to establish the Energy Improvement District. aa0a PACE ARKANSAS INITIATIVE [SB 6401 What is PACE? A Property Assessed Clean Energy (PACE) bond or lien is a debt device where proceeds are lent to interested property owners to finance energy efficiency improvements, water conservation improvements, and renewable energy projects that reduce their energy costs. Why do Arkansans need access to PACE loans? • Property owners can finance for up to 20 years the costs of energy and water efficiency improvements and renewable energy projects. There are no upfront costs. Energy cost savings from PACE -eligible improvements exceed the loan payments which are assessed annually on the property owner's property tax bill. For business owners, this means that PACE improvements increase their company's cash flow. • Cities, counties, and even the state have the opportunity to create jobs with no added credit risk. • PACE improvements increase property values. How does a PACE program work? • PACE legislation authorizes voluntary creation of energy improvement districts which will be certified to issue general revenue bonds. Proceeds from these bonds will fund loans to interested property owners for energy efficiency improvements, water conservation improvements, and renewable energy projects. • Energy Improvement Districts may consist of individual cities and counties, or a combination of the various jurisdictions. A district could be organized statewide. • PACE program assessments only affect property owners who obtain loans for energy improvements. Loans or liens stay attached to the property until the loan/lien is repaid. • Energy and water improvement work must be performed by qualified and certified providers thus protecting property owners and PACE districts. Why, does the AREA endorse the PACE Initiative? • An effective PACE program can be an economic boost for the entire state. PACE will reduce energy costs for participating consumers and create jobs in the energy efficiency and renewable energy sectors. March 2013 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Stricken language would be deleted from and underlined language would be added to present law. Act 1074 of the Regular Session State of Arkansas As Engrossed: S3/5/13 S3114 13 53120113 89th General Assembly A Bill Regular Session, 2013 SENATE BILL 640 By: Senators D. Johnson, J. Woods By: Representatives Leding, Barnett, C. Armstrong, Hawthorne, McGill, B. Overbey, T. Thompson, Sabin; D. Whitaker For An Act To Be Entitled AN ACT TO CREATE JOBS, RETAIN WEALTH, AND GROW ARKANSAS'S ECONOMY BY ENABLING PROPERTY ASSESSED CLEAN ENERGY FINANCING; TO AUTHORIZE THE ESTABLISHMENT OF ENERGY IMPROVEMENT DISTRICTS TO FUND LOANS FOR ENERGY EFFICIENCY IMPROVEMENTS, RENEWABLE ENERGY PROJECTS, AND WATER CONSERVATION IMPROVEMENTS; AND FOR OTHER PURPOSES. Subtitle TO AUTHORIZE THE ESTABLISHMENT OF ENERGY IMPROVEMENT DISTRICTS TO FUND LOANS FOR ENERGY EFFICIENCY IMPROVEMENTS, RENEWABLE ENERGY PROJECTS, AND WATER CONSERVATION IMPROVEMENTS. BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: SECTION 1. Arkansas Title 8 is amended to add a new chapter to read as follows: Chapter 15 — Energy Efficient Facilities 8-15-101. Title. This chapter shall be known and -may be cited as the "Property"Propercy Assessed Clean„ Energy „Act". 02-28-2013 13:08:57 ,1LL152 As Engrossed: S315113 S3114/13 S3120113 SB640 1 8-15-102. Definitions. 2 As used in this chapter: 3 (1)(A) 'Bond" means a revenue bond or note issued under this 4 chapter. 5 (B) "Bond" includes -any -other financial obligation 6 authorized by this chapter, the laws of this state, or the Arkansas 7 Constitution; 8 (2) "District" means a property assessed energy improvement 9 district established in this state by law for the express purpose of managing 10 the PACE program; 11 (3) "Governmental entity" means a municipality, county, 12 combination of cities or counties or both, or statewide district; 13 4 "Owner" means an individualpartnership, association 14 corporation, or other legal entity that is recognized by law and has title or 15 interest in any real property; 16 (5) "PACE program" means a property assessed clean energy 17 program under which a real property owner can finance an energy efficiency 18 improvement, a renewable energy project, and a water conservation improvement 19 on the__real property; and 20 (6) "Person" means an individual., partnership, association, 21 corporation, or other legal entity recognized by law as having the Dower to 22 contract. 24 8-15-103. Legislative findings. 25 The General Assembly finds that: 26 (j)_ It is in the best interests of the state to authorize 27 districts that make available to citizens one (1) or more „financing programs, 28 including without limitation a PACEprogram, to fund energy efficiency 29 improvements, renewable energy ro'ects and water conservation improvements 30 on residential,_ commercial, industrial, and other real properties at the 31 request of the owner; 32 2 The programs described in subdivision 1 of this section 33 will benefit the citizens of this state by: 34 A Decreasing the cost of providing funds to 35 participating citizens and lowering the aggregate issuance and servicing 36 costs of loans; and 2 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5113 S3/14/13 53/20/13 SB640 1 B Making funds available to rural communities throughout 2 the state that might not otherwise create and finance the programs described 3 in subdivision (1) of this section; and 4 (3) The programs described in subdivision (1) of this section 5 will further the public purpose of: 6 (A) Creating jobs and stimulating the state's economy; 7 B Generating significant economic development through 8 the investment of -the -proceeds of loans in local, communities including 9 increasedsales_ tax revenue 10 (C) Protecting participating citizens from the financial 11 impact of the rising cost of electricity produced from nonrenewable fuels; 12 (D) Providing positive cash flow in which the costs of the 13 im rovements are lower than the energy savings on an average monthly basis; 14 (E) Providing the citizens of this state with informed 15 choices and additional options for financing improvements_thatmay not 16 otherwise be available; 17 (F) Increasing the value of the improved real property for 18 participating citizens; 19 (G) Improving the state's air quality and conserving 20 natural resources, including water; 21 (H) Attracting manufacturing facilities and related jobs 22 to the state; and - 23 (1) Promoting energy independence and security for the 24 state and the nation. 25 26 8-15-104. Immunity. 27 (a) The powers and duties of a district conferred by this chapter are 28 public and governmental functions exercised for a public purpose _and for 29 matters of public necessity. 30 (b) The district and its personnel are immune from suit in tort for 31 the performance of its duties under this chapter unless immunity from tort is 32 expressly waived in writing. 33 34 8-15-105. Authority to create. 35 (a) A governmental entity legally authorized to issue general revenue 36 bonds may create a district b_yadoption of an ordinance. 3 02-28-2013 13:08:57 JLL152 As Engrossed: S315113 S3114113 S3120113 SB640 1 b A combination of governmental entities may create a district b 2 each governmentalentity: 3 (1) Adopting an ordinance that -provides for the governmental 4 entity's participation in the district; and 5 (2) Entering into a joint agreement with one (1) or more other 6 participating governmental entities._ 7 (c) This section shall not limit additional governmental entities from 8 becoming members of the district under § 8-115-106. 9 10 8-15-106. Membership in an existing district. 11 (a) To become a member of an existing district, the governing body of 12 a governmental entity shall:_ 13 (1) Adopt an ordinance that provides for the participation of 14 the governmental entity in the district; and 15 (2) Enter into an agreement with the other participating members 16 of the district. 17 (b) The agreement between members of a district shall establish the 18 terms and conditions of the operation of the district with the limitations 19 provided in this chapter. 20 21 8-15-107. Board of directors. 22 a A district created under this chapter shall be operated and 23 controlled by a board of directors. 24 (b) The board of directors shall manage and control each district, 25 including without limitation the operations, business, and affairs of the 26 district. 27 (c) The board of directors shall be solely responsible for selecting 28 the chair of the board of directors and establishing the procedures by which 29 the board of directors shall operate. 30 (d) A director shall not receive compensation in any form for his or 31 her services as a director. 32 (e) Each director shall be entitled to reimbursement by the district 33 for any necessary expenditures incurred in connection with the performance of 34 his or her general duties as a director. 35 36 8-15-108. Membership on the board of directors, 4 02-28-2013 13:08:57 JLL152 As Engrossed: S315113 S3114113 S3120113 SB640 1 (a) The board of directors of a district shall consist of at least 2 seven (7) directors. 3 (b) The board of directors shall include: 4 (1) For a statewide district, the members specified in the 5 agreement establishing the district; 6 (2) For a district composed of a combination of one (1) or more 7 counties and one (1) or more cities: 8 (A) The county judge or his or her designated 9 representative of each county that is a member of the district; 10 B The mayor or his or her designated representative of 11 each city that is a member of the district; and 12 C if the number of directors is fewer than seven 7 13 after fulfilling the requirements of subdivisions (b)(2_)_(A) and (B) of this 14 section, additional members shall be appointed as specified in the agreement 15 establishing the district until a totalof seven (7) directors has been 16 appointed; 17 (3) For a district composed of one (1) or more counties: 18 (A) The county judge or his or her designated 19 representative of each county that is a member of the district; and 20 (B) if the number of directors is fewer than seven (7) 21 after fulfilling the requirements of subdivision (b)(3)(A) of this section, 22 additional members shall be appointed as specified in the agreement 23 establishing the district until a total of seven (7) directors has been 24 appointed; and 25 (4) For a district composed of one (1) or more cities: 26 (A) The mayor or his or her designated representative of 27 each city that is a member of the district; and 28 (B) if the number of directors is fewer than seven (7) 29 after fulfillin¢,the requirements of subdivision (b)(4)(A) of this section, 30 additional members shall be appointed as specified in the agreement 31 establishing the district until a total of Seven (7) directors has been 32 appointed. 33 (c)_ The designated representative of a county judge or_mayor under 34 subsection (b) of this section shall be a qualified elector of the 35 iurisdiction that the designated representative is aDvointed to revresent. 36 5 02-28-2013 13:08:57 JLL152 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 As Engrossed: 5315113 53114/13 53120J13 SB640 8-15-109. Terms of directors. (a)A director who is a public official may serve on the board of directors of a district duringhis. or her term of office as the county judge or mayor of a member of a district. (b) A director who is the designated representative of_the _mayor or county judge of a member of the district serves at the pleasure of the mayor of the city or the count ud a of the county that is a member of the district. 8-15-110. District boards of directors — Meetings. (a) The board of directors of a district shall hold quarterly meetings and special meetings, as needed in the courthouse or other location within the district. (b) The time and place of the quarterly meetings shall he on file in the office of the district board of directors. 8-15-111. District boards of directors — Powers and duties. (a) The board of directors of a district may: (1) Issue revenue bonds on behalf of the district; (2) Make and adopt all necessary bylaws for its organization and operation• (3) Elect officers and employ personnel necessary for its operation; . (4) Operate, maintain, expand, and fund a PACE proiect; (5) Apply for, receive, and spend grants for any purpose under this chapter; (6) Enter into agreements and contracts on behalf of the district; (7) Receive R roperty or funds by gift or donation for the finance and support of the district; (8) Reimburse a governmental entity for expenses incurred in performing a service for the district; (9) Assign assessments to a private lending institution; and (10) Do all things necessary or appropriate to carry out the powers expressly ranted or duties expressly imposed under this chapter. (b) The board of directors shall: 6 02-28-2013 13:08:57 JLL152 As Engrossed: S315113 S3114113 S3J20/13 SB640 1 (1) Allow a commission of: 2 (A) One and five -tenths percent (1.5%) for the extension 3 of district assessments by the county assessor or county clerk; 4 �B) One and five -tenths percent (1.57.) for the collection 5 of district assessments by the county collector; and 6 (C) One -eighth percent (0.125%)_for services of a county 7 treasurer in disbursing the moneys collected for district assessments; and 8 (2) Adopt rules consistent with this chapter_ or with other 9 legislation that in its iudgment may be necessary for the property 10 enforcement of this chapter. 11 12 8-15-112. Reporting requirement — Collection of assessments. 13 (a)(1)(A) By March 1 of each year or -upon the creation of a district 14 that uses or intends to use the county collector for collection of district 15 assessments shall file an annual report with the county clerk in any county 16 in which a portion of the district is located. 17 (B) The annual report required under this section shall be 18 available for inspection and copying by assessed landowners in_the district. 19 (C) The county clerk shall not charge any costs or fees 20 for filing the annual report required under this section. 21 (D) The district shall deliver a filed copy of the annual 22 report required under this section to the countycollector within five (5) 23 days of filing. 24 (2) The annual report required under this section shall contain 25 the following information as of December 31 of the current calendar year.: 26 A A list of contracts,__identity of the parties to the 27 contracts, and obligations of the district; 28 �B) Any indebtedness, including bonded indebtedness, and 29 the reason for the indebtedness, including the following: 30 (i) The stated payout or maturity date of the 31 indebtedness, if any; and 32 ii The total existing delinquent assessments and 33 the party responsible for the collection; 34 (C) Identification of each member of the board of 35 directors of the district and each member's contact information; 36 (D) The date, time, and location for any scheduled meeting 7 02-28-2013 13:08:57 JLL152 As Engrossed: 53/5/13 S3/14113 S3/20/13 SB640 1 of the district for the following year; 2 (E) .The contact information for the district assessor; 3 (F) Information concerning to whom the county treasurer is 4 to pay district assessments; 5 (G) An explanation of the applicable statutory penalties, 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 interest, and costs; (H)__ The method used to compute district assessments; and (I) A statement itemizing the income and expenditures of the district, including a statement of fund and account activity for the district. (b)(1) A district that does not comply with subsection (a) of this section commits a violation punishable by a fine of not less than one hundred dollars ($100)nor more than one thousand dollars ($1,000) for each offense. (2) A fine recovered under subdivision (b)(1),of this section shall be deposited into the county clerk's cost fund. (c)(1) On or before December 31, the district shall file its list of special assessments for the following calendar year with the county clerk. (2)(A) After filing the list of special assessments under subdivision (c)(1) of this section the district shall deliver a copy of the filed list of special assessments to the preparel of the tax books. (B) If the county collector is not the designated preparer of_the _tax books, the district shall deliver a copy of the filed list of special assessments to the county collector. (3) The list of special assessments required under subdivision (c)(1) of this section shall contain: (A) A list of each parcel with an assessment levied against it within the district; and S The contact information_ for the district assessor. (4) The list of special assessments required under subdivision (c)(ll_o_f_this section shall not include assessments on parcels that otherwise would not apRear on the tax books for the following year. (5) After the December 31 deadline to file the list of special assessments required under subdivision c 1 of this section the count collector may reject an assessment submitted by the district for inclusion in the list of special assessments. (d)(1) After the district files the list of special assessments 8 02-28-2013 13:08:57 JLL152 As Engrossed: S315113 S3J14113 S3120/13 SB640 1 required under_ subsection (c), the county_ collector shall collect the 2 assessments at the same time the county collector collects the other taxes on 3 the property. 4 (2) The county collector shall pay the funds collected under 5 subdivision (d)(1) of this section to the county treasurer at the same time 6 that the county collector nays all other taxes to the county treasurer. 7 (32 The county treasurer shall distribute the funds received 8 under subdivision (d)(2) of this section to the district In the same manner 9 as he or she distz-ibutes funds to other tax entities. 10 11 8-15-113. Financing projects. 12 (a) ^A district may establish a PACE program to provide loans for the 13 initial acquisition and installation of energy efficiency improvements, 14 renewable energy projects, and water conservation improvements with 15 consenting real property owners of existing real property and new 16 construction. 17 (b)(1) The district may authorize by resolution the issuance of bonds 18 or the execution of a contract with a governmental entity or a private entity 19 to provide the loans under subsection (a) of this section. 20 (2) The resolution shall include without limitation the 21 following: 22 (A) The type__of renewable_ energy project, water 23 conservation_ improvement, or energy -efficiency improvement for which the loan 24 may be offeredf 25 (B) The proposed arrangement for the loan program, 26 including without limitation: 27 i A statement concerning the source of funding 28 that will be used to Ray for work -performed under the loan contract; 29 (ii) The interest rate and time period during which 30 contracting__real property owners would repay the loan; and 31 (iii) The method of apportioning all or any portion 32 ofthe _costs _incidental to the financing, administration, and collection of 33 the arrangement among the consenting real property owners and the 34 governmental entity; 35 (C) A minimum and maximum aggregate dollar amount that may 36 be financed 12er i2ropert 9 02-28-2013 13:08:57 JLL152 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 As Engrossed: S315113 S3J14113 S3120113 SB640 (D)(i) _A_method for prioritizing requests from real property owners for financing if the requests appear likely to exceed the authorization amount of the loan program. (ii) Priority shall be given to those requests from real property owners that meet the eligibility requirements on a first come, first served basis. (E) Identification ofalocal official authorized to enter into loan contracts on behalf of the district; and (F) A draft contract specifying the terms and conditions ro osed by the distract. (c)(1) The district may combine the loan payment required by the Joan contract with the billing for the real property tax assessment for the real property where the renewable energy project, water conservation improvement, or the energy efficiency improvement is installed. (2) The -district -may establish the order in which a loan payment will be applied to the different charges. (3) The district may not combine the billing for a loan payment required by a_contract authorized under this section with a.billing of another.. county. or political subdivision unless the county or political subdivision has given its consent by a resolution or ordinance. (d �_ The district shall offer private lending institutions the opportunity to participate in local loan programs established under this section. (e)(1)(A) In order to secure a loan authorized under this section, the district may place a lien equal in_value_to the loan_aAainst any real property where the renewable energy project, water conservation improvement, or the energy efficiency improvement is installed. (B) The lien shall attach to the real property when it is filed in the county recorder's office for record. (2)_(A)(i) The priority of the lien created under this chapter is determined based on the date of filing of the lien. (,iiLExcept as -provided in subdivision (e)(2)(A)(iii) of this section, the priority of the lien shall be determined in the same manner as the priority for other real-groperty tax and assessment liens. (iii) A lien created under this chapter shall be 10 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5/13 S3/14113 S3/20/13 SB640 1 subordinate to any real or personal property tax liens. 2 iv A _district shall discharge the lien created 3 under this chapter upon full payment of the lien. 4 (B) If the real property is sold, the lien shall stay 5 attached to the real P operty, and the loan created under this chapter will 6 be owed by the new real property owner. 7 _LC) if the real property enters into default or 8 foreclosure; 9 (1) Payment of the assessment shall not be so,�ht 10 from a member of the district who does not own the real property that entered 11 into default or foreclosure; 12 (ii) Repayment of the assessment shall not be 13 accelerated automaticall • and 14 111 The balance of the assessment shall be repaid 15 according to the terms of the agreed -upon schedule. 16 3 The district may bundle or 2ackage the loans for transfer to 17 private lenders in _a manner that would allow the liens to remain in full 18 force to secure the loans. 19 f 1 Before the enactment of an ordinance under this section a 20 Rublic hearing shall be held at which interested persons may object to or 21 inquire about the proposed loan program or any of its particulars. 22 2 The public'hearing shall be advertised one 1 time per week 23 for two (2)__consecutive weeks in a newspaper of general circulation in the 24 district. 25 26 8-15-114. Program guidelines. 27 The board of directors together with any third -party administrator it 28 may select, shall determine: 29 _ (1) The guidelines of the PACE nrggram, including without 30 limitation that: 31 (A) The -base energy performance evaluation shall be 32 completed b a certified and qualified energy evaluation professional to 33 determine existing energy use and „options for improved energy efficiency; 34 (B.) The approved improvements create a,yositive cash flow; 35 (C2 Work shall be performed by gualified and certified 36 contractors_ in the field of energy efficiency and methods of renewable, energy 11 02-28-2013 13:08:57 JLL152 As Engrossed: S3/5/13 S3/14/13 S3/20/13 1 installation: SB640 2 (D) Performance testing and verification shall be 3 performed by a Qualified professional after the work is completed; 4 (E) Adequate consumer protections are in place; and 5 iF_ The applicable underwriting standards for the 6 participants in the program are established; 7 (2) The qualifications of the vendors performing installations 8 under this chapter; 9 3 The mechanisms bv which the district will remit the received 10 special assessment payments and any cost reimbursement; and 11 (4) Any other matters necessary to implement and administer the 12 PACE program. 13 14 8-15-115. Payment by special assessments. 15 The credit and taxing power of the State of Arkansas will not be 16 pledged for the debt _evidenced by the bonds,, which will be payable solely 17 from the revenues received from the special assessments on the participants, 18 zeal property under this chapter. 19 20 8-15-116. Bonds. 21 (a) A district may: 22 1 Issue bonds to provide the PACE program loans authorized b 23 this chapter; and 24 (2) Create a debt reserve fund of legally available moneys from 25 nonstate sources as partialsecurity for the bonds. 26 (b) Bonds issued under this chapter and income from the bonds, 27 including any profit made on the sale or transfer of the bonds, are exempt 28 from taxation in this state. 29 () Bonds issued under this chapter shall: 30 (1)(A) _ Be authorized by a resolution of the board of directors. 31 B The authorizing bond resolution may contain any terms 32 covenants and conditions that the board of directors deems to be reasonable 33 and desirable; and 34 (2) Have all of the qualities of and shall be deemed to be 35 negotiable instruments under the laws of the State of Arkansas. 36 12 02-28-2013 13:08:57 JLL152 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 As Engrossed: 5315/13 53/14/13 S3/20/13 SB640 8-15-117. Sale. The bonds -may be sold in such a manner, either, at public or private sale and upon such terms as the board of directors of a district shall determine to be reasonable and expedient for effectuating the purposes of this chapter. 8-15-118. Revolving fund. (a) A district may maintain a revolving fund to be held in trust by a banking institution chosen by the board of directors -separate from any other funds and administered by the board of directors, (b) A district may transfer into its revolving, fund money rom any permissible source, including: (1) Bond revenues; (2) Contributions; and (3) Loans_ 8-15-119. Notice to mortgage lender. At least thirty (30) days before the execution of an agreement with a district, an owner shall provide written notice to each mortgage lender holding a lien_on the owner's property of the owner's application to articipate_in a PACE program. Is/D. Johnson APPROVED: 0411112013 13 02-28-2013 13:08:57 JLL152 Ta;1i e ea Departmental Correspondence ARKANSASLEGAL • • DEPARTMENT Kit Williams City Attorney Jason B. Kelley Assistant City Attorney TO: MAYOR &CITY COUNCIL FROM: 3ASON KELLEY, ASST. CITY ATTORNEY THRU: KIT WILLIAMS, CITY ATTORNEY DATE: SEPTEMBER 30, 2013 RE: ENERGY IMPROVEMENT DISTRICTS/ PACE BONDS To my knowledge, Fayetteville is the first governmental entity to make use of the new Property Assessed Clean Energy Act. The Act authorizes the creation of "Energy Improvement Districts" which are independent legal entities (akin to other types of improvement districts in the City) authorized to create, finance and manage programs promoting renewable energy, energy efficiency and water conservation improvements on residential, commercial and industrial property. The districts have the authority to issue bonds, which are characterized in the enabling legislation as revenue bonds. These bonds would provide further funding for .vans to be made to individual property owners for purposes of financing energy improvements. Repayment of the loans is tied to the collection of real property taxes and is handled through the normal county property tax collection process. The enabling legislation is silent on the method of appointment of the board of directors when only one city is creating a district. The Act provides that when "a district is composed of one (1) or more cities ... members shall be appointed as specified in the agreement establishing the district[.]" Ark. Code Ann. § 8-15-108(b)(4). Obviously, when only one city is participating, there is no one else to enter an "agreement." The Act specifically states that these districts are created "by adoption of an ordinance" and not through an agreement. Ark. Code Ann. § 8-15-105(a). Thus, I have drafted this proposed ordinance to provide for appointment of members to the board of directors. However, the draft also provides that if another governmental entity desires to join, the makeup of the board would be as determined in the agreement between Fayetteville and the joining entity. It is my opinion that the provision in the draft ordinance clarifying and re- asserting the legal and financial independence of this District from the City is important due to the constitutional prohibition the City must follow restricting it from appropriating money or loaning credit for the benefit of any corporation or private individual. Ark. Const. Art. 12, § 5 & Art. 16, § 1. State created improvement districts have greater leeway in this area. See generally Fitzgerald v. Walker, 55 Ark. 148, 17 S.W. 702 (1891), Nakdimen v. Fort Smith & Van Buren Bridge Dist., 1 l5 Ark. 194, 172 S.W. 272 (1914), Ray v. City of Mountain Home, 228 Ark. 885, 311 S.W.2d 163 (1958); Bell v. Fulkerson, 291 Ark. 604, 727 S.W.2d 141 (1987). Protecting this legal distinction is important for the future viability of the potential future bonds, both for the District and for the City. eDepartmental Correspondence RKANSAS TO: Mayor Jordan Don Marr, Chief of Staff Paul Becker, Finance Director Peter Nierengarten, Sustainability & Strategic Planning FROM: Kit Williams, City Attorney DATE: January 28, 2013 _ RE: Energy Improvement Districts Bill Priority Status of Property Assessed Clean Energy Bonds Kit Williams City Attorney Jason B. Kelley Assistant City Attorney You asked me to answer Kenton Smith's e-mail questions about the draft ".1 establishing Property Assessed Clean Energy (PACE) bonds. §8-15-112 Financing projects (e) (2) (A) refers to the priority to be given to PACE bonds. "(2) (A(i) The priority of the lien created under this chapter is determined based on the date of filing of the lien. (ii) The priority of the lien shall be determined in the same —anne'r as the priority for other real property tax and assessment liens." This language is not perfectly clear. Priority for real estate taxes is very clear: "Taxes assessed upon real and personal property shall bind them and be entitled to preference over all judgments, executions, encumbrances, or liens whensoever created." A.C.A. §26-34-101 (a). Real estate taxes are owned to a governmental entity and will be paid during a sale or foreclosure BEFORE all other liens and mortgages. Will PACE bonds receive such preferential status? Not during a sale. !F As opposed to a tax lien, the lien supporting a PACE bond does not become fully due upon the sale, but transfers through the sale to remain a lien on the property to be paid by the purchaser (new owner). This appears to be the case upon default or foreclosure also. However, A.C.A. §80-50-108 Effect of sale in the Statutory Foreclosure subchapter states: "A sale made by a mortgagee or trustee shall foreclose and terminate all interest in the trust property of all persons to whom notice is given under § 18-50-104 ...." A.C.A. §18-50-104 requires that notice be given to "(a)ny person having a lien or interest subsequent to the interest of the mortgage or trustee ...." All such normal liens would be revoked and invalidated by the statutory foreclosure action in favor of a mortgage entered into prior to the filing of these other liens. Tax liens and apparently PACE bond liens will not be cut off, but will survive a statutory foreclosure sale. The tax lien would have to be paid off, while the PACE bond lien would simply still attach to the property and not be extinguished by the foreclosure of the property despite § 18-50-108 (a). This is further bolstered by the proposed §8-15-112 (e)(2)(B) & (E) subsections: "(B) If the real property is sold, the lien shall stay attached to the real property, and the loan created under this chapter will be owed by the new real property owner. (C) If the real property enters into default or foreclosure: (i) Repayment of the assessment shall not be accelerated automatically; and (ii) The balance of the assessment shall be repaid according to the terms of the agreed -upon schedule." CONCLUSION All this proposed language appears to give a qualified preference for PACE bond liens. I believe these liens will remain attached to the real property's title until they are fully paid. A sale, default, or statutory foreclosure does not require PACE bonds to be paid during these events (as taxes would be). However, it appears the PACE bonds will survive any of these events so that the new owner will still have to pay off the PACE bonds pursuant to the original terms of the bonds. 6 POSITIVE CASH FLOW A positive cash flow from sufficient savings of utility or other costs must be established by the PACE Board of Directors before bonds can be sold or funds loaned to a property owner desiring to use PACE funds for improved energy efficiency. §5-15-113 (1)(B). There is no definition of "positive cash flow" in the proposed statute nor any description or requirements about how to determine that a "Positive cash flow" would exist. Most of the "positive cash flow" analysis will be determined by how long the payback period would be (10 years to 30 years?) and what percentage will be applied to repay the loan. If a thirty year payback period at a very low interest rate is used (as was for our new Energy Efficiency Code requirements), a "positive cash flow" could likely be achieved. More realistic assumptions would make a positive cash flow determination less likely to be achieved. We also remain concerned that a PACE program established under this statute by City Ordinance should not be allowed to run afoul of Article 16 § 1 of the Arkansas Constitution: "Neither the State nor any city ... shall ever lend its credit for any purpose whatsoever, nor shall any county, city or town or municipality ever issue any interest bearing evidences of indebtedness ...." The proposed statute does not appear to violate Article 16 § 1 of the Constitution. However, the PACE District Board of Directors is authorized to issue bonds whose "resolution may contain any terms, covenants, and conditions that the board of directors deem reasonable and desirable." {§8-15-115 (c)(1)) Such terms and conditions must not pledge tax revenue, nor any revenue not derived from repayment of bonds, non -city "contributions" or bond revenue. 3 aaea ARKANSAS ADVANCED ENLkGY ASSOCIATION October 7, 2013 Mayor and City Council Members City of Fayetteville 113 W. Mountain Fayetteville, AR 72701 RE: Proposed Ordinance to Create an Energy Improvement District Ladies and Gentlemen, On behalf of the Arkansas Advanced Energy Association (AREA),1 want to express our strong support for your adoption of the proposed ordinance that would create an energy improvement district under terms of the Arkansas Property Assessed Clean Energy Act. This is an exciting opportunity for the City of Fayetteville to become the first local jurisdiction to take advantage of enabling legislation adopted by the Arkansas General Assembly this year that creates a voluntary financing option for energy improvements to reduce energy costs for commercial property owners and ignite job expansion in the advanced energy sector. As a strong advocate for adoption of the PACE Act by the General Assembly, AAEA consulted a list of key stakeholders to incorporate their concerns and best practices into the Arkansas law. These included the Association of Arkansas Counties, Arkansas Municipal League, Arkansas County Collectors Association, Arkansas Bankers Association and Arkansas Association of General Contractors. This resulted in a well -crafted document that protects cities and counties from credit risk while giving them the local option to enable private investment in energy savings that create jobs and increase cash flow for property owners. Eligible projects under the Arkansas PACE law include energy efficiency, renewable energy and water conservation. Since the first PACE financing mechanism was enacted by the State of California in 2008, 30 states have adopted PACE -enabling legislation with 24 having actually launched programs. AAEA continues to monitor and analyze these programs to create a catalogue of best practices and case studies from participating regions that demonstrate clear advantages for communities, commercial property owners and the energy savings industry. Here are just some of the conclusions we can draw: Arkansas Advanced Energy Association • www.arkansasadvancedenergy.com info@arkansasadvancedenergy.com • (501) 537-0190 • Interest rates on PACE loans that account for 100 percent of the project cost are averaging between 4.75% and 7% across the country; • Size of projects range from around $20,000 for a small business to millions of dollars for large properties like shopping centers or office complexes; • Business owners are increasing their company's cash flow enabling them to retain jobs and become more competitive in the marketplace; • Existing mortgage lenders support projects that meet their clients objectives and increase value of their collateral; • Energy service contractors are generating new sales as a result of PACE programs; • .Local governments like PACE because it creates jobs, generates economic activity with no added credit risk; • Private market investors like PACE because assessment liens are a proven, strong credit. PACE addresses one of the largest barriers to energy savings retrofits — up front financing and short-term loans. In testimony before legislative committees during General Assembly consideration of PACE earlier this year, AAEA energy savings company C 1.09 rstimated potential job growth for their companies at 30 percent once PACE is deployed in their respective regions. Thank you for the opportunity to comment on the Fayetteville City Council's consideration of the proposed ordinance to create the state's first Energy Improvement District. The City of Fayetteville has previously established an exemplary record of promoting sustainable building practices. Adding property assessed clean energy financing to the mix, will unleash the transformational economic power of a vigorous energy savings program for existing buildings throughout your community. Sincerely, Steve Patterson Executive Director Arkansas Advanced Energy Association • www.arkansasadvancedenergy.com info@orkonsasadvancedenergy.com 9 (501) 537-0190 Io j !3 Washington County Assessors Office 2M N. Co➢w Suite # 250, FayettevMce AR 72701 Phone: (479)444-1500, Far (479)4441518 October 10". 2013 The Honorable Mayor and City Council Members City of Fayetteville, Arkansas The Washington County Assessor's Office looks forward to working with the Fayetteville Energy Improvement District on the establishment of and implementation of the energy improvement district in the City of Fayetteville. The responsibilities of the Washington County Assessor's Office as outlined in A.C.A. § 8- 1a-101 et seq. (the "Property Assessed Clean Energy Act") are easily implemented and would not create any additional burden on my offices operations. In fact as an advocate, from the beginning, of this legislation I look for the creation of the district. Sincerely, PL-A--I�� Jeff Williams Washington County Assessor rC—EAA lkWE IA.AO •' cavm�c�a a rncn�aci rx wssgaMorrao�a�nsny mn Appendix III - Response of A2E2 to RFP 10-14 (including Appendices and Exhibits submitted therewith) City of Fayetteville, Arkansas Ile Purchasing Division — Room 306 1 PV 113 W. Mountain Tay IV%f T Fayetteville, AR 72701 A R K A N S A S Phone: 479.575.8220 TOO (Telecommunication Device for the Deaf]: 479.521.1316 RFP 14-10, Property Assessment Clean Energy (PACE) Administrator DEADLINE: Friday, June 27, 2014 before 2:00:00 PM, local time RFP DELIVERY LOCATION: Room 306 -113 W. Mountain, Fayetteville, AR 72701 PURCHASING AGENT: Andrea Foren, CPPO, CPPB, aforenn2fayetteville-ar.gov DATE OF ISSUE AND ADVERTISEMENT: Wednesday, June 04, 2014 REQUEST FOR PROPOSAL RFP 14-10 Propertv Assessment Clean Energy PACE Administrator No late proposals _shall be accepted. RFP's shall be submitted in sealed envelopes labeled with the project number and name as well as the name and address of the firm. All proposals shall be submitted in accordance with the attached City of Fayetteville specifications and bid documents attached hereto. Each Proposer is required to fill in every blank and shall supply all information requested; failure to do so may be used as basis of rejection. Any bid, proposal, or statements of qualification will be rejected that violates or conflicts with state, local, or federal laws, ordinances, or policies. The undersigned hereby offers to furnish & deliver the articles or services as specified, at the prices & terms stated herein, and in strict accordance with the specifications and general conditions of submitting, all of which are made a part of this offer. This offer is not subject to withdrawal unless upon mutual written agreement by the Proposer/Bidder and City Purchasing Agent. Name of Firm: llefKOAISAS Av✓A/✓CEb F_WX,PG Y EePo/ T Contact Person: P Vf- P;G'} Title: 9?e'&C'r,AA ` E-Mai1: ,kX041r44fA5ad✓4a et-demeCf F�pne: So/ -53 019D Business Address: 1 Z 4 W CAP /TOL p !4 a T _ City: L E7 State: l-Pl- Zip: Z Z40 Signature: Date: (0130114— City of Fayetteville, AR RFP 14-t0, Property Assessed Clean Energy (PACE) Administrator Page i of 19 City of Fayetteville RFP 14-10, Property Assessed Clean Energy (PACE) Administrator SECTION E: Signature Submittal 1. DISCLOSURE INFORMATION Proposer must disclose any possible conflict of interest with the City of Fayetteville and PACE District, including, but not limited to, any relationship with any City of Fayetteville employee or PACE District Board Member. Proposer response shall disclose if a known relationship exists between any principal or employee of your firm and any City of Fayetteville employee, elected City of Fayetteville official, or PACE District Board Member. If, to your knowledge, no relationship exists, this should also be stated in your response. Failure to disclose such a relationship may result in cancellation of a purchase and/or contract as a result of your response. This form must be completed and returned in order for your bid/proposal to be eligible for consideration. PLEASE CHECK ONE OF THE FOLLOWING TWO OPTIONS, AS IT APPROPRIATELY APPLIES TO YOUR FIRM: �1) NO KNOWN RELATIONSHIP EXISTS RELATIONSHIP EXISTS (Please explain): I certify that; as an officer of this organization, or per the attached letter of authorization, am duly authorized to certify the information provided herein are accurate and true; and my organization shall comply with all State and Federal Equal Opportunity and Non -Discrimination requirements and conditions of employment. 2. PRIMARY CONTACT INFORMATION At the discretion of the City or PACE District, one or more firms may be asked for more detailed information before final ranking of the firms, which may also include oral interviews. NOTE: Each Proposer shall submit to the City a primary contact name, e-mail address, and phone number (preferably a cell phone number) where the City selection committee or PACE District Board can call for clarification or interview via telephone. Corporate Name of Firm.ARK9>n►n4S_4v1, WeeP EWER Y E7WO/T Y 4 L-tZ Primary Contact:5*V'e- Title of Primary Contact: PR1/Jc I PAL Phone#1 (cell preferred): J, ,7*3 Phonet$2: 5b 1 ".5.3 7-- d::)a E-Mail Address: air Q ✓ e #tergy,. con--v 3. ACKNOWLEDGEMENT OF ADDENDA Acknowledge receipt of addenda for this invitation to bid, request for proposal, or request for qualification by signing and dating below. All addendums are hereby made a part of the bid or RFP documents to the same extent as though it were originally included therein. Proposers/Bidders should indicate their receipt of same in the appropriate blank listed herein. Failure to do so may subject vendor to disqualification. City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 18 of 19 I ADDENDUM NO. I SIGNATURE AND PRINTED NAME I DATE ACKNOWLEDGED 4. PRICING: Pricing shall be attached as a separate form. Reference Section 6, Submittal Requirements for details on what all pricing shall include. 5. DEBARMENT CERTIFICATION: As an interested party on this project, you are required to provide debarment/suspension certification indicating in compliance with the below Federal Executive Order. Certification can be done by completing and signing this form. Federal Executive Order (E.O.) 12549 "Debarment and Suspension" requires that all contractors receiving individual awards, using federal funds, and all sub -recipients certify that the organization and its principals are not debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded by any Federal department or agency from doing business with the Federal Government. Signature certifies that neither you nor your principal is presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation in this transaction by any federal department or agency. Questions regarding this form should be directed to the City of Fayetteville Purchasing Division. NAME OF COMPANY&ff9 ►/S.4S f/DtI,�/�lcE� EniE R� v � rt Y A i E 7-- PHYSICAL ADDRESS: _U4 W f A-P ITQ L Su, Tir' j (o3 D LA A Z 7220I MAILING ADDRESS: 5Ani PRINTED DAME: �� e f� P•9,t +e r S 0 PHONE: _5_sfl S 3 %C7 / 9 D FAX: SDI Jr3 % DI 4 / E-MAIL: SIGNATI TITLE: C_ I? ( Q._.1284MC f P,4 L DATE: (,:2- ',3 0 / .Z [2 / f== City of Fayetteville, AR RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Page 19 of 19 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity Response to RFP 14-10, Property Assessed Clean Energy (PACE) Administrator Proposal to City of Fayetteville, Arkansas Andrea Foren, CPPO, CPPB Purchasing Division — Room 306 113 W. Mountain Fayetteville, AR 72701 A joint proposal of Energy Equity Funding, LLC and Arkansas Advanced Energy Association June 27, 2014 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity Table of Contents Introduction..................................................................................................................................................1 Proposal........................................................................................................................................ ..... 2 A. Methods and Approach................................................................................................................... 2 B. Scope of Work/Deliverables............................................................................................................3 Step -By -Step Process — Commercial Program...................................................................................4 Step -by -Step Process — Residential Program..................................................................................... 6 Contractor Qualifications, Training and Engagement...........................................................................8 C. Qualifications and Experience.......................................................................................................10 D. List of Project Personnel................................................................................................................13 E. Availability......................................................................................................................................14 F. Estimated Administrative Costs.....................................................................................................15 G. Schedule Rates and Fees................................................................................................................15 H. Program Funding............................................................................................................................15 FinancingDetails................................................................................................................. ...........16 Response to RFP 14-10 Introduction A2E2 - Arkansas Advanced Energy Equity This is a joint proposal between Energy Equity Funding, LLC (EEF) and Arkansas Advanced Energy Association (AAEA). EEF Is the Current Administrator for Set the PACE St. Louis, a Property Assessed Clean Energy program in St. Louis, Missouri. This program has successfully engaged local stakeholders and generated one of the fastest projects to be funded from program launch as cited by the national PACE advocacy organization, PACENow. As part of the process of being selected as the program administrator, EEF participated in a comprehensive design phase which analyzed the particular market conditions for Property Assessed Clean Energy programs in the regional marketplace and what is required to make them successful; in particular, the attributes that create a successful program and focus the administration on maintaining a streamlined, efficient, and least -cost solution for property owners. AAEA has engaged local stakeholders in the Arkansas market since 2011 and was instrumental in getting the Property Assessed Clean Energy legislation passed. Engagement of local stakeholders for a Property Assessed Clean Energy program is critical for the success of the program. A successful Property Assessed Clean Energy program requires the engagement of contractors and other local stakeholders to leverage for marketing program participation and self -funding of the program. AAEA has laid the groundwork for a successful program and provides a local footprint for both administrative support and contractor outreach. Multiple financing partners and building experts have agreed to join our team to provide the most comprehensive administrative services for a robust Property Assessed Clean Energy (PACE) financing program. We have also engaged local community banks in introductory conversations and they have shown great interest in providing financing for the program. This program design stresses flexibility and a streamlined process to make the most attractive vehicle for contractors and property owners to implement qualifying energy efficiency, renewable energy, weatherization, and water conservation property improvements in the City of Fayetteville. AAEA and EEF's joint venture will be called Arkansas Advanced Energy Equity (A2E2). We are excited about the opportunity to build a successful, scalable, efficient and low-cost financing solution for energy efficiency, renewable energy, weatherization, and water conservation projects for property owners in the City of Fayetteville. Response to RFP 14-10 Proposal A. Methods and Approach. A2E2 -Arkansas Advanced Energy Equity An important aspect in designing and deploying a successful PACE program is to assemble a Team whose members possess both the highest level of expertise in their field and a profound knowledge of local conditions born of experience. The A2E2 Team meets these criteria and we are eager to bring our collective talent and energy to bear on the challenge of launching this Program that will achieve maximum energy costs savings for the City of Fayetteville property owners for years to come. Some of our Team members are already engaged in doing just that —and some of our Team members have been at the forefront of innovative ways to engage property owners and the building community towards more efficient practices at a national level. The salient elements of our proposal to provide administrative services to the Program include: • A dedicated, responsive, diverse, and experienced local Team to administer innovative financing for energy reduction and sustainable improvements. • A Team that has proven engagement in the community, both in the contractor community and with property owners, through established infrastructure, projects, and social media. • In-depth knowledge and experience utilizing various special district options, nationally and in the State of Missouri, to finance energy improvements to commercial and residential properties, including the newly enacted PACE legislation. • A scalable fee structure, in which the Program is self-sustaining covering administrative costs, yet provides highly competitive financing options for property owners tailored to their individual needs. • Expertise in developing innovative approaches to data utilization to maximize Program impact and transparency with an emphasis on detailing program success through several metrics: number of projects, total amount of financing, total energy savings, jobs created or retained, and estimated total green house gas reduction. • Genuine enthusiasm and desire to administer a successful Program that will maximize impact on the City and region to create a more sustainable environment. Response to RFP 14-10 B. Scope of Work/Del iverabies A2E2 - Arkansas Advanced Energy Equity As Program Administrator, A2E2 will be responsible for the day-to-day operations of the Fayetteville PACE Program and report to the District. Our firm, together with other members of our team, will implement and execute the design in place including a financing instrument for qualified property improvements, verification and quality control procedures, contractor engagement and training, and program data acquisition and reporting. Success of the PACE Program will depend on maximizing participation through contractor, property owner, and community engagement. A2E2 will engage contractors and property owners through a broad and diverse network, and client contacts of Team Members. Community stakeholders can also be engaged through environmental groups, advocacy organizations, and business associations. Marketing venues and tools such as the A2E2 program specific website, PowerPoint presentations and webinars, explanatory video(s), social media such as Facebook and Linkedln, newsletters, earned -media, local access cable channels, speakers circuit, public announcements, trade allies of local utilities, and program promotion through the mayor's office and local economic development all come into play to further engage property owners, contractors, and the general public. Another critical aspect of the success of the Program will be the proper collection, collation, and dissemination of Program data. The more data that is acquired and available regarding the efficacy of the Program, the more interest the Program will generate. The Program design sets benchmarks for data acquisition and reporting to the District. A2E2 proposes making Program data available via an online "data dashboard" that would demonstrate Program proliferation, community benefits, and energy savings in real time; accessible to the District, and viewable online. The following are two (2) step-by-step narrative descriptions of our proposed Program process —commercial and residential. These step-by-step descriptions adhere and conform to the previously delivered Program design process. Several sample documents referenced below, such as loan application, etc., can be found in the Appendix. Exhibits section of this proposal. NOTE: Due to ongoing regulatory issues and litigation with FHFA and residential PACE, we contemplate that a large amount of the first phase of funding will be on the commercial side of the PACE Program. Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity Step -By -Step Process — Commercial Program 1. Acquire and assess potential commercial energy efficiency project. Program participants will be primarily drawn from the customer base of energy consultants, contractors, and ESCOs (energy service companies), in addition to community outreach to property managers and owners. Initial applications that provide basic property and owner data will be followed by a preliminary credit review and analysis of energy efficiency needs. The program application will be available in different formats including online through a program web portal and/or hard copies. The preliminary credit review will be performed by our lending partner. These preliminary reviews will take place within 48 hours and should determine basic eligibility and potential scope of each project. For a sample program application, see Appendix Exhibit C2. 2. Commercial energy audit contracted and engaged. The property owner will contact a participating commercial energy auditor for an analysis of their property to generate a list of approved potential qualified improvements through the methodologies outlined in Appendix Exhibit C3 and C5.1 The property owner can then select the improvements that they wish to finance through the Program based on the results of the energy audit, which will be the basis for the scope of work. This process can take up to 60 days for a small commercial building or up to 180 days for a large building. 3. Completion of the design phase. Once the scope of work has been defined with the input of the energy auditor as well as the property owner, the design phase can begin. The property owner will engage the contractor to develop a detailed design for implementation of the improvements. This can take up to 90 days for a smaller building and another 120 days for a large building. As with the energy audit, this cost can be rolled into the program financing. This process may occur simultaneously to the audit process. 4. Loan application documents forwarded to financing institution. With design and construction documents complete, along with the scope of work, the owner can submit a full loan application to the lending institution. Please see sample loan application attached as Appendix Exhibit C6. The full application will have final construction costs and projected energy savings attached. Any additional administrative fees will be rolled into the project financing. It may take 30 to 45 days for the loan to close once the full application has been submitted with the supporting documentation. 5. Construction phase. Once financing has been approved for the project by the lending institution, construction of the improvements will begin. For larger projects, progress payment(s) can be made. If so, there may be progress inspections, as well as inspections and verifications required for the actual construction, such as building permits. 1 Final approved contractor list will be generated by program administrator during implementation phase. 4 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity b. Project verification and quality control. Once the project is completed, the property owner will verify with the lending institution and the Program Administrator that the work has been completed. All construction liens will be signed off on and funding completed. In addition, the Program Administrator will provide to the PACE Board of Directors a detailed verification of a sampling of program projects as a quality control measure. 7. Post improvement measurement and verification. As part of the verification process, the property owner will be asked to sign a release to allow the Program Administrator access to their utility bills for the year prior to improvements through the completion of the improvements and the final payment of the loan. Please see consent to release utility data attached as Appendix Exhibit U. This will allow the Program Administrator to gather data that will verify the efficacy of the improvements for the subject property, and ultimately, the entire program. If the subject property is not performing as projected, follow up with the property owner can be done to identify potential causes. If the deviation from projections is not caused by external variables, such as weather and/or usage, the improvements can be analyzed to verify that they were installed correctly and whether corrections may be warranted. If the subject property is performing as projected with the improvements, this information will be shared with the property owner. This data, along with the improvement specifications, will be aggregated by the program administrator to provide ongoing reports to relevant authorities to gauge the economic impact, the overall energy savings and estimated green house gas emissions reductions the PACE Program generates for the community. Please see the database description attached as Appendix Exhibit C9. 8.Ongoing payments. The property owner will continue to make payments per the terms of the loan agreement directly to the lending institution or to the property tax collector depending on which method is chosen by program participant. Should program participant choose the former loan -servicing method, only in the event of default will the assessment be recorded. Please see a sample assessment contract attached as Appendix Exhibit C8. Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity Step -by -Step Process — Residential Program 1. Market outreach into the community. Program will be marketed through community outreach and strategic partnerships. Trade alliances between energy auditors, home performance contractors and Realtors, as well as financial partners and utilities would serve to direct applicants into the program. 2. Prequalification and initial screening. Property owners will fill out an online application to provide basic information on themselves and their property. Please see sample program application attached as Appendix Exhibit R2. Prequalification for program applicants will be based on self -reporting. The property owner's eligibility will be determined by a credit analysis and if the property meets the required underwriting criteria. 3. Energy audit of the property. The property owner will select a qualified energy auditor from a list of energy auditors that are participating in the program.2 If the property owner has been referred to the program by an energy auditor, they can submit that auditor's information on the application and that auditor will be the default vendor for the energy audit. A certified energy audit is performed per the standards set forth in the Building Performance Institute's (BPI) technical specifications by the energy auditor and paid -for by Applicant .3 Please see BPI's technical specifications document attached as Appendix Exhibit R4. The cost of the energy audit may be rolled into the overall financing for the project. 4. Scope of work defined. The energy auditor will recommend improvements to the property based on the audit results and a pre -defined "loading order" of improvements. Please see loading order of improvements attached as Appendix Exhibit R5. The loading order defines those improvements that will 1) offer the most increase in efficiency for the smallest capital investment (greatest energy savings) and 2) puts improvements in logical order. For example, improving a property's insulation and air sealing may reduce the required size of a replacement furnace —therefore, it becomes more financially prudent to properly insulate and seal a home before replacing the furnace. The property owner will select the improvements based on the recommendations of the energy auditor. If there are improvements that the property owner wishes to finance out of the loading order, the application can reflect this along with an explanation to be considered for approval. Please see scope of work document attached as Appendix 2 Final approved contractor list will be generated by program administrator during implementation phase. 3 A certified energy audit is highly recommended to achieve the best energy savings, home safety, and public benefit. A select group of improvements are eligible without performing an energy audit. If Applicant opts for no energy audit, proposed project must qualify under the Arkansas PACE statute, namely, being verified by program administrator as "providing positive cash flow in which the costs of the improvements are lower than the energy savings on an average monthly basis," and per the U.S. Dept. of Energy PACE guidelines, having an "expected Savings -to -Investment Ratio (SIR) greater than one," with the, "financed package of energy improvements (being] designed to pay for itself over the life of the assessment." 6 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity Exhibit R6. Loan application, scope of work, and audit documents will be submitted to the Program Administrator, which will be forwarded to the lending institution for loan approval. For a sample loan application, see Appendix Exhibit R7. 5. Full loan approval. Once the scope of work has been defined through input from the audit results and the property owner, the lending institution will run a full credit report and review the scope of work for loan approval. The lending institution will contact the property owner upon loan approval for loan closing. The property owner will then sign - off on the loan closing documents, including a truth -in -lending statement and assessment contract. Please see an example of loan closing documents attached as Appendix Exhibit R7. The energy auditor and contractor will be notified of the loan and work approval to commence work on the improvements. 6. Improvements implemented by contractor. Work will be performed by the participating contractor previously selected by the homeowner during the scope of work phase. Once the work has been completed, the homeowner signs off on the work verification and assessment contract, which is then sent to the lending institution. The homeowner will also be asked to sign a consent form to release their property's utility data for the year preceding the improvements and the year following the improvements. Please see consent to release utility data attached as Appendix Exhibit R8. At this point the lending institution will disburse the funds to the contractor(s), who will forward any lien waivers to the lending institution. The property owner will receive a loan statement showing the total disbursement amounts. 7. Payments commence on the loan. The homeowner will begin to make payments on the loan directly to the lending institution or to the property tax collector depending on which method is chosen by program participant. Should program participant choose the former loan servicing method, the assessment contract will only be recorded in the event of a default on the loan payments.4 For a sample assessment contract, see Appendix Exhibit R9. 8. Data collated and quality control. A sampling of projects will be reviewed for quality assurance, with the samplings focused on making sure that as many contractors/auditors are reviewed as possible. Please see the quality control methodology document attached as Appendix Exhibit R10. As projects are completed, the improvements and utility data will be collated to generate reports to track the program's proliferation and overall efficacy at increasing energy efficiency and carbon 4 Currently there is a limitation on availability for PACE financing for single-family residential properties due to concerns raised by the Federal Housing Finance Agency (FHFA). There are, however, alternative financing options available with the A2E2 program for residential property owners, including home equity financing or energy efficiency mortgages (EEMs). There is pending Federal legislation that if passed would open up PACE -financing for residential properties. `] se to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity emission reduction. Please see the database description attached as Appendix Exhibit 1111. Contractor Qualifications, Training, and Engagement We propose for the Program Administrator to establish a set of contractor qualifications approved by the District. Administrator will conduct outreach to the Fayetteville contractor community to broaden awareness of the PACE Program and make available the opportunity for contractors to participate. Established networks of contractor contacts through Team Members and local utilities will be leveraged to facilitate this outreach effort. Administrator will provide training (if needed) and then screen and process contractor applicants. Administrator will then generate a list of "Approved Contractors" and make it available online.5 Potential program participants will select their project's contractor from the Approved Contractors list. Approved Contractor Qualifications Commercial • Commercial Applicants can work with their preferred contractors if fully bonded, insured, and licensed in the State of Arkansas. Program administrator will approve each project's contracting team to ensure qualifications. Contractors will pay a fee to participate. * Commercial PACE project energy contractors must be either certified by ASHRAE, or have the capacity to perform at least an "ASHRAE Level 2" energy analysis. Commercial projects require a more comprehensive and technical energy consumption analysis than residential energy audits. The analysis requirements for commercial projects will be unique for each property and handled on a case -to -case basis. Commercial contractors must be fully bonded, insured, and licensed professional contractors in the State of Arkansas. Residential • Residential Applicants in this program must select approved Home Energy Auditors and Home Performance Contractors from the PACE Program's certified list. Once selected for a job, Contractors will pay a per -job fee to participate. 5 This PACE program is self -financed as stipulated in Fayetteville's PACE ordnance, "No debt entered into by the District shall ever be construed as an obligation of the City or of any other governmental entity which may participate in the District." A nominal contractor set-up fee (fees range from $300-$800) will be charged to participating contractors. Contractor logo and company profile will be featured on the Program's website. 8 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity • Home Energy Auditors under this program must have completed a training program leading to certification by either the Building Performance Institute (BPI) or the Residential Energy Services Network (RESNET). • Approved Energy Auditors under this program must follow the on-the-job procedures of an accredited home energy audit (see below). Recommended Residential Energy Audit Procedure and Content The goal is to direct the energy auditor to develop a comprehensive list of measures which lead to whole -building, science -based energy improvements to existing low-rise residential buildings (single-family and multifamily). In this standard, these buildings are called "homes." An energy audit is an evaluation of a home's existing energy profile and the potential to improve the home's energy performance, and considers the policies and procedures of applicable residential energy programs. The current BPI Home Energy Auditing Standard (BPI-1100-T-201x) includes, but is not limited to the following: Scope: The auditor will conduct a building -science -based evaluation of homes (residential low rise buildings) in terms of energy usage, durability, and occupant health/safety and provide a comprehensive written scope of work to improve the home (provided that such improvements are on the program list of eligible improvements). This work scope shall be based on an evaluation of the whole house according to the requirements of this standard and the objectives of the customer. The work scope shall not be based primarily on a narrow product line, services of a contractor or convenience. The objective of the work scope is to optimize home performance cost-effectively, while maintaining or improving health and safety, and satisfying customer objectives. The scope of work shall: e Be based on building -science principles and include the use of appropriate equipment in diagnosing opportunities for improving energy efficiency, and minimizing health and safety hazards. Include a cost -benefit analysis of recommended improvements including consideration of applicable energy programs, incentives, regulations, energy costs, fuel process, and typical local energy -consumption levels. Cost -benefit analysis is to be based on computer analysis using software approved by BPI, RESNET, or the U.S. Department of Energy. Include a base load energy use analysis and advice to clients on energy use reduction strategies. When energy -consumption records are available, the audit shall include an analysis 9 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity of energy consumption records (at least 12 months) to justify estimates of energy savings from the recommendations. • Include a recommended work scope that recognizes best -practice installation procedures as well inclusion of a comprehensive set of specific energy efficiency and health/safety measures warranted by the site -specific circumstances. • Include pre -work and post -work verification (for example, diagnostic testing). NOTE: Davis Bacon wages are not required because funding is not funded through the American Recovery and Reinvestment Act. This has been confirmed with the U.S. Department of Energy. C. Qualifications and Experience Energy Equity Funding, LLC Contact: Tom Appelbaum, Member Address: 121 Chesterfield Business Parkway, Chesterfield, MO 63005 P: 314-499-8756, F: 314-985-0637 E: TomEEnergyEguityFundinp,.com General Company Information (i.e. Services, Size, Location, Structure, History): Energy Equity Funding is a Missouri limited liability company that was formed to help implement and administer energy efficiency financing programs. The principals of Energy Equity Funding, Byron DeLear and Tom Appelbaum, were also founding directors of the Missouri Association of Accredited Energy Professionals (MAAEP), a statewide professional association of residential energy auditors and affiliated industries. Through work with the energy auditor community, Energy Equity Funding was intimately involved with the effort to get Property Assessed Clean Energy (PACE) passed in the Missouri legislature and recognized the need for a pragmatic, efficiency focused approach to the implementation of any PACE program in the Missouri market. By working with the professionals in the industry, Energy Equity Funding developed a "Missouri model" for administering energy efficiency/renewable energy programs that would provide consumer protections while ensuring program participation. Energy Equity Funding is located in St. Louis County, Missouri and has been working with various stakeholders throughout the state and nation to develop implementation materials that adhere to best practices of energy efficiency/renewable programs. Energy Equity Funding has also been involved with the Missouri Association of Accredited Energy Professionals as well as the Missouri Department of Natural Resources to establish standards for energy audits. These standards apply to both what an audit 10 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity consists of procedurally, as well as the required output for such audits, to facilitate tracking and reporting requirements for a community based program. Relevant Experience and Qualifications: Energy Equity Funding has been involved in several efforts to promote energy efficiency/renewable energy programs in Missouri. Both principals of Energy Equity Funding are recipients of the Energy Efficiency Champion Award from Renew Missouri, a project of the Missouri Coalition for the Environment. Byron DeLear is an expert on sustainability policy and has presented at numerous events, including the P80 Group Foundation's "Global Solutions Summit 2014" held at the U.S. State Department and Atlantic Council, 2010 & 2011 Midwest Energy and Climate Policy Conferences, and 2010 & 2011 Greening Midwest Communities conferences. Tom Appelbaum is an attorney and geologist that is the statewide Program Manager for the Sierra Club's Cool Cities Code Campaign and recently presented at the Governor's Conference on Economic Development. He also has vast experience in managing enterprise wide information technology efforts with experience piloting major platform implementation at most of the major financial institutions as well as BJC Healthsystems. Energy Equity Funding has presented to the Missouri Association of Counsels of Government (MACOG) as part of a regional approach to alternative financing programs for energy efficiency upgrades. Regulatory and Legal History: Energy Equity Funding, LLC was incorporated as a limited liability company in the state of Missouri on April 11, 2010. References: Please see attached references. Please see resumes of Tom Appelbaum and Byron DeLear attached. Arkansas Advanced Energy Association Contact: Steve Patterson, Executive Director Address: 124 West Capitol, Suite 1630, Little Rock, AR 72201 P: 501-537-0190; F: 501-537-0191 E: steve@arkansasadvancedenergy.com General Company Information (i.e. Services, Size, Location, Structure, History): The Arkansas Advanced Energy Association (AAEA) is the business voice for advanced energy in Arkansas. AAEA is a 501(c)(6) non-profit trade association dedicated to growing Arkansas's economy through expanded utilization of advanced energy technologies, including energy efficiency, demand response, natural gas electric generation, solar, wind, hydro, nuclear, electric vehicles, alternative fuels and smart 11 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity grid. These are innovations that make our energy supply more secure, clean and affordable. Since working closely with key leaders in the Arkansas General Assembly to gain enactment of Senate Bill 640, the Property Assessed Clean Energy (PACE) Act, in April 2013, AAEA has remained the new law's chief advocate for implementation throughout the state. Today, AAEA includes nearly 100 companies and the organization has identified more than 11,500 advanced energy -jobs across the state. Some AAEA energy service companies and equipment suppliers have estimated that PACE financing will enable them to increase their workforce by as much as 30 percent in regions where energy improvement districts are formed. Relevant Experience and Qualifications: Because the Arkansas PACE Act places the burden of implementation on local jurisdictions, AAEA's Executive Director, Steve Patterson, and Policy Director, Ken Smith, have traveled the state presenting live workshops or webinars to more than a dozen Arkansas communities and enlisted more than 80 companies as potential PACE program contractors. To gain strong bipartisan support for PACE during its consideration by the legislature, AAEA also engaged various stakeholder groups, including the Arkansas Bankers Association, the Arkansas Association of General Contractors, the state chapter of the U.S. Green Building Council, Arkansas Municipal League, Association of Arkansas Counties and the Arkansas Homebuilders Association. All groups either supported SB640 or assured legislators that they had no objection to its adoption. AAEA has kept these groups advised throughout the implementation process over the past year. Regulatory and Legal History: Arkansas Advanced Energy Association (AAEA) was incorporated as a mutual -benefit corporation in the State of Arkansas on August 19, 2011. The organization was determined exempt from federal income tax under section 501 (c)(6) of the Internal Revenue Code by the IRS on August 10, 2012. Please see resumes of Steve Patterson and Ken Smith attached. 12 Response to RFP 14-10 D. List of Project Personnel A2E2 - Arkansas Advanced Energy Equity Fayetteville PACE Administrative Team Financing and Loan Servicing Oppenheimer, Inc. PACE Equity Administrative and Data Acquisition Services Energy Equity Funding, LLC Legal Services Mitchell Williams Grobmyer, Ramsay & Ross Contractor OutreacyAdministration Services Arkansas Advanced Energy Association Policy and Technology Deployment Global Technology Deployment Initiative Rick Worner Beau Engman Tom Appelbaum and Byron DeLear Ben Brenner Mark Grobmyer Steve Patterson Mark Grobmyer Residential Energy Assessment Quality Assurance HERS, Inc. Ron Hughes Commercial Energy Assessment and Proiec[ Quality Assurance Powers of Arkansas. Alan Hope Pinnacle Energy Services Ryan McClain Sun City Solar Pam Speraw Viridian USA Matt Bell 13 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity E. Availability The number of person hours required to administer the Program will be dependent on a number of factors, including program participation amongst contractors and property owners and the nature and mix of various projects. Different tasks described in the scope of work and Program design documentation have varying levels of economies of scale, making a predictable person/hour commitment schedule difficult on an aggregate basis. In addition, some tasks will be developed for the overall Program, regardless of the scope of the Program, so their pro rata person/hour commitment will decrease as the Program continues to proliferate. The follow tasks are person/hour commitments based on a per unit (project) basis: • Loan Processing - .5 hours. • Program Data Collection and Tracking and Reporting. o Receive and record project information ■ Improvements mad to properties, loan amounts, projected energy savings and actual utility data. - .5 hours. o. Develop data repository:.25 hours (pro rata) o Develop program status data dashboard:.25 hours (pro rata) • Contractor Training and Recruiting:.25 hours. • Quality Assurance 0 15t level quality assurance —follow up calls to contractor and program participants to verify project completeness and satisfaction:.15 hours. 0 2"d level quality assurance — physical sit visits: .5 hours. • CRM o Dedicated customer support line. Calls pertaining to contractors directed to Program Administrator, calls pertaining to loan status to Lender:.1 hours. Please see attached Person/Hour Commitment Schedule for details. 14 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity F. Estimated Administrative Costs The administrative fees, as specified in the RFP, will be borne entirely by operation of the program. The initial marketing costs, including marketing materials, website development, and contractor events for outreach, will be covered by contractor registration fees. Ongoing administrative costs will be covered by an administrative fee which will be calculated at closing of project financing and capitalized with the cost of the project. Please see section G for a detail of scheduled rates and fees which are anticipated for ongoing administration of the program. G. Schedule Rates and Fees Fees charged for administering the Program are ongoing and scaled based on Program participation and other activities. The basis of Program fees are described below for various administrative activities for the Program. Loan servicing/origination fees: these fees are generated by the lending institution and are based on market rates for land -secured financing, as described in the Program design documents. Program administration: there will be a one time, three percent (3%) program administration fee that covers standard program administration as described in the Program design documentation. This fee will be capitalized with the loan. Quality assurance: On -site quality assurance will be subcontracted to team members based on the classification and number of the projects being completed. The cost for on -site verification, which will primarily be measurement and verification, will be determined by the nature of the project. Residential projects will be fairly consistent with regard.to costs, but commercial projects will be on a case -by -case basis because of variance in complexity and size of project. The Program design also calls for quality assurance scheme that is affected by the number of contractors participating in the Program. These fees will be paid out of contractor initiation fees, as described in the Program design documentation. H. Program Funding The size scope and nature of energy efficiency number energy projects for commercial properties varies dramatically. A successful program to finance these projects requires flexibility and various options for the property owners. The objective for financing is to offer a property owner the most cost-effective solution for their project, while maintaining the benefits of the Property Assessed Clean Energy program. EEF and AAEA have partnered with multiple funding providers to offer the most flexibility for both program administration and property owners. 15 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity The following parameters detail some of the funding options as have been discussed with various team members. Obviously, with a number of options available some of this information would depend on the funding option and the nature of the project being funded. But we've tried to outline some typical scenarios for projects. Financing Details: a) Verification of financial stability and financial worthiness of related financial participants and program lenders. Please see informational sheets for financial team members. Oppenheimer is extremely well - funded and experienced in providing public financing. PACE Equity is also well -funded and prepared to provide funding for large-scale projects on -a case -by -case basis, or provide funding for an aggregate number of smaller scale projects after reaching a funding threshold. b) Statement of financial commitment of funds dedicated to forming the program. Financial team members have funds dedicated to the program, a commitment of funds will be determined on a case -by -case basis depending upon underwriting criteria for the projects. c) Identify and discuss the source of initial capital to fund PACE projects within the District. Initial funding for property assessed energy projects within the district is anticipated to be supplied by the financial team members or local bank to be determined. We have engaged local community banks in introductory conversations and they have shown great interest in providing financing for the program. Other financial members of the team could certainly provide financing for larger projects, or an aggregate of smaller projects. d) Funding sources for PACE program (self -funded vs. banks) — List sources if applicable. We have two team members that are prepared to fund projects for the program. A local bank which provides retail and commercial financing would provide significant flexibility for financing projects, particularly smaller scale projects. Additionally, a local bank would be capable of servicing those loans. Oppenheimer is capable of providing both large-scale revenue bonds as well as smaller financing debt instruments for either larger projects or an aggregate of smaller commercial projects. PACE Equity is capable of providing project specific financing for projects that are either in excess of $500,000, or an aggregate of smaller projects that reach a threshold of funding amounts. 16 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity e) Document commitment of financing partners for this program in writing from each partner. Please see attached commitment letters. f) An assessment of the risk and cost to the District in the event a property owner enrolled in the program defaults on payments under the proposed structure. There is no risk or cost to the district in the event that a property owner enrolled in the program defaults on payment under the proposed structure. All of the risk associated with a property owner defaulting would be borne by the lender to the program. These risks are built into the financing terms and underwriting criteria that the lenders will use in assessing the projects. These risks, however, are minimized by the fact that they are secured through an assessment contract. In the event of a default, whoever purchases the property will acquire the property subject to the tax assessment. The only risk to the lender will be for any arrears in payments that may have accumulated. This could potentially be addressed through the establishment of a loan loss reserve once the program matures and perhaps on a statewide basis. g) Maximum and minimum PACE finance amounts. The minimum property assessed clean energy financing amount would be $2500. The maximum financing amount would only be limited by the overall property value in the financial criteria of the project. There is no limit that a project could have other than that. h) Interest rates (adjustable or fixed) loan term options — (5yr, 10yr, 20yr). Interest rates will vary based on underwriting criteria and will be subject to market rates associated with land secured financing. The term of the loans are anticipated to vary from project to project based on what term will generate a cash flow neutral position. Interest rates will also vary based on the method of financing used. Shorter term financing that achieves a cash flow neutral position would likely fall in the range of 3% to 5.5%. Longer -term structured financing backed by other debt instruments would likely be approximately 6 to 7%. The amortization terms and whether or not these rates would be adjustable or fixed would be determined on a case -by -case basis, the same as the financing. i) Preferred method used to calculate the cost of credit to individual property owners. Cost of credit to individual property owners would follow traditional commercial lending underwriting criteria. The factors in determining the cost of credit would be the term of the 17 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity financing and the particular financial parameters of the property owner. Because all these factors are variable is important that the property owner have options regarding the financing. Rates and cost of credit are always time sensitive and therefore if loans can be structured with variable terms this will reduce the cost of credit and a number of scenarios. This is part of the benefit of using bank financing as opposed to bond financing. j) Estimate of the actual cost of PACE credit to property owners. Assume financing amount of $100,000 for basis of estimate (assume maximum allowed commission under ACA § 8-15-111(b)(1) of 3.125%for the County assessor/clerk, collector and treasurer) Please see the attached amortization schedule which details the total cost of a project with an initial improvement cost of $100,000. In this hypothetical scenario, it will assume that the financing rate will be 4.5%. This however makes a number of assumptions and is just for illustration purposes. k) Discussion of the optimal length of time to carry the project with regard to cash -flow and the useful life of improvements. The optimal length of time or term of financing is when cash flow neutral impact is achieved. if The length of time for financing were the term of the financing exceeds cash flow neutral, then the cost the financing is greater than it needs to be and you're in danger of exceeding the useful life of the improvements. This means that each project is sensitive to the scope of the work in relation to the energy and operational savings as compared to the overall cost of the project. Once again this highlights the benefit of having flexibility with regards to financing. Typically, when you have a mix of energy efficiency improvements the overall financial model won't exceed the useful life of improvements. But this is once again why a technical analysis of the scope of work for a project is important. It is particularly necessary when there is a large complex property involved. Smaller projects and energy efficiency on residential properties are generally much more straightforward and there is much less risk with regards to the financial model generated for the financing. 1) Discussion of credit risk associated with project delay or cessation. The risks associated with a project delay or cessation will be mitigated by having a detailed engineering study for complex in larger projects. Obviously, these risks are enhanced with the size and scope of a project and are much less for smaller projects that are simpler and require less planning. A detailed engineering study will take into account both the financial model as well as the project timeline. Since it is generally assumed that energy costs will increase over time, the length of time that a project takes could in fact improve the financial model that the project is based on. There are however, risks associated if there are significant delays once the 18 Response to RFP 14-10 A2E2 -Arkansas Advanced Energy Equity project has been capitalized. This can be dealt with by financing a project in phases. This of course will be handled on a case -by -case basis, and the financial members of the team are well - versed and experienced in raised construction financing. m) An assessment of the amount of contingency funds necessary for handling any defaults in this program, and how a default would be handled. During the initial stages of the program, all default contingencies and costs will be factored into the financing and underwriting criteria for the various projects. It is contemplated, however, that potentially a loan-loss reserve fund could be established to further enhance the financial viability of the program. A loan-loss reserve fund program would be much more feasible as property assessed clean energy projects proliferate within the state. n) Proposed 3rd Party Administrator fees to contractor who would install improvements, if any. Contractors would pay a one-time contractor registration fee for participation in the program. This registration fee would include contractor training and the contractor's logo on the website portal for the program. These fees range from $300-$800. o) Proposed 3rd Party Administrator fees to property owner. The property owner would pay no administrator fees directly. There would be an administration fee of 3% capitalized into the overall cost of the PACE loan. So this fee would be added to the principal of the loan and paid directly to the Program Administrator upon financing of the program by the lender. p) Re -occurring fees to property owner, if any. The only reoccurring fee to the property owner with regard to their PACE loan would be any fees charged by the assessor for collection of the PACE loan payments. If the lender and the property owner both agree to have the lender service the loan, the property owner would make loan payments directly to the lender. With lender -based loan servicing any fees associated with the assessor collecting payments would be avoided. q) Early repayment penalties (Y/N)? If yes how determined? It is not anticipated that there would be any early repayment penalties, but this would depend upon the terms of the financing which can vary from project to project. It is conceivable that the terms of a project financing could include some early repayment penalties but that would be determined at the time of financing. 19 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity r) Delineation of anticipated roles and responsibilities between the District, the firm, and any other partner or entity. The role of the District PACE Board would be to simply oversee the program's efficacy and progress. The third party administrator would oversee all the functioning of the program and report back to the District PACE Board and provide up-to-date information on the progress made in funding projects and reducing energy usage. Depending upon which financing method the property owner selects, the lender would analyze the underwriting criteria and determine financing terms. Contractors would provide project data and financial modeling for the energy efficiency improvement proposed. s) Costs associated with Property Appraiser, and Closing. It is not anticipated that a typical project would require an appraisal or any title work for typical commercial loan. Therefore, the typical costs associated with closings and appraiser would be avoided. Any residential program projects however, would require standard appraisal and closing costs, since the financing methodology would be more closely associated with conventional financing. 20 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity Executive Summary This is a joint proposal between Energy Equity Funding, LLC (EEF) and Arkansas Advanced Energy Association, LLC (AREA) to provide administrative services for Fayetteville's Energy Improvement District #1. EEF Is the Current Administrator for Set the PACE St. Louis, a Property Assessed Clean Energy program in St. Louis, Missouri. Set the PACE St. Louis has successfully engaged local stakeholders and generated one of the fastest projects to be funded from program launch as cited by the national PACE advocacy organization, PACENow. AAEA has engaged local stakeholders in the Arkansas market since 2011 and was instrumental in getting the Property Assessed Clean Energy legislation passed. Engagement of local stakeholders for a Property Assessed Clean Energy program is critical for the success of the program. A successful Property Assessed Clean Energy program requires the engagement of contractors and other local stakeholders to leverage for marketing program participation and self -funding of the program. AAEA has laid the groundwork for a successful program and provides a local footprint for both administrative support and contractor outreach. Multiple financing partners and building experts have agreed to join our team to provide the most comprehensive administrative services for a robust Property Assessed Clean Energy ("PACE") financing program. We have engaged several local community banks in introductory conversations and they have also shown great interest in providing financing for the program. AAEA and EEF's joint venture will be called Arkansas Advanced Energy Equity ("QE2" ). A2E2 stresses flexibility and a streamlined process to make the most attractive vehicle for contractors and property owners to implement qualifying energy efficiency, renewable energy, weatherization, and water conservation property improvements in the City of Fayetteville. State enabling Statute: Arkansas Senate Bill 640—(Arkansas Act 1074) Signed into law by Gov. Mike Beebe on April 15, 2013. A broad coalition of Arkansas businesses and advocacy groups organized by the Arkansas Advanced Energy Association (AREA) helped to educate, spread awareness, and build support, ensuring the passage of Arkansas's PACE enabling legislation by the General Assembly on April 9, 2013. By emphasizing that PACE builds stronger communities through wealth retention, job creation, higher property values, and more cash flow for business owners, this coalition worked together with co- sponsoring and key legislators to build the bi-partisan support necessary to make PACE a reality. With Gov. Mike Beebe's signature on April 15, 2013, the enabling statute became ACT 1074 of 2013, (Ark. Code Ann. Section 8-15-101 et seq.) Arkansas thus became the 30th state to pass PACE. As of the date of this publication, there are 31 states that have passed PACE into law. Leading up to enactment, PACE gained the support of the Arkansas Bankers Association, the Associated General Contractors of Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity Arkansas, Arkansas Municipal League, Association of Arkansas Counties, Public Policy Panel, Arkansas Chapter of U.S. Green Building Council and Citizens First Congress. The A2E2 program for the City of Fayetteville's PACE District introduces a means for commercial and residential property owners to make energy efficiency, renewable energy, and water conservation property improvements with little to no up -front costs. The initial expenses typically associated with energy savings improvements have been a significant barrier for property owners to make these improvements. The commercial side of the A2E2 program utilizes PACE financing, while the residential side uses more traditional forms of lending while still retaining some characteristics of PACE. The A2E2 program allows commercial property owners to voluntarily pay for approved energy efficiency, renewable energy, and water conservation improvements by attaching the cost of these projects to their property tax bill. Each energy savings project is amortized up to a 20-year period, providing the property owner with a cash -flow positive energy savings solution. In other words, approved projects will provide energy savings that equal or exceed the project's overall cost. The repayment obligation of the PACE financing is attached to the property, not to the individual property owner. PACE financing stays with the property in the same manner as a special tax assessment for street or sewer improvements. If a property owner decides to sell before the property tax assessment is fully paid, the energy equity is transferred to the new property owner who then assumes the payments as special tax assessments just like the original borrower. Tying payment to the property solves credit and collateral issues for energy efficiency and renewable energy loans, reduces up -front installation costs, and allows for both the payment and the value of the installation to be transferred from one owner to the next. If the special tax assessment is not paid, the city collector of revenue can foreclose on the delinquent property in the same manner as for non-payment of property taxes. As mentioned, there is a limitation on availability for PACE financing for single-family residential properties due to concerns raised by the Federal Housing Finance Agency (FHFA). There are, however, alternative financing options available with the A2E2 program, including home equity financing or energy efficiency mortgages (EEMs). The A2E2 program has been designed so that initial financing of projects may be provided by local community banks. PACE is a private -sector solution leveraging private capital to help spur energy savings and economic recovery. Its revenue neutral characteristics —for municipalities and program participants —make PACE a timely and innovative solution to help stimulate economic development, save on energy costs, and do so in an environmentally friendly way. Program Size: A2E2 is fully scalable. The initial commitment by our field of financing options ranges from $2M — $150M, plus additional funding on a property -by -property basis to the extent that any property qualifies for a community development loan in accordance with the Community Reinvestment Act. The average residential project is projected to be $9000 per home. Commercial projects can vary greatly 2 Response to RFP 14-10 A2E2 - Arkansas Advanced Energy Equity from $25,000 to millions of dollars in energy efficiency, renewable energy, and water conservation property improvements. Bonding Projects: The Arkansas PACE Statute states that the Energy Improvement District PACE Board may issue bonds which would be payable from special assessment revenues generated by assessment contracts. The practical threshold at which a bond may be issued for aggregated PACE projects is approximately $5 million. This translates to approximately 555 residential PACE projects averaging at $9000 per home aggregated in a single bond issuance. For commercial PACE projects, a much lower number may be aggregated to reach the $5 million bond issuance threshold due to the commercial assessment contracts, on average, being significantly higher than residential. Commercial and residential PACE assessment contracts may be combined into the same issuance as long as the grouped contracts meet underwriting standards. A Debt Service Reserve fund may be established to cover loan losses. Under the contemplated timeline for AM, the potential for bonding projects will begin after the initial funding capacity has been reached. Administrating Agency: Per the Arkansas PACE statute, "A governmental entity legally authorized to issue general revenue bonds may create a [PACE] district by adoption of an ordinance." The City of Fayetteville has formed a "Property Assessed Energy Improvement District" (PACE District) under the authority of Ordinance No. 5624. Other governmental entities (for example, county, city, or incorporated town or village) may join the PACE District upon approval by the PACE Board. Participating Arkansas municipalities will pass an enabling ordinance that will reflect the state enabling PACE statute. A third -party administrative firm may be selected by the PACE Board to manage the program and complete day-to-day activities. Public Benefit Consideration: A basic component of the PACE financing concept is the idea that embedded in any energy efficiency, renewable energy, or water conservation retrofit performed on private property is an intrinsic benefit to the public interest in terms of increasing energy independence, lowering stress on the energy grid, stimulating the local economy through energy savings, job creation, and reducing Arkansas's carbon emission pollution. A2E2 is designed with rigorous consumer protections, quality assurance, and best practices in energy efficiency and renewable energy contracting standards. This approach guarantees the most favorable energy savings and return -on -investment on a contract -to -contract basis, combining to provide the best public benefit. Local Business Growth, Job Creation and Economic Development: It is estimated that generating $20 million in economic activity through the A2E2 program in retrofitting the City of Fayetteville's buildings and homes would create or retain more than 100 jobs, saving residents and businesses hundreds of thousands in energy costs, and making a substantial contribution to the City's climate change measures and sustainability goals. We are excited about the opportunity to build a successful, scalable, efficient and low-cost financing solution for energy efficiency, renewable energy, weatherization, and water conservation projects for property owners in the City of Fayetteville. Steve Patterson AREA, Executive Director As a specialist in strategic political planning and organizing and managing large systems, Steve Patterson has led the effort to form a trade association of Arkansas advanced energy companies since early 2011. The AAEA was formally launched in November, 2011, and Charter Board Members convened for the first time in March, 2012. Patterson retired from government in December, 2006, after 26 years as a Chief Executive and political advisor to Members of Congress from Oklahoma, Texas and Arkansas, including U.S. Rep. Dave McCurdy, U.S. Rep. Jim Turner and U.S. Sen. Blanche Lincoln. Today, he is a co-founding partner in CDP Strategies, LLC, a strategic fundraising and event management consulting company based in Little Rock, AR. Steve is a native of Oklahoma where he graduated from Oklahoma State University with a Bachelor of Science degree in journalism. He currently serves as Leadership Council Chairman for the Little Rock Chapter of the American Diabetes Association and serves on the Board of Directors for the Arkansas State Chamber of Commerce. Ken Smith AREA, Policy Director Ken Smith, a native of Hot Springs, AR, established the first Nature Conservancy office in Arkansas in the 1980s. He later served as Executive Director of the Ozark Natural Science Center where he managed a staff of 20 people and an annual budget of $500,000. During the Clinton Administration, Smith served as Deputy Chief of Staff at the U.S. Department of Interior where he managed the Secretary's office and served as White House liaison for all Presidential initiatives including selection and hiring of Presidential nominees. Later, Smith was elevated to Assistant Secretary for Fish and Wildlife where he was responsible for management and policy at two federal agencies, National Park Service and the Fish and Wildlife Service. After returning to Arkansas, Smith became Vice President and Executive Director of Audubon Arkansas where he raised an annual budget of $1 to $2 million per year without recording a deficit. Since leaving Audubon in 2010, Smith has operated his own Energy and Natural Resources consulting and lobbying firm with expertise in governmental affairs and nonprofit management. Thomas D. Appelbaum, J.D, M.B.A. 121 Chesterfield Business Parkway, Chesterfield, MO 63005; (314) 499-8756 Email: tom@EnergyEquityFunding.com SUMMARY OF QUALIFICATIONS A licensed attomey and geologist with experience in management and policy in the energy industry, finance, and information technology. PROFESSIONAL EXPERIENCE April 2010 — Present Energy Equity Funding, LLC President/COO of an energy efficiency and renewable energy turnkey administration company, focused on the operational aspects of delivering financing to property owners for energy efficiency and renewable energy improvements. • Administrator of the 'Set the PACE St. Louis' energy efficiency and renewable energy financing program for the City of St. Louis. This is a Property Assessed Clean Energy (PACE) program authorized through the Clean Energy Development Board and the Mayor's Office of St. Louis City. www.sethePACEStLouis.com. • Featured presenter at the 2010 Governor's Conference on Economic Development on Property Assessed Clean Energy programs. • Co-chair of the administrative subcommittee for this program. June 2012 — Present Veterans Resource Foundation, Inc. Board Secretary of a 501.c.3 veterans organization to raise awareness of veteran issues. • This started as the result of organizing the nation's first "Welcome Home the Heroes" parade in downtown St. Louis. This parade was organized and executed in 30 days and was made possible by raising over $25,000 in 4 days. (featured on The Rachel Maddow Show, NBC Nightly News, and Fox News). • This parade spawned similar efforts across the country, including; Chicago, IL, Minneapolis, MN, Richmond, VA, Oklahoma City, OK, and Phoenix, AZ, among others. May 2009 — Present Missouri Association of Accredited Energy Professionals (MAAEP) Director and Founder of a statewide 501.c(6) professional association of energy assessors and affiliates. • Named "Energy Efficiency Champion" by the NGO Renew Missouri. • Co-authored and edited a report on survey results of the Missouri Department of Natural Resource's Energize Missouri Homes — Home Upgrade with Geothermal. • Program Manager for the statewide Cool Cities Campaign for adoption of the 2009 IECC building codes, resulting in the adoption or proposed adoption of the code in several municipalities. April 2010 — Present Parkway School District Director on the Board of Education for the 7t' largest school district in the state of Missouri. • Annual budget of over $230 million. • Implemented: largest solar install in state, single stream recycling, • Currently working with gas utility and Senator Claire McCaskill's office for a grant to become the first district in the state to convert the bus fleet to compressed natural gas. • In the process of implementing a solar energy initiative with the goal of reinvesting energy savings to install solar through the district. EDUCATION Juris Doctorate December, 2005 Saint Louis University School of Law Masters in Business Administration, 1996 Maryville University, St. Louis, MO (Member of the Sigma Beta Delta Business Students' Honor Society.) Bachelor of Science, Geology, 1988, Missouri State University Springfield, MO Technical Presentations: "Emerging Trends in Energy Efficiency and Renewable Energy Financing" — Missouri State Department of Geology, Geography and Planning Department. February 2013. "Property Assessed Clean Energy Implementation in the Market" — Governor's Conference on Economic Development, 2010. "Coal Quality Predictability through Data Modeling" — CPS Radian Corporations' User's Conference, 1992. Byron W. DeLear 13413 Pardissi Court Maryland Heights, MO.63146 USA ByronDeLearOgmail.com (314) 445-7911 PROFESSIONAL EXPERIENCE April 2010—Present Chairman and CEO 1 Energy Equity Funding, LLC. Energy Equity Funding (EEF) provides turnkey Property Assessed Clean Energy (PACE) and other clean energy program administration, consulting and financing services. Responsible for developing strategy, marketing, and overall corporate vision. • November 2010 EEF awarded contract to develop innovative clean energy program for the City of St. Louis. EEF partnered with Armstrong Teasdale's Future Energy Group's team providing program design and administration services. • February 2013 Team led by EEF selected by St. Louis Clean Energy Development Board as program administrator for Set the PACE St. Louis (www.setthapacestiouls.coml. March 2010—Present Property Assessed Clean Energy (PACE) legislation. Helped build and coordinate coalition instrumental in passing PACE legislation in Missouri. Marshalled support from legislators and their staff, trade organizations, community bankers, environmental groups & their lobbyists, law firms, Governor's office, and others. Participated in bill signing ceremony with Gov. Jay Nixon on July 12t', Kansas City, Mo. Currently serves on Missouri PACE Best Practices", and -PACE Federal advocacy" committees organized by James Trout from Missouri Department of Natural Resources. July 2009--Present Founder and Chairman I Missouri Association of Accredited Energy Professionals (MAAEP.org), a clean -energy, non-profit corporation. MAAEP is one of the nation's first statewide trade associations for energy auditors and home performance contractors. • Planned, coordinated and conducted RAAAEP organizational meetings for professional members in St. Louis (Dec. 09), Kansas City at Metropolitan Energy Center (Feb. 10), Jefferson City at Capital Building (March 10), Springfield at Contractor's Assoc. (May 10). • MAAEP awarded $30,000 statewide contract to promote 2009 International Energy Conservation Code (IECC) from Sierra Club. Outreach to stakeholders, code enforcers, and municipalities. Code training sessions around state held. April 9-10, 2014 Featured presenter at Global Solutions Summit, U.S. State Dept and Atlantic Council, Washington D.C.—propelled by an initiative of HRH Prince Charles, the Global Solutions Summit seeks to connect global finance with innovators in cleantech and technology deployment to mitigate rising international environmental and demographic challenges. The event was sponsored by the P80 Group Foundation, representing sovereign wealth and pension funds totaling more than $40 trillion dollars in assets. Authored follow-up report, "Global Solutions Summit brings together cleantech entrepreneurs and finance." July 24-25, 2013 Clinton Presidential Library and Center, Little Rock, AR. —member of multi -disciplinary team to raise the sustainability profile of the LEED Platinum complex. Contemplated retrofits include solar, geothermal, water conservation and energy efficiency measures for a projected additional 60% energy usage reduction. Advocated for PACE financing to be utilized as funding mechanism as ribbon cutting project for PACE in Arkansas. December 2011 Featured presenter Midwest Energy Policy Conference held in St. Louis, Mo. December 1-2, 2012. `Mating PACE work in St. Louis and Beyond" October 2011 Featured presenter Greening Midwest Communities Conference held in Jefferson City, Mo. October 18-19. 2012. 'The Big Picture on the Future of Energy Efficiency" October 2010 Co-authored position paper on Energy Efficiency for Missouri Energy Initiative (MEI) think-tank with Suzanne Watson, Policy Director for the American Council for an Energy -Efficient Economy (ACEEE). "Energy Efficiency: The Unseen Critical Resource" October 2010 Featured presenter at Greening Midwest Communities Conference held in Jefferson City, Mo. 'Energy Policy, Legislation and Incentives for New and Existing Homes" July 2010 Received "Energy Efficiency Champion Award" from NGO Renew Missouri for advancing the Property Assessed Clean Energy Policy in the 2010 Missouri legislature. June 2010 Featured presenter at the 2010 Midwest Energy and Climate Policy Conference held at Missouri Botanical Garden and Union Station. -Leveraging energy -equity for the Midwestern marketplace through PACE financing" May 2010 Home Star Energy Retrofit Act —Lobbied US Senate in Washington DC with national organization Efficiency First. Met with Missouri's Sen. McCaskill and Sen. Brownback (R-KS), and the offices of Sen. Coburn (R-OK), Harkin (D-iA), Nelson (D-Neb), Hutchinson (R-TX), Bond (R-MO) and Sessions (R-AL) Published report:'Efficiency First rallies US small businesses to support Home Star jobs bill in DC" BIOGRAPHY Byron DeLear —enviro-entrepreneur, author, media producer, and twice former US House candidate. DeLear is a founding incorporator of the Missouri Association of Accredited Energy Professionals (MAAEP), and is CEO of Energy Equity Funding, LLC. He keeps his finger on the pulse of a wide range of future -focused projects, and serves on boards of various NGOs and non -profits. He can be reached at: ByronDeLea[Qgmail.com. -- PPENHEIMEk Oppenheimer Holdings Inc. Annual Report 2012 1} \ 1 1 l r � l i IIi � 1 i Building on a Tradition of 130 Years Oppenheimer, through its principal subsidiaries, Oppenheimer & Co. ` Inc. (a U.S. broker -dealer) and Oppenheimer Asset Management r Inc., offers a wide range of '? investment banking, securities, tj • investment management and wealth management services from 94 offices in 26 states and through local broker -dealers in five foreign Hur icane n cues vacu tion of o new he dquar for 7 jurisdictions. OPY Credit Corp. offers syndication as well as trading of issued corporate loans. Oppenheimer employs over 3,500 1��ALI ST people. Oppenheimer offers trust and estate services through D `y BRA-- - -- Oppenheimer Trust Company. Oppenheimer Multifamily Housing & Healthcare Finance, Inc. is engaged in mortgage brokerage and servicing. In addition, through its subsidiary, Freedom Investments, Center point of Downtown Manhattan Inc. and the BUYandHOLD division of Freedom, Oppenheimer offers online discount brokerage and - dollar -based investing services. A ,. . Despite having 800 employees displaced by Hurricane Sandy, y Oppenheimer continued to service its clients. at 85 Broad Street FINANCIAL HIGHLIGHTS —Annual Report 2012 (In thousands of dollars except per share amounts) 2010 2009 2008 Gross Revenue $952,612 $958,992 $1,036,273 $990,480 $919,823 Profit (loss) before income taxes ($527) $17,848 $67,991 $37,067 ($36,565) Net profit (loss)* ($3,613) $10,316 $38,532 $20,824 ($19,980) Basic earnings (loss) per share* ($0.27) $0.76 $2.89 $1.59 ($1.51) Total assets $2,678,020 $3,527,439 $2,515,062 $2,162,582 $1,506,073 Shareholders' equity* $500,740 $508,070 $504,330 $461,012 $433,954 Book value per share* $36.80 $37.16 $37.73 $34.88 $33,38 Total shares outstanding 13,608 13,672 13,368 13,218 12,999 Number of employees 3,521 3,576 3576 3,616 3,399 Gross Revenue ($ thousands) 1200000 —. 1000000 800000 600000 400000 200000 0 03 04 05 06 07 08 09 10 11 12 Assets Under Management (S billions) 25 20 15 - 10 5 Off N- 03 0405060708091011 12 . Attributable to Oppenheimer Holdings Inc. Net Profit* (S thousands) a000o -30000 03 04 05 05 07 08 09 10 11 12 Client Assets ($ billions) 03 04 05 06 07 08 09 10 11 12 Shareholders' Equity ($ thousands) 600000 500000 400000 300000 200000 100000 0 03 04 05 06 07 08 09 10 11 12 Financial Advisors** 2000 1500 1000 500 0 03 04 05 06 07 08 09 10 11 12 wiper Chet rot /w.rcW � M.mart Book Value Per Share ($) 03 04 05 06 07 08 09 10 11 12 E DEAR FELLOW SHAREHOLDERS The year just ended was consumed with dealing with crisis -induced issues arising in years past. Litigation stemming from the 2008-2009 period dogged us throughout the year. This, combined with continued low interest rates and equity capital markets that continued to be impaired by a slow growing economy, dramatically affected our results. These issues may, however, finally be moving to the rearview mirror. We expect less litigation expense and modestly higher interest rates as we move into 2013 and are seeing equity markets jumping off to a very strong start in this New Year. Markets performed quite well in 2012, but participation rates were low, as inves- tors were consumed with the European sovereign debt crisis, the U.S. fiscal cliff and a virulent domestic national elec- tion. While the economy moved with fits and starts, broad based market averages closed the year 14% higher than where they began. As 1 am writing this letter, averages have begun to hit new highs, exceeding the level reached in 2007. It is a welcome sign and one from which Oppenheimer is positioned to benefit. Client assets under administration totaled approximately $80.3 billion, a new milestone, while client assets under management in fee -based programs totaled approximately $20.9 billion at December 31, 2012, also at record levels, compared to $76 billion and $18.6 billion, respectively, at December 31, 2011. During 2012, the Company reported rev- enues of $953 million, a decrease of .6% from $959 million in the prior year. We reported a loss of $3.6 million, compared to a profit of $10.3 million earned in 2011. The loss per share was $0.27 ($0.27 fully diluted) compared to a profit of $.76 per share ($.74 fully diluted) in the prior year. At December 31, 2012, the Company had a total of 13,607,998 shares outstanding and the book value per share was $36.80 compared to $37.16 at the end of 2011. Our results were negatively impacted by expenses associated with significant litigation costs, the build out of our new headquarters and low interest rates. On the positive side, results from our fixed income businesses, Oppenheimer Mul- tifamily Housing & Healthcare Finance and somewhat higher incentive fees from managed clientassets madea meaningful contribution during the year. Dealing with the litigation resulting from the financial crisis proved to be an extraor- dinarily expensive undertaking again this past year. We continue to see redemptions of client -held Auction Rate Securities and the holdings by clients eligible for firm tenders were dawn to $213 million atyear- end as opposed to total client holdings of $2.8 billion when the auction rate market failed in 2008.On January 31, 2013, we received the decision of an arbitration panel on the U.S. Airways litigation first filed in 2009. The adverse result with the panel ordering us to pay $30 million (com- pared to a claim of approximately $140 million) was a bitter disappointment and in our view clearly contrary to prevailing case law. This amount, which was booked to 2012 results, caused us to show a loss for the year. While our results in 2012 were lower than we would expect in a more normal environment, we are making progress in rebuilding profitability in our core business. With the economy improving, we believe this trend should continue in 2013. This year will bring its own mix of successes and challenges, but our direc- tion is clear. We will be diligent with what we can control: providing our clients with the best service and most comprehensive financial solutions in the marketplace and doing our best to deliver the high quality advice and guidance that our clients have a right to expect. We take very seriously the responsibilities we have to help our clients succeed. Our move to our new headquarters pro- ceeded quite well and uneventfully up until the onslaught of Hurricane Sandy in late October. Both our old headquarters and our new one saw their basements filled with millions of gallons of saltwater, ruining building infrastructure and making both of them un-inhabitable for over 30 days. The combined effects of dislocating over 800 of our employees, the issues faced by many of them with homes with no power, as well as a city whose electric power and transportation systems were crippled, were quite daunting. While we will never know the revenue lost from so many of our people working from tempo- rary locations and from home, we are quite proud of our ability to continue to provide essential uninterrupted service to all of our clients and our employees at offices in unaffected regions of the country. We are deeply grateful to the tireless efforts of so many of our infrastructure employees who spent sustained periods of time away from their homes and families, during a time when they were sorely needed there. All in all, it was quite an experience. Final construction of the new floors of our headquarters has resumed, and we expect to reach full occupancy by late spring. Accounting for the move had a decidedly negative effect on our earnings in 2012, despite the long-term savings that will be realized over the life of our occupancy; however, we will begin to enjoy the benefit of those savings in 2013. During the past year we showed progress in a number of areas: • We hired 66 experienced financial advisors across the country, adding to recently opened offices as well as long established ones. • We increased our ability to transact in emerging market debt around the world by adding traders and experienced sales talent as well as opening relationships with institutional clients throughout Europe, Asia and the U.S. We saw increased reve- nues as a result and great opportunities as the economies of these nations accelerate. • We finished the year with 34 senior publishing equity analysts covering ap- proximately 600 public companies. • We added new funds to our alterna- tives platform and saw significant ac- ceptanceamong sophisticated investors. Increasingly, investors want and expect to see differentiated opportunities from their advisors, and we believe we remain in the forefront in offering such investments. Risk management is an integral part of our business operations. Our goal is to set a tone and create a risk manage- ment culture in which every employee is empowered to raise an issue or express a concern. That means having a well-de- fined, clear-cut business model, a strate- gy that puts that model into practice and operating principles to guide the thou- sands of daily decisions that are made by managers across the company. Given our recent experience with Hurricane Sandy, we are putting specific emphasis on improving operational risk awareness and execution throughout the company. The investments we continue to make in our people and the build out of our busi- ness lines are yielding results. I am grateful to the men and women of Oppenheimer for their continued commitment to serv- ing clients. The relationships arising from this dedication have never been more important or more productive as our many professionals assist in navigating a volatile environment. We wil I pay particular attention to areas of our business that appear most promising —including a goal of reaching $1.25 billion in revenues by 2018. This requires con- tinuing to add productive financial advi- sors, attracting experienced investment banking talent and adding market and trading expertise in the emerging markets that we expect will outgrow traditional developed markets in the years ahead. The problems afflicting theworld econ- omy today are real and troubling. They may even cause the opportunities we foresee for this business to take shape with less vigor than we would hope. However, we think those opportunities will surely materialize —the vast accumu- lation of wealth will support demand for investment servi ces wel I 'into the future. Oppenheimer's future rests on a foun- dation of enduring principles. Our core values — integrity, quality, commitment — have sustained the loyalty of genera- tions of clients and continue to motivate talented employees. These values also have supported the kind of business performance that can result in solid shareholder returns over many years. These beliefs support our confidence in the company's present course and in our ability to deliver value to clients and to our investors in the years ahead. Ultimately, we will bejudged by our abil- ity to generate profits and by our stock price, which clearly does not yet reflect much of the work we are doing or the progress we have made. I want to personally thank Elaine Roberts, the President of our Holding Company, who for over 35 years has been a sup- portive and close associate to me and to the Company. Elainewill be retiring atthe end of the first quarter but has agreed to remain as a director. We look forward to her counsel for many years to come. Let me close by expressing my appre- ciation to the Oppenheimer team and my gratitude to you, our shareholders, for your unwavering support. I trust you share our excitement about your Company's future and the way in which we are building on our past to build an even brighter future. Albert G. Lowenthal Chairman of the Board 3 PRIVATE CLIENT SERVICES Oppenheimer's Private Client Services area continues to be the cornerstone of our firm. Our entrepreneurial culture and our focused business environment has differentiated us from other financial service providers and allowed us to offer our clients significant flexibility and solutions that are customized and tailored to their goals, objectives and unique circumstances. We ended 2012 with over $80 billion of client holdings entrusted to our firm, an all time high. During 2012, we hired 66 experienced Financial Advisors, adding meaningfully to our highly capable and well trained staff of investment professionals. Low interest rates, extremely low by historical standards, have created a challenge for our advisors to provide investment advice that would gradually help clients to reallocate their invest- ments to vehicles and strategies that would work toward them achieving longer -term objectives. This includes the use of alternatives designed to provide attractive returns compared to those available in either short- or longer -term fixed income securities, with the intent of preserving purchasing power and with the possibility of future growth. These investment alternatives include research -followed equities, equity strat- egies with attractive dividend returns, open- and closed -ended mutual funds, preferred stocks, adjustable -rate secu- rities and convertibles as well as bonds and annuities. We also believe that managed portfolios offer attractive long-term returns with the benefit of a dedicated and experienced money manager, chosen for expertise in a specific investment sector. Our partner, Oppenheimer Asset Management, helps us find the "best of breed" within our clients' desired allocation. Our Chief Investment Strategist, John Stoltzfus, whose weekly written research pieces and frequent media appearances along with regular client meetings pro- vided direction and context to a complex investment environment. He has helped form an effective synergywith our Chief Market Technician, Carter Worth, in advis- ing our Financial Advisors and clients. Professional Development The Oppenheimer Professional Devel- opment Department is charged with ensuring that our Financial Advisors are positioned to remain current and fully trained in the rapidly evolving investment world that we face. Our advisors' role has changed to a highly consultative "counseling" model and they must be prepared to counsel our most sophisti- cated clients. The experience of the last 5 years has resulted in a recognition by clients and advisors that they must realign their priorities. Clients are focusing on basic financial organization, crafting formal financial blueprints for their lifetimes, analyzing household cash flows, looking more closely at their existing lifestyle needs and crafting retirement living strategies that incorporate enjoyable and meaningful work, along with plenty of opportunities for family. Wealth transfer is of keen importance to clients, concerned to assure that their accumulated savings can be passed on to future generations. We see this hap- pening through meetings and discussions with clients on a multi -generational basis. The sure knowledge of higher taxes has made it all the more important that we keep our clients in touch with constructive solutions to this dilemma. Oppenheimer Trust Company Oppenheimer Trust Company is a leader in delivering innovative investment man- agement, asset and fund administration and fiduciary services to affluent indi- viduals, corporations and institutions. In the midst of change, there is a need for some things that remain constant. Today, more than ever, our clients need a strong foundation and a fiduciary to rely on as their financial affairs become more complex. During 2012, Oppenheimer Trust had a 31% growth in revenue and a 15% growth in fiduciary assets under our management and care. At year-end, 4 assets held by us stood at $2.2 billion as we continued to service the fiduciary needs of clients. Oppenheimer Life Agency, Ltd. Oppenheimer's insurance platform is designed to offer our clients sophisti- cated planning techniques that provide innovative solutions for long-term goals. In 2012, our annuity platform continued to focus on guaranteeing clients lifetime incomewith variable annuities. Given the ongoing iow interest rate environment, annuities as well as life insurance are an asset class which provides protection and yield to clients planning for retirement. Our life insurance platform was broad- ened to assist our Financial Advisors in focusing not only on the changing tax landscape and its impacton ourclients' overall estate planning objectives, but to also educate our clients on the crucial role life insurance can play in planning. Our Financial Advisors are able to coun- sel their clients on life insurance as an irreplaceable solution to legacy planning. Advisors are able to address clients' concerns regarding wealth transfer by establishing and designing appropriate plans utilizing life insurance and long- term care insurance as a part of their overall investment strategy. Our advanced executive benefit plat- form, which includes corporate owned life insurance, provides our corporate clients with a means to provide enha nced wealth -building benefits to their employ- ees. Oppenheimer continues to stand out as we offer our corporate clients innovative employee paid benefit pro- grams as well as advice to control the future cost of such benefits. Executive Services The Executive Service Group offers a range of sophisticated strategies to corporate executives to protect and enhance the value of their assets. These individuals are frequently concerned with the risks associated with concen- trated portfolios, where employer stock overwhelms all other assets. The desire to address this concentration risk may also be influenced by tax considerations or by regulatory requirements. Our expe- rience and advice surround the sale of stock under SEC Rule 10b5-1 and/or Rule 144, as well as a variety of hedging strategies that may provide qualified clientswith diversification, liquidity and downside protection. Executive Services also works with corporate sponsors of equity benefit plans to help find tailored and effective solutions. Retirement Services The Retirement Services Department consults with individuals, small employ- ers and institutions to develop strategies that will meet investors' retirement goals. Various retirement plan designs may be utilized to help meet both employer and employee goals in providing retirement income. Retirement account assets for Oppenheimer clients increased to over $20 billion at year-end 2012. The increase was due in large part to new client assets in our retirement advisory programs, now at more than $4.5 billion in assets. As company -funded pension plans contin- ue to diminish in importance, our focus on a process of prudent advice to plan fiduciaries has helped increase 401(k) plan advisory assets under management. Professional Alliance Group The Professionals Alliance Group (PAG) supports third -party professional firms in expanding their businesses by pro- viding financial services to their clients, further enhancing the partner's role as a trusted advisor. PAG has relationships with accounting firms, business man - agers, sports agents, consultants and other professionals throughout the world and represents over $2 billion in assets deposited with our firm. 5 ; ASSET MANAGEMENT Oppenheimer Asset Management's mission is to provide investment advice that best serves the needs and objectives of our clients, to implement effective solutions and innovative investment strategies and to protect and grow capital with appropriate risk controls. In 2012, revenues generated, client accounts serviced and assets ($20.9 billion) under management reached an all-time high. Our investment team, advisory process and analytical capabilities are the cor- nerstone of who we are and what we do. During the past year, we enhanced our traditional and alternative investment capabilities. We launched two new hedge funds and added additional high convic- tion managers to our recommended list of traditional managers. Throughout our history, we have soug ht to help our clients invest in specialized, niche areas where we find investmentopportunities managed I by talented investment professiona Is with strong credentials. We are increasingly being called upon to provide financial planning servicesfor clients seeking to unify their financial life. Our effort requires having opinions, views and ideas developed through an effort dedicated to proprietary investment research and market analysis. Our ser- vices will provide an ongoing program so that clients can be prepared to fund education expenses and retirement in a systematic manner. In coordination with a client's Financial Advisor, our profession- al staff collect the required information from clients, consult extensivelywith the client and ultimately review the results with the client to ensure that the plan provides a financial roadmap for them, both now, and in the future. Consulting Group The Consulting Group provides val- ue-added services in asset allocation, manager selection, portfolio construc- tion and manager -of -manager investment programs. Over the course of 2012, the Consulting Group continued increas- ing the number of unique investment managers and high conviction strategies offered. Each of these must have the flexibility and nimbleness to successful- ly navigate difficult markets. Assets in the discretionary and non -discretionary programs exceeded $9 billion. The fastest growing offerings include the Portfolio Advisory Service (PAS), a fee - based mutual fund advisory program and the Unified Managed Account (UMA) pro- gram, which allows for multiple investment managers, mutual funds and/or ETFs to be 6 combined into single custodial account. The Managed Allocation Series (MAS), part of the discretionary offerings available in separate account or mutual fund struc- tures, continued its strong growth as well as excellent risk -adjusted performance for clients. The MAS portfolios combine the Consulting Group's asset allocation, man- ager research and portfolio construction philosophy with a dynamic overlay process investment portfolios. Assets under man- agement exceed $2.1 billion. FAM provides a balanced approach to investing with exposure to both equity and debt investments. Its experienced man- agers manage in excess of $700 million. OIA, FAM and OIM offer clients direct access to Oppenheimer portfolio man- We are increasingly being called upon to provide financial planning services for clients seeking to unify their financial life. designed to respond opportunistically to changing market conditions. Oppenheimer Investment Advisers (OIA)/Oppenheimer Investment Management (OIM)1 Fahnestock Asset Management (FAM) The OIA and ON investment teams pro- vide fixed income strategies that share a common philosophy emphasizing a disciplined investment process and a long- term perspective focused on managing risk. The primary objective is to reduce risk by focusing on a diversified selection of higher quality investment -grade bond issues. OIA and ON managers have a broad capability and extensive experi- ence managing taxable and tax-exempt agers as well as a customized approach that allows the creation of a variety of portfolios to meet specific client needs. Alternative Investments The Alternative Investments Group ended 2012 with $2.5 billion in assets under man- agement across a select number of invest- ment partnerships. AIG provides alternative investment research and consulting and offers single -strategy, multi -strategy and separate account management for hedge funds and private equity. In January 2012, theAlG investmentteam was strengthened by the addition of new personnel with wide-ranging experience and capabilities. The team reconstituted the existing fund of hedge funds, the Advantage Advisers Whistler Fund, to embody their investment philosophy of f indi ng managers with strong pedigrees, specialized in a single area of expertise and a demonstrated ability to produce above market returns. In addition, we also launched two niche single strategy hedge funds, the Chichester Commodities U.S. Feeder Fund, a relative value commod- ities fund, and the Susa European Equities Fund, an equity long short fund focused on European companies. In 2013, theteam aims to introduce additional newstrategies with an ongoing focus on performance across all investments. Advisor -Directed Portfolio Management The OMEGA Program of discretionary portfolio management strategies contin- ued to grow in 2012. Assets at year-end stood at over $1.9 billion reflecting 26% growth for the year. The momentum behind this trend has been the addition of experienced Financial Advisor Portfolio Managers toour firm. These advisors utilize a variety of investment approaches in their efforts to achieve consistent returns for clients over time. The Preference Advisory program is non -discretionary, fee -based advisory program for clients who want to select their investments with the flexibility to change investment direction without additional costs or commissions. Program assets at year-end were $2.9 billion. 7 CAPITAL MARKETS During 2012, Oppenheimer focused on the need for a robust re-evaluation of our business, and especially on ensuring our product is being delivered efficiently to a client base that is receptive and prepared to compensate us for the value we bring to their investment process. Concerns about the European economy and sovereign debt, coupled with a growing disappointment in the pace of the recovery in the U.S., kept many investors sidelined throughout the year. The challenge posed by the deadlock in Washington kept overall volumes low with commissionable volume declining 15% versus 2011. However, market indices rose throughout the year with large -cap equities, especially companies with global reach and high dividends as major beneficiaries. EQUITY CAPITAL MARKETS Oppenheimer's Equity Sales and trading department has continued to provide the firm's clients with a consistent and high quality research product coupled with a global trade execution capability. Our trading desks in New York, London, Boston, Chica- go, San Francisco and most recently in Hong Kong continue to serve more than 1,000 institutional clients around the world. The Oppenheimer name in all these markets represents a value added, alpha generating service offer- ing that continues to be ranked in the top 30 financial services firms around the world. The Oppenheimer equity franchise comin- ues to grow and the firm is participating in an increasing number of equity transac- tions across multiple industry verticals. As the world economy stabilizes, we expect that there will be an increase in investor appetite for equities in the coming year and a corresponding increase in all types of equity activity including IPOs. Our client base continues to broaden in the U.S., Europe and Asia and there is demand from mutual funds, hedge funds and pension funds for high quality equity offerings. Oppenheimer has built its equity distribution platform to focus primarily on small and mid cap equity investors giving us a strong opportunity to underwrite equity offerings in growth and emerging growth verticals. During this past year, Oppenheimer completed over75 public, private equity and equity -linked offerings raising an aggregate of approximately $30 billion on behalf of our clients. Oppenheimer was an active book -runner in the Health- care, Industrial, Energy and Technology sectors. The firm is renewing its focus in the Financials Sector where we see high levels of activity emerging in the next several years. While 2012 saw lower volumes in offerings of Chinese companies, Oppenheimer has continued to maintain 8 an active dialogue with potential major Chinese issuers. We expect that in 2013 we will see a return of these companies to the major sectors: Consumer& Business Services; Energy; Financial Institutions; Health- care; Industrial Growth; and Technol- Oppenheimer has built its equity distribution platform to focus primarily on small and mid cap equity investors giving us a strong opportunity to underwrite equity offerings in growth and emerging growth verticals. U.S. capital markets as valuations of exist- ogy, Telecom & Internet. In addition, ing China listed equities have improved. we provide Special Situations research, as well as Investment Strategy and The past year was particularly active in offerings related to the energy sector. New technology has significantly increased natu- ral gas and oil production in North America, which in turn has required ever increasing amountsof newcapital. There has been and will continue to be record levels of issuance from energy companies, including those providing infrastnrcture, transportation and production enhancement. As this process continues, we anticipate broad opportunities for middle market companies, such as those for which we can be a significant partner. Oppenheimer's Equity Research Depart- ment continues to provide our clients with high -quality, differentiated research. At year-end, our research group consisted of 34 senior research analysts covering approximately 600 companies across sac Technical research. As we have become increasingly global, among U.S. investment banks, we have the largest coverage of U.S.-listed China based companies, with threeanatystsfolkdwing over 40 companies and new areas of coverage in the Hong Kong, Singapore, China and India markets. In London, we vvill begin offering specialized research on a top- down basis to investors looking for additional perspective on companies based in Europe and trading exclusively on European markets. The September 2011 Top Picks portfolio which launched September 29, 2011 and consisted of each analyst's top idea for the following 12-month period gen- erated a total return of 32%, after fees and expenses. It outperformed the S&P 500 index by over 600 basis points. The department has raised over $125 million to date across the three Top Picks Portfolio: UITs, and will continue to introduce similar products for clients. We conducted 11 investor conferences, providing an in depth look at many aspects of our research coverage. Over 500 public and private companies were provided a forum to meet with approximately 2,000 institutional investors. These events were accompanied by our robust Corporate Access program, where we provide com- panies the opportunity to travel with our professional staff to meet with institutional investors in their offices around the U.S., London and in Hong Kong. In 2012 we provided this service to over 500 compa- nies, which participated in thousands of meetings around the world. Looking forward, our attention in the coming year will be focused on ensuring Sales and Trading staff are deepening the penetration of our product with existing clients, and to broaden the reach of our product to develop new clients as we have done in Hong Kong with the addi- tion of four seasoned Equity professionals and local research product to the existing team. We are now covering 13 Asian markets and are offering Asia Equity execution to the Firm's global clients. 9 INVESTMENT BANKING A Leading Middle Market Investment Bank Oppenheimers investment banking business results were led by our mergers and acqui- sitions practice during 2012. As corporate clients continued to re -position their business for a changing global environment, they engaged Oppenheimer to render actionable advice and to assist them in executing on their strategy. Increasingly, middle market corporate clients and private equity firms rely on us for advice in our sectors of focus where vve have proven expertise and possess strong industry knowledge. The firm acted as strategic financial advi- sor on 21 mergers and acquisitions, with a transaction value of $2.7 billion in 2012. Overall M&A activity in 2012 continued to be constrained by uncertain macroeco- nomic conditions. Momentum slowed as the year progressed, as buyers and sellers became more cautious. Confidence levels are increasing, and a stronger econo- my, a strong stock market and early announcements of M&A transactions will continue to stimulate increased M&A activity throughout 2013. During 2012, Oppenheimer completed a number of significant strategic advisory assignments, including the $635 million sale of Decision Resources to Piramal Healthcare Ltd., the $295 million sale of Things Remembered to Madison Dearborn Partners, the $240 million sale of Reach Medical Holdings, Inc. to Air Medical Group Holdings, Inc., the $193 million sale of Flan- ders to I night Equity, the sale of Secure-24 to Pamlico Capital, and the recapitalization Selected M&A Transactions Undisclosed CONNOLLY Advisor on Recapitalization by Advent International Exclusive Financial Advisor July 2012 10 $635,000,000 IlIlDResources Advisor on Sale to Pirarnal Healthcare Ltd. Joint Sell Side Advisor June 2012 of Connolly, Inc. by Advent International. During the downturn in the first half of 2012, many non-U.S. publicly -listed com- panies have looked to "go private;" we were active in this area as well. With our full -service suite of capabilities, Oppen- heimer continues to be a partner of choice. In the first half of the year, Oppenheimer was active in supporting our clients in their issuance of equity securities to the public markets through initial public offerings and secondary offerings. We also assisted clients in the private placement of equity securities. During the year, Oppenheimer completed 76 public equity offerings and two private placements, raising approximately $31.3 billion in capital. The firm experienced the most equity raisi ng activity in the healthcare and energy sectors. The firm also contin- ues to build on its capabilities in Asia and Europe, where it works with companies in the region to access the U.S. capital markets. In mid-2012, Oppenheimer formalized its collaborative relationship with RBS Citizens Bank to provide Mergers & Acquisitions and Equity Capital Markets expertise to RBS Citizens' middle market clients, while simultaneously offering credit and commercial banking solutions from RBS Citizens Bank to Oppenheimer's middle market clients. This relationship leverages complementary middle marketcommer- cial and investment banking products, ser- vices and expertise and we are optimistic about the potential of the relationship, $295,0000,000 �MUMS BERED 44.g.:,I� Sale to Madison Dearborn Partners, LLC Exclusive Financial Advisor May 2012 This unique collaboration between Oppen- heimer and RES Citizens Bank has result- ed in several early successes in leveraged finance situations where Oppenheimer's advisory relationships secured significant financing transactions for RBS Citizens Bank. Notable transactions in 2012 include RBS Citizens acting in the Lead Arranger role in the $105,000,000 financing for the acquisition of TaxAct by Infospace, a Co -Lead Arranger role in a $170,000,000 financing for PMC Group in support of their acquisition of Arkema's global tin stabilizer and catalyst business, and the Lead Arranger rote in a $120,000,000 refinancing for Geo Specialty Chemicals. In 2012, we had a change in leadership in the Investment Banking Group leading to a renewed focus on growing the busi- ness and capitalizing on the dislocation and uncertainty at manyof our investment banking peers. The new leadership team hasembarked on a number of key initiatives to drive g rowth, including: (i) expanding our coverage and expertise in industry sectors that we believe will experience significant growth, (ii) expanding our relationships with middle -market oriented private equityfirms, (iii) driving alignment with the Equity and Debt Capital Markets Groups, (iv) leverag- ing opportunities within our large private client network, and (v) developing the RBS Citizens relationship to generate additional opportunities. Looking forward to 2013, we believe we are on course to leverage our key strengths and capitalize on stabilizing capital marketsand increased M&A activity. Selected Equity & Leveraged Finance Transactions S166,175,000 ArdeaOf 0Biurcimre, s Hybrid Overnight Fallow -On Offering Lead Manager February 2012 $72,450,000 G52 EIMROIIYEMTIR Initial Public Offering Lead -Left Bookrunner February 2012 $120,000,000 G E O sarntiur a¢.wcus Senior Credit Facility Exclusive Financial Advisor October 2012 PUBLIC FINANCE Municipal finance continues to be the backbone for states, cities and public entities to continue to serve the needs of their residents through the con- struction and rehabilitation of needed infrastructure and to finance long-term services. Oppenheimer's Public Finance Group operates a business model geared a banking strategy integrating both tra- ditional governmental issuers and other transactions, that are tax-exempt by virtue of the 501(c)3 status of the bor- rower or a federal tax-exempt allocation. Education finance continues to be of high importance to state and local issues. In Oppenheimer's Public Finance Group operates a business model geared toward service to clients throughout the public sector. toward service to clients throughout the public sector. Oppenheimer offers a broad suite of services: underwriting of fixed and variable rate transactions, placement of short-term notes, finan- cial advisory services on general market transactions as well as project finance to issuers both within and beyond the mainstream municipal market. In addition to achieving an all-time high in gross revenues, the Public Finance Group made strides in 2012 toward developing new business strategies that position bankers to increase the number of trans- actions and revenue in 2013 and beyond. These include the opening of four new offices in Dallas, TX, Fort Lauderdale, FL, Houston, TX, and Leawood, KS and collaboration with both Oppenheimer's short-term municipal desk and Oppen- heimer Multifamily Housing & Healthcare Finance, inc. Indeed, as several of the industry's most prominent public finance groups have scaled back operations or shuttered entirely, Oppenheimer has capitalized on the retrenchment to strategically add talent. Public Finance is positioned to achieve success due to the wide array of expe- rience and performance spanning a broad spectrum of sectors and credits. Oppenheimer's 2012 transactions reflect 2012, Oppenheimer managed over $500 million in education -related debt, ranging in principal amount from under $500,000 to $65 million. The Topeka office originat- ed over $50 million on behalf of Kansas school districts, and the recently opened Texas office has already begun to finance independent school districts. In the Midwest, Oppenheimer had strong success serving as co -senior managerof approximately$1.5 billion of bond issues for the Illinois Department of Employment Security. In addition, we again assisted Jackson County, Missouri to refinance the Truman Med- ical Center, this year for $39 million. In addition, Oppenheimer served the City of Carmel, Indiana, with the sale of two series of Lease Rental Revenue Multipurpose Bonds. The bonds were used to finance a parking facility for a public building in the City Center and to restructure the existing debt of the City and the District. Oppenheimer served as co -manager on over $26 billion of bond issues nation- wide in 2012. Major issuers included the Dormitory Authority of the State of New York, the Metropolitan Transportation Authority, the New York City Transitional Finance Authority, the State of California and the County of Los Angeles. Significant Financings by the Municipal Capital Markets Group in 2012 $1,469,940,000 State of Illinois Unemployment Insurance Fund Building Receipts Revenue Bonds $185,145,000 City of Carmel (Indiana) Redevelopment District Lease Rental Revenue Multipurpose Bonds $135,000,000 Wayne County, Michigan General Obligation Limited Tax Notes $101,322,000 Rockland County, New York Various Purpose Bonds and Revenue Anticipation Notes $48,244,000 Hudson County (New Jersey) Improvement Authority County Guaranteed Pooled Notes $46,875,000 Jefferson County (Texas) Industrial Development Corporation Hurricane Ike Disaster Area Revenue Bonds $53,190,000 Township of Lyndhurst, New Jersey Bond Anticipation Notes $39,025,000 Jackson County, Missouri Special Obligation Refunding Bonds $38,800,000 Space Coast Infrastructure Agency Infrastructure Improvement Revenue Bonds $31,645,000 North Kansas City School District No. 74 General Obligation Refunding Bonds kE DEBT [APITAL MARKETS Fixed Into e Sales, Trading a' nod Research" The Fixed Income division had another year of solid performance. While the U.S. Presidential election, the debt ceiling and the fiscal cliff provided a colorful backdrop to the rates and credit markets, the over- whelming influence on the bond market was the Federal Reserve QE3 (Quantita- tive Easing 3) program. Risk Free rates remained at historic lows and the total amount of outstanding U.S. Treasurydebt reached record levels once again. U.S. corporations continued to issue record amountsof debt atadvantageous interest rates. U.S. home owners continued to refinance their mortgages at historically low rates and these low cost attractive rates began to fuel new construction and the beginning of a recovery of the housing market as new levels of afford- ability opened this critical market to new participants. In addition to buying by the U.S. Federal reserve, U.S. private investors continued to allocate their savings to the bond market fueling professional money managers to easily deploy the resulting fund inflows into bond portfolios across the spectrum of risk appetite from emerg- ing market, to high yield, to highly con- servative U.S. Treasuries. Investor demand for higher yields led many buyers to purchase bonds from sovereign and corporate issuers who had been effec- tively locked out of the debt markets for nearly 5 years through lack of investor demand. Corporations throughout the emerging and developed world found a receptive market for their debt, leading to record new issuance of Emerging Market corporate debt. As global banks continue to pull back their financial exposure outside of their home countries to non -domestic borrowers, those same borrowers increas- ingly found the bond market a suitable replacement. While Oppenheimer does not focus on Emerging Market bond origina- tion, we do transact with many domestic and international clients who are active participants in the secondary markets. Oppenheimer consolidated the leader- ship of the Taxable and Municipal bond divisions in 2012. This change took effect mid -year and has already resulted in the rationalization of some duplicative costs. We also created a growing number of revenue enhancing synergiesasa result of the combination. During the year, we set the stage for new growth in this import- ant market by adding additional municipal traders, sales people and public finance bankers. While these new capabilities are already contributing to the profitability of the division, we anticipate that these enhancements will lay the groundwork for further expansion in the coming years. By staying attuned to news and events in the municipal markets, we were able to find opportunities to find real value for clients as "bad news" for some issu- ers was misinterpreted by the markets and presented unusual value to "smart buyers" with an ability to understand how fragmented the municipal market can be with neighboring issuers having completely different credit profiles. Such opportunities have prompted unto begin offering municipal research specializing in opportunity investing as well as services to advise municipal investors on portfo- lio construction and on the attraction of taking advantage of "swaps" to increase yield and shorten duration and better position portfolios for a rising interest rate environment. We continued to expand the number of Fixed Income accounts covered and were able to improve our overall market share across all fixed income asset classes. This was accomplished through our hiring of experienced sales, trading and research personnel, while maintaining our com- mitment to providing clients with high quality service and market leading ideas. 12 Our dient-f acing business model insulated us from the risks associated with extreme volatilityand market exposures often asso- ciated with large proprietary tradi ng desks. The expected near term effectiveness of the Volcker Rule, which severely curtails proprietary trading by banks, will not impact Oppenheimer's business because we continue to operate as a broker and a dealer, and not as a commercial bank. Our business remains primarily focused on servicing our clients with value added research and conflict -free trading capabil- ities. Our ability to offer execution across broad areas of fixed income, including U.S. Government and Agency debt, high grade corporate debt, mortgage debt, high yield corporate debt, emerging market debt and preferred shares, is unique among our competitors. Given our relationship with Oppenheimer Multifamily Housing & Healthcare Finance, we effectively and promptly distributed over $1 billioninnew issues of FHA insured securitized debt in 2012. While we deal with larger institutions on a regular basis, the majority of our institu- tional clients are "middle market" accounts and thus remain largely underserviced by our larger competitors. The high level of service we provide to these clients has won us a dedicated and loyal base and permits us to earn the opportunity to fill many of their needs. In 2012, we continued to build our business by hiring experienced professionals located throughout the United States, as well as in London, Tel Aviv and Hong Kong. Although the domestic financial markets have generally recovered from the credit crisis, many large firms have been forced by the upcoming Volcker Rule to priori- tize their origination efforts and curtail proprietary risk activities. This has created a void in the market that Oppenheimer is uniquely positioned to serve. Additionally, small boutiquesthat were once considered safe harborsduring the crisis are increasingly challenged in the new environment. With- out capital, research or a diversified mix of clients and trading capabilities, these firms have had difficulty maintaining the attention of large institutional clients. Our focus on middle market customers and nichetrading capabilities continues to be an advantage in the post credit crisis environment. Oppenheimer Europe Oppenheimer continued to grow its fixed income franchise outside the United States. With an increase in the size of our fixed income trading group in London and our newly opened facility on the island of Jersey, we believe that we can continue to grow our business. Our growth will be sourced in the UK as well as the rest of Europe through our unique ability to service inquiries from institutions requiring higher levels of service and attention. Oppenheimer Asia In Asia, we hired new leadership on the trading desk in Hong Kong. We have since made significant progress in generating consistent revenue and profitability. We will continue to recruit talented professionals in Hong Kong and through a small dedicated staff, we intend to continue focusing on offering Asian owners and issuers of debt access to niche markets in Europe, the U.S. and Asia. 13 COMMERCIAL MORTGAGE BANKING Oppenheimer Multifamily Housing & Healthcare Finance (OMHHF) is a licensed FHA mortgagee and GNMA Seller/Servicer. Its role is to assist owners of multifamily apartment properties and healthcare facilities, including nursing home and assisted living properties, to employ a government -assisted mortgage program in financing or re -financing their mortgages cost effectively. As a leading commercial mortgage banker, we provide customers with a full range of services such as origination, underwriting, closing, securitizing and servicing of their mortgage loans. In 2012, we dosed 97 loans forjust under $900 million. These loans represented a wide range of properties including apartments, hospitals and healthcare facilities. Fiscal 2012 saw us among the top five lenders for FHA Multifamily Ini- Bethel Health & Rehabilitation Center, Connecticut tial Endorsements and the top 10 of all lenders of for FHA Firm Commitments. Our servicing portfolio increased by 36.4% from 2011 to 2012. We faced increased competition to refinance loans from the existing OMHHF portfolio. Pro- actively, we identified all loans eligible for refinance and contacted those borrowers well in advance. As a result, we were able to keep a high percentage of the refinanced loans. Another advantage is our ability to collab- orate with other Oppenheimer divisions to cross -sell products, with the opportunity to raise capital from the equity markets or through healthcare financing in the municipal market. These products create additional value for Oppenheimer's clients. We continue to pursue correspondent relationships to leverage our infrastructure while sharing revenuevvith well established unrelated mortgage bankers. We find we are able to create addition- al efficiencies and economies by using OMHHF team members to perform all necessary services in-house. We were helped in this effort by Oppenheimer's name and reputation. Both proved attrac- tive to the seasoned candidates whom we successfully brought on board in all areas of our business, including Originations, Underwriting and Servicing. Another ongoing challenge is the impact of rapid technological growth on our business. Our customers' need for more information more quickly can only increase. We are stepping up our efforts to devise real-time, automated methods of providing these data on a robust and secure platform. Going into 2013, we continue to pursue relationships with firms that can provide our clients with the abil- ity to finance commercial properties with non -FHA financing alternatives to expand our ability to provide one -stop shopping. We intend to also sell other Oppenheimer products to eligible and interested clients. Representative Properties Financed by OMHHF in 2012 Ellis Hospital 2 New York $54,850.000 Lebanon Ridge Texas $31,474,800 Hawthorne Hill Colorado $28,240,000 Shores at K-Rock Oklahoma $28,119,500 Amberleigh Shores North Carolina $26,560,500 Bethel Health & Connecticut Rehabilitation Center $26,268,700 Sunlake at Edgewater Alabama Apartments $21,000,000 Wembly at Georgia Overlook $20,427.800 Waterford Park Texas Apartments $16,479,00 14 Our Annual Report on Form 10-K for the year ended December 31, 2012 also serves as our 2012 Annual Report to Stockholders. It is available to view and print online on our website at www.opco.com on the Investor Relations page. A stockholder who wants to receive a paper or email copy of our Annual Report on Form 10-K for the year ended December 31, 2012 must request one. The report is available, without charge, except for exhibits to the report, by (i) writing to Oppenheimer Holdings Inc., 85 Broad Street, 22"4 Floor, New York, New York 10004, Attention. 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Top Tower, 50 Dizengoff Street POB 23722 Tel Aviv 61236 Israel 972-3-526.2666 Principal Offices Oppenheimer Holdings Inc. 85 Broad Street New York, NY 10004 (212) 668-8000 FAX (212) 943-8728 info@opco.com Oppenheimer & Co. Inc. Corporate Headquarters 85 Broad Street New York, NY 10004 (212) 668-8000 FAX (212) 943-8728 Capital Markets 85 Broad Street New York, NY 10004 (212)856-4000 www.opco.com Oppenheimer Asset Management Inc. 65 Broad Street New York, NY 10004 (212) 907-40DO FAX (212) 907-4080 www.opco.com Oppenheimer Trust Company 18 Columbia Turnpike Flo'r am Park, NJ 07932 (973) 245-4635 FAX (973) 245-4699 www.opco.com OPY Credit Corp. 85 Broad Street New York, NY 10004 (212) 885-4489 FAX (212) 885-4933 Freedom Investments, Inc 375 Raritan Center Parkway Edison, NJ 08837 (732) 934-3000 FAX (732) 225-6289 Oppenheimer Multifamily Housing & Healthcare Finance 1180 Welsh Road, Suite 210 North Wales, PA 19454 (215) 631-9151 FAX (215) 412-4583 Phnm9,4hy by UW Fh-ITand Idn Ma&e Officers A.G. Lowenthal Chairman of the Board and Chief Executive Officer E.K. Roberts President and Treasurer J.J. Alfano Executive Vice President and Chief Financial Officer D.P. McNamara, Esq. Secretary Board of Directors R. Crystal° W. Ehrhardt** M. Keehner*** A.G. Lowenthal K.W. McArthur* A.W, Oughtred" E.K. Roberts * members of the audit commit- tee * members of the compensation committee ° members of the nominating/ corporate governance commit- tee Auditors PricewaterhouseCoopers LLP Registrar and Transfer Agent Computershare Shareholder Services LLC 480 Washington Blvd, AIMS 074-29-135 Jersey City, NJ 07310 The Company's financial information and press releases are available on its website, www.opco.mm, under "Investor Relations". A copy of the Companys Annual Report on Form 10-K is available by request from infoCopco.com (')PPENHEIMER Oppenheimer Holdings Inc. Corporate Headquarters SS Broad Street New York, NY 10004 OPCO 2014 Q1 Firm Data As of 3/31/2014 Employees 3,506 Financial Advisors 1,390 AUA $87.2 Billion AUM $25.6 Billion Total Equity $530.58 Million Roots tracing back to 1881 96 Offices 25 States 5 Foreign Jurisdictions Rick Worner Phone Number: (913) 383-5156 Managing Director Fax Number: (913) 383-5158 Oppenheimer & Co. Inc. E-mail Address: rick.worner@a,opco.com Mr. Worner has been notably active in structuring economic development financings using various tax increment, transportation development and neighborhood improvement district structures. Rick Worner is a managing director of Oppenheimer's Investment Banking Department. He entered the investment field in 1981 after having served as Governmental Affairs Director of the Greater Kansas City Chamber of Commerce. Mr. Worner, a graduate of the University of Kansas, has participated in state and local civic affairs throughout his career. He has served on numerous community boards including: Kansas State Park and Resources Authority, Kansas Life -Lines, Love Fund Charitable Board, and Kansas City Tomorrow. He has been notably active in structuring economic development financings using various tax increments, transportation development and neighborhood improvement district structures. These bonds are secured through sales tax, excise tax, special benefit taxes. Mr. Worner served as lead banker on the various transactions for the Kansas Turnpike Association, KDOT, the Unified Government of Wyandotte County, and Kansas City, Kansas Board of Public Utilities. These innovative financings became the model for many similar financings throughout the Country. Mr. Worrier was the lead Banker for Oppenheimer on the Village West Project in Kansas City, Kansas. Village West Clients include: Nebraska Furniture Mart, Cabela's, Great Wolf Lodge, Kansas Speedway, The Legends Shopping Center, Hollywood Casino, Sporting Kansas City Soccer Stadium and the KC T Bones Minor League Baseball Stadium. The total Real Estate Investment in Village West exceeds $ 1,000,000,000.00, Currently Mr. Worrier is leading the development efforts on 2 new STAR Bond projects in Kansas. The first is a $ 200,000,000.00 Project in Wichita, Kansas. It is anchored by a Cabela's store and will feature a Gymnasium Complex designed to draw various athletic tournaments from a 10 State Region. The second is a 100,000,000 Project in Goddard, Kansas. It will be anchored by an International Aquatic Complex designed to draw competitive swimming & diving events from across the United States. It is anticipated that both of these projects will be under construction in 2013. C�aPPENHEIME Byron DeLear Chairman Energy Equity Funding Dear Byron, June 24, 2014 Oppenheimer & Co. Inc. 10601 Mission Road Suite 300 Leawood, KS 66208 (913)383-5156 Rick Worner Managing Director Investment Banking Rick. Womer@opco.com Member of All Principal Exchanges As you are aware, Oppenheimer & Co.,Inc is a full service Investment Banking firm with offices located throughout the United States. Oppenheimer & Co.,Inc. has assisted in the financing of billions of projects that utilize some form of "TAX INCREMENT" financing. The Pace Program uses a form of TAX INCREMENT financing. We have reviewed the PACE funding program. We are confident that should we be presented with bond documents that contain terms and conditions acceptable to us that the program is financeable thru the use of long term debt. Specifically we stand ready to assist you in financing the projects for the City of Fayetteville. Should you have any questions please feel free to contact us Sincerely Yours, L441L—� Rick Worner Managing Director John Rodstrom bio John Rodstrom joined Oppenheimer & Co. Inc. in March, 2012, as Managing Director and Head of Public Finance. Mr. Rodstrom has 33 years of public finance experience in Florida, Colorado, California, South Carolina, Georgia, and Texas. Prior to joining Oppenheimer, he spent time in the public finance divisions at Kidder Peabody, Citigroup and Wachovia. John serves a broad range of municipal clients, and his repertoire continues to expand. Transactions in which he has been involved include healthcare, educational facilities, school COPS, water and sewer, complex refundings, community development districts, tax increment financings, parking, excise taxes, special assessment, electric power, airports, and transportation issues. In addition to his record as a banker, Mr. Rodstrom is also a public servant. He finished his fifth and final term on the Broward County Commission in 2012, completing a career in local governance that spanned over three decades. Before being elected to the Broward County Commission in 1992, he was elected Vice Mayor and Commissioner for the City of Fort Lauderdale and served from 1982 through 1988. Additionally, Mr. Rodstrom served as Mayor of the City of Sunrise. Mr. Rodstrom has a Bachelor of Arts from Columbia University and a Juris Doctorate from Nova Southeastern University School of Law. He holds the Series 5 (Interest Rate Options Examination), Series 7 (General Securities Representative License), 63 (Uniform Securities Agent State Law Examination) and 53 (Municipal Securities Principal) licenses. PACE Equ ity Renovating America the Efficient Way PACE Equity PACE Equity is in the business of enabling building owners and contractors to develop PACE funded projects. We take care of the project governance, energy engineering, and financing of these projects. We are building a unique infrastructure for what is the greatest need in the evolving PACE marketplace — securing and developing projects from the ground up. PACE Equity's mission is to be the national leader in developing PACE projects. Our goal is to be actively developing projects in all PACE markets over the next 2-3 years by building a solid infrastructure that can be leveraged at a local level. Beau Engman, PACE Equity Founder Engman is recognized as a leader in the drive for sustainability in the built environment. Through roles with non -profits, the nation's largest energy service company and prominent private equity firms, he has consistently driven efforts to break down barriers to energy efficiency in the private sector. In addition to serving as the founder of PACE Equity, Engman serves on the board of PACENow, a non-profit organization focused on evangelizing PACE around the country. Previously, Engman was Vice President of Commercial Energy Solutions for Johnson Controls, managing the delivery of energy efficiency solutions to Global 1000 and commercial real estate companies and prior to that was co-founder of E2 Capital Partners, which provided financing solutions for energy efficiency projects within major commercial and industrial enterprises. Prior to working in the Energy Efficiency Industry, Mr. Engman managed four different software business — two of which were sold to public companies. Mr. Engman was CEO of BuildTopia, a web based ERP system for the residential construction Industry which sold to Constellation Software in 2010; He was also founder of HomeWrite, a web based home management system that was sold to Move.com in 2001. He graduated from the University of Richmond with a degree in Finance and International Business. Mitchell, wlliams. Selig, Gates & Woodyard P.L.L.C. Contact: Benjamin D. Brenner, Counsel E: bbrenner@mwlaw.com P: (501) 688-8884 C: (501) 412-2002 Little Rock Office: 425 W. Capitol Avenue, Suite 1800 Little Rock, Arkansas 72201 Rogers Office: 5414 Pinnacle Point Drive, Suite 500 Rogers, Arkansas 72758 Mitchell Williams is a fully -service law firm organized into three areas of service — Business, Regulated Business, and Litigation. The firm employs over 90 attorneys from four offices in Arkansas and Texas. Information about all of the firm's services and attorneys can be found at www.mitchellwilliamslaw.com. Mr. Brenner is one of the few attorneys in Arkansas specializing in the practice of sustainability law. Through this practice, he regularly represents and advises individuals and companies on the law of sustainable business practices and products. He is also currently the chair of the Little Rock Sustainability Commission. In this capacity, he is providing leadership to the City of Little Rock as it moves toward the adoption of a comprehensive sustainability plan and the creation of a PACE District. The other attorneys from Mitchell Williams who would be part of the team for this project are: Public and Municipal Finance attorney Michele S. Allgood. Ms. Allgood practices out of the firm's Little Rock Office. She has extensive experience in all areas of municipal finance, including improvement districts, bond counsel, underwriter's counsel, issuer's counsel, trustee's counsel and borrower's counsel. Clients for whom Ms. Allgood has provided assistance include state agencies, cities, facility boards, and commissions. She has experience in taxable and tax exempt and public and private municipal finance transactions. Public and Municipal Finance attorney Jill Drewyor. Ms. Drewyor practices out of the firm's Rogers Office. She concentrates her practice in public and commercial finance, real estate and development, including state and federal low-income housing tax credit developments. Ms. Drewyor's experience in financing extends to representing clients in handling all states of complex public finance, real estate and project development, and representation of lenders and borrowers in complex lending transactions and tax credit financing. She represents a variety of issuers, borrowers, underwriters and trustees in tax-exempt and taxable public and private finance transactions. Ms. Allgood and Ms. Drewyor will assist with work related to project financing. Banking, Real Estate, and Securities attorney D. Nicole Lovel. Ms. Lovell practices out of the firm's Little Rock office. She is an experienced securities, banking, and commercial real estate attorney, and will provide guidance on commercial real estate, financing, and securitization issues. Other lawyers, paralegals, and support staff of the firm will be available to the City to work on this project and may be added to the team depending on the needs of the project and to best serve the City. MITCHELL sustainabdity WILLIAMS Sustainability touches every person and every industry and is changing the way individuals, companies and lawmakers make day-to-day decisions. To stay competitive, businesses of all sizes must embrace the concepts of environmental integrity and social responsibility. Mitchell Williams' Sustainability Practice helps our clients stay ahead of the curve in all areas of business within this rapidly changing legal and regulatory environment. The highly -integrated team of attorneys uses a multi -disciplinary approach to providing effective legal advice, drawing on members from the firm's environmental, energy, real estate, business and finance, corporate, utility, intellectual property, and tax practices. In addition to providing counsel on a wide array of issues that arise in connection with the generation and distribution of renewable and alternative energy resources and the development and financing of new sustainability technologies, the team's attorneys will also help clients evaluate current policies and standards, manage emerging risks, navigate climate change regulations, understand and benefit from emissions trading programs, audit current practices, and develop new sustainability initiatives. Other services included in the practice are: • Renewable energy technology • Economic development and government incentives • Green leasing, financing, acquisitions and sales • Land use, entitlements and repositioning of projects • Environmental due diligence, permitting, audits and compliance • Brownfields redevelopment, incentives and Superfund laws • Procurement law and government contracts • Environmental infrastructure project development, including water supply and wastewater facilities and contaminated sediment dredging projects • Energy infrastructure project development, including solar, wind, hydroelectric and biofuel • Government affairs and public policy • Construction and real estate litigation and dispute resolution • Carbon audits, offsets and investments in new carbon markets • Real estate and LEED-certified green building construction, including design, leasing, marketing, insurance and risk management • Tax incentives, including conservation easements Representative experience includes: • Negotiation and execution of wind energy leases for properties in Arkansas, Oklahoma, Texas and Wyoming • Bond financing and pilot program development for wind turbine manufacturers • Negotiation of tax credits for alternative energy for major automotive manufacturer • Represent second largest bio fuel manufacturing plant in Arkansas from initial start-up to full scale operation. • Represent international wind blade manufacturer in all aspects of project finance and day to day business operations. • Outside counsel to state-wide electric generation and transmission company with significant hydroelectric assets. • Representation of largest consumer (energy recovery) of waste tires in the state of Arkansas • General and legislative counsel to the Arkansas Recyclers Association, which represents the state's four scrap consuming steel mills and the major scrap processors • Representation of an Arkansas -based multi -plant drum recycling and remanufacturing company • Representation of the largest tire processing and recycling facility in the state of Arkansas • Negotiation of agreements associated with capture and sale of carbon credits to be generated by capture of methane in an Arkansas landfill • Negotiation of permits associated with one of the nation's largest hazardous waste processing/recycling facilities Mark Grobmyer Partner, Grobmyer, Ramsay & Ross Managing Director, P80 Group Foundation Managing Director, Global Technology Deployment Initiative (GTDI) Mark Wootten Grobmyer, graduated with a Bachelor of Arts degree, with honors, from Washington and Lee University and then studied law at the University of Arkansas School of Law where he was awarded his Jurist Doctor Degree. He also studied international law and business at the University of Exeter in England. In private law practice, Mr. Grobmyer served as Chairman of an American Bar Association Committee on Financial Services. He also served for many years as Senior Partner of a commercial law firm where his legal practice focused on International and Financial Services Law. While practicing law, Mr. Grobmyer also served as a Special Supreme Court Justice. He has also served as a Senior Advisor to the American Gas Association, the American Society of Association Executives, the International Sister Cities Conference, The World Trade Association, The International Gas Center, the International Unconventional Energy Association, the International Center for Sustainable Development, the Congressional Awards Foundation and Chief Executive Magazine, the "Club Journal" of Fortune 1000 CEOs. Recently Mr. Grobmyer is serving as a member of the Blue Ribbon Climate Panel, which is addressing how best to deal with methane as a damaging greenhouse gas. Mr. Grobmyer also serves as Managing Director of the Global Technology Deployment Initiative (GTDI) which assists technology companies, especially clean technologies, in accelerating their deployment internationally. Mr. Grobmyer worked to organize and coordinate involved a joint meeting of the Club de Madrid (more than 93 former Presidents and Prime Ministers of more than 60 nations) and the P80 Group Foundation (works with world's largest pension, sovereign wealth funds and insurance companies). This conference led to the signing of the Little Rock Accord, to mobilize billions of dollars to finance the deployment of technologies which can help address growing shortages of resources related to energy, water, clean air, food and medical services. Mr. Grobmyer currently serves as a Managing Director of the P80 Group Foundation, which has established a Joint Task Force with the Club de Madrid to work to implement the Accord. HERS Inc., 1206 S. Main St. Little Rock, AR 72207 501.353.0605 Ron Hughes, owner and president of Home Energy Rating Services, Inc., is a certified HERS Energy Rater, RESNET certified Green Rater, NAHB National Green Building standard Verifier and a member of the Residential Energy Services Network (RESNET). Ron has held a Class B HVACR license in Arkansas. He was first certified as an energy auditor in 1981 by the State of Missouri. He has been a residential energy efficiency consultant since 1983 when on contract to the Arkansas Energy Office. Ron is a member of the mayoral appointed Little Rock Sustainability Commission and has served 'as both vice -chair of the Commission and co- chair of the Built Environment Committee. Ron has been involved in developing, implementing and managing HERS programs since 1987 as Director of Energy Rated Homes of Arkansas, a nonprofit organization funded by the Arkansas Energy Office. Based on the early work of Western Resources in the Pacific Northwest, ERHA was the first state -sponsored HERS program in the country for new and existing homes. He was later president of Energy Rated Homes of America (ERHA) and was instrumental in establishing HERS programs in numerous states. ERHA was rebranded RESNET in 1995 as the Energy Services Network (RESNET), and has grown to be the rating system for homes in the country. The goal was a national, uniform home rating system. It has happened. Powers of Arkansas 5440 Northshore Dr. North Little Rock, AR 72118 501.374.5420 Alan Hope, president and owner of Powers of Arkansas, which started in 1985, is a native of Little Rock. He is a graduate of the University of Arkansas with a Bachelor of Science degree in Industrial Engineering. A LEED Accredited Professional, Class A HVACR license holder, and Certified Energy Manager with more than 29 years of experience meeting the building HVAC, Controls and Service needs of higher education, healthcare, K-12 schools, commercial and industrial customers. Mr. Hope's extensive experience with energy management systems, operations and maintenance, building automation and control systems, energy strategies, business, design, contracting, service and construction of varied facilities afford expertise for each Customer. In 2010, he was a finalist in the Arkansas Business "Business Executive of the Year" and Powers of Arkansas received the "Arkansas Business of the Year" {Cat 111 76-300 employees). Powers was the "Siemens Field Office of the Year" for both 2010 and 2011. With over 100 employees, Powers is the Arkansas Company for Building HVAC, Controls, and Service. Pinnacle Energy Services 2820 E. Millennium Dr., Suite 2 Fayetteville, AR 72703 479.301.2076 Ryan McClain, principal at Pinnacle Energy Services, earned his Bachelor of Science degree in Mechanical Engineering from the University of Arkansas. Since then he has continued to enhance his education by adding professional certifications to his education/experience/resume, including being a Registered Professional Mechanical Engineer in Arkansas, a LEED- AP in the area of Existing Building Operations and Maintenance, a Certified Measurement and Verification Professional (CMVP) with the Association of Energy Engineers (AEE), a Certified Energy Manager with AEE and a Commissioning Authority through the AABC Commissioning Group. Ryan's professional affiliations are the American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE), Association of Energy Engineers, and the United States Green Building Council (USGBC). Sun City Solar 57 Marcella Dr. Little Rock, Arkansas 72223 501.412-.1513 Pam Speraw, co-founded Sun City Solar Energy, LLC in 1983 resulting in the establishment of eleven solar energy dealers in four states. In 1987, Sun City Energy was included in NASA's Spin -Off magazine for the transfer of technology to the energy management sector. SCSE currently has five offices in three states. As a speaker and trainer on commercial and residential solar energy systems, her focus includes solar electric power, solar hot water heating, and solar pool heaters. Ms. Speraw has a Bachelor of Arts in Management and has served on several boards. Her professional memberships include Solar Energy Industries Association (SEIA) and American Solar Energy Society (ASES). Viridian USA 100 Gamble Road Little Rock, AR 72211 501.227.0648 Matt Bell CEM, LEED AP BD+C, partner at Viridian USA, holds B.S. in Business Administration from University of Arkansas, is a LEED Accredited Professional in Building Design and Construction and a Certified Energy Manager (CEM). His previous experience brings expertise in construction estimation and project management. Previously, Matt was an executive in the construction industry as co-founder of Bell -Corley Construction, a commercial general contracting firm located in Little Rock. While at BCC, Matt Bell and Boyd Corley were recognized locally by Arkansas Business Magazine and nominated for Business of the Year in both 2005 and 2006. Nationally BCC was recognized by Entrepreneur Magazine as a member of the HOT 100 fastest growing businesses ranking 26th and the Inc Magazine Inc. 500 as the 44th fastest growing company in 2006. In 2005, Arkansas Business Publishing recognized Matt as business leader and he was selected to the "40 under 40" list of upcoming business and political leaders in Arkansas under 40 years of age. Matt recently served as the Chair of the Green Schools Advocacy Committee through the USGBC Arkansas Chapter and currently serves as a chair member on the committee. Additionally, Matt currently serves as Vice - Chairman for the Keep Arkansas Beautiful Commission. Current responsibilities include providing sustainable design and construction assistance to owners, architects, engineers, and contractors to enhance their ability to budget, plan, design, and finance a facility that respects occupant needs, financial responsibilities, and the environment. Primarily responsible for the project management of all LEED New Construction projects and coordination of all project team member responsibilities. Viridian USA 100 Gamble Road Little Rock, AR 72211 501.227.0648 Chris Ladner LEED Fellow, CEM, CxA, partner at Viridian USA, has a B.S. in engineering from Iowa State and is a LEED Fellow, LEED Accredited Professional in Building Design and Construction, Certified Energy, Manager (CEM), and Certified Commissioning Authority. Through his previous experience Chris has expertise in building HVAC systems, performance contracting, controls as well as knowledge of industrial controls. In 2008, Chris was a Commissioner on the Arkansas Governor's Commission on Global Warming. Through this commission greenhouse gas reduction policies will be developed for the Governor and Arkansas Legislators. As a consultant to the Clinton Climate Initiative, Chris works with cities and other institutions to reduce their greenhouse gas emissions. Chris currently serves as Chair of the U.S. Green Building Council National Chapter Steering Committee and holds positions on various USGBC sub- committees. He is an Arkansas delegate to the USGBC Southeast Regional Council and the regional Co -Chair. His past positions with the Arkansas Chapter of the USGBC include Chair, Vice -Chair, Secretary, and coordinator of the annual Sustainable Arkansas conference. Chris has participated in various types of LEED projects including: LEED- Neighborhood Development, LEED-Commercial Interiors, LEED-New Construction, LEED for Existing Buildings, and LEED-Homes. As the team leader of a volunteer design team Chris is helping the Argenta Community Development Center in North Little Rock, Arkansas with their Green Homes project. The project is an effort to demonstrate the financial, environmental, and occupant benefits of the LEED-Homes sustainable standard inan affordable home project. Chris has presented on sustainable design and construction to various groups including Master Speaker at the USGBC Greenbuild Conference, American Planning Association, National Environmental Balancing Bureau (NEBB), the American Society of Heating Refrigeration and Air Conditioning Engineers (ASHRAE), graduate architecture programs, and various sustainability conferences. 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NNNNNr2-m- m-m--mC+)cr M"TstIt r�-- Arkansas Advanced Energy Equity Program A2E2 Program Manual 6.27.14 r ENERGY caeaLLC ARKANSAS ADVANCED ENERGY ASSOCIATION Contents Listof Exhibits............................................................................................. 3 ExecutiveSummary ....................................................................................................... 4 Background.................................................................................................................... 7 WhyPACE?................................................................................................................... 8 General Program Information......................................................................................... 10 Step -by -Step Process — Commercial Program............................................................... 12 Typical Commercial PACE Properties............................................................................ 14 Commercial Program Loan Application Process Flow Chart .......................................... 15 Sample Estimated Payment Schedule — Commercial Program ...................................... 16 Cash Flow Chart with Bonding Phase............................................................................. 17 Step -by -Step Process — Residential Program................................................................. 18 Residential Program Loan Application Process Flow Chart ........................................... 20 Sample Payment Schedule — Residential Program........................................................ 21 Sample Application Checklist........................................................................................... 22 EligibleProjects................................................................................................................ 23 Approved Contractor Qualifications.................................................................................. 27 Recommended Residential Energy Audit Procedure and Content ................................... 28 Required Underwriting Criteria......................................................................................... 30 ClarifyingQuestions.......................................................................................................... 31 Acknowledgements........................................................................................................... 32 Resources for More Information........................................................................................ 33 Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 2 Exhibits General: G1 Revised Statutes Arkansas Act 1074 (PACE Enabling Statute) G2 City of Fayetteville Ordinance No. 5624 (establishing PACE Board) Commercial: C2 Commercial Program Application C3 Commercial Energy Audit Methodology Document C5 ASHRAE Technical Specifications C6 Commercial Loan Application C7/R8 Consent to Release Utility Data C8/R9 Assessment Contract C9/R11 Database Description Residential: R2 Homeowner Program Application R4 BPI Technical Specifications R5 Loading Order of Improvements R6 Scope of Work Document R7 Loan Application and Agreement R8/C7 Consent to Release Utility Data R9/C8 Assessment Contract R10 Residential QA Protocol R11/C9 Database Description Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 3 Executive Summary The Arkansas Advanced Energy Equity ("A2E2") program introduces a means for commercial and residential property owners to make energy efficiency, renewable energy, and water conservation property improvements with little to no up -front costs. The initial expenses typically associated with energy savings improvements have been a significant barrier for property owners to make these improvements. The commercial side of the A2E2 program utilizes Property Assessed Clean Energy ("PACE") financing, while the residential side uses more traditional forms of lending albeit with some characteristics of PACE. The A2E2 program allows commercial property owners to voluntarily pay for approved energy efficiency, renewable energy, and water conservation improvements by attaching the cost of these projects to their property tax bill. Each energy savings project is amortized up to a 20-year period, providing the property owner with a cash -flow neutral or cash -flow positive energy savings solution. In other words, approved projects will provide energy savings that equal or exceed the project's overall cost. The repayment obligation of the PACE financing is attached to the property, not to the individual property owner. PACE financing stays with the property in the same manner as a special tax assessment for street or sewer improvements. If a property owner decides to sell before the property tax assessment is fully paid, the energy equity is transferred to the new property owner who then assumes the payments as special tax assessments just like the original borrower. Tying payment to the property solves credit and collateral issues for energy efficiency and renewable energy loans, reduces up -front installation costs, and allows for both the payment and the value of the installation to be transferred from one owner to the next. If the special tax assessment is not paid, the city collector of revenue can foreclose on the delinquent property in the same manner as for non-payment of property taxes. Note: As mentioned, there is a limitation on availability for PACE financing for single-family residential properties due to concerns raised by the Federal Housing Finance Agency (FHFA). There are, however, alternative financing options available with the A2E2 program, including home equity financing or energy efficiency mortgages (EEMs). State enabling Statute: Arkansas Senate Bill 640—(Arkansas Act 1074) Signed into law by Gov. Mike Beebe on April 15, 2013. The Arkansas PACE Statute provides for one or more municipalities to form "Energy Improvement Districts" to enter into "Assessment Contracts" with property owners, to "fund energy efficiency improvements, renewable energy projects, and water conservation improvements on residential, commercial, industrial, and other real properties at the request of the owner." The Energy Improvement District Board of Directors (the "PACE Board") may select a "third -party administrator" to provide day-to-day administrative services. See Exhibit G1. Arkansas Advanced Energy Equity [A2E2] — Program Manual Page 4 The Arkansas Advanced Energy Equity (A2E2) program has been designed so that initial financing of projects may be provided by local community banks. PACE is a private -sector solution leveraging private capital to help spur energy savings and economic recovery. Its revenue neutral characteristics —for municipalities and program participants —make PACE a timely and innovative solution to help stimulate economic development, save on energy costs, and do so in an environmentally friendly way. Program Size: A2E2 is fully scalable. The initial commitment by our field of financing options ranges from $21VI — $150M, plus additional funding on a property -by -property basis to the extent that any property qualifies for a community development loan in accordance with the Community Reinvestment Act. The average residential project is projected to be $9000 per home. Commercial projects can vary greatly from $25,000 to millions of dollars in energy efficiency, renewable energy, and water conservation property improvements. Bonding Projects: The Arkansas PACE Statute states that the Energy Improvement District PACE Board may issue bonds which would be payable from special assessment revenues generated by assessment contracts. The practical threshold at which a bond may be issued for aggregated PACE projects is approximately $5 million. This translates to approximately 555 residential PACE projects averaging at $9000 per home aggregated in a single bond issuance. For commercial PACE projects, a much lower number may be aggregated to reach the $5 million bond issuance threshold due to the commercial assessment contracts, on average, being significantly higher than residential. Commercial and residential PACE assessment contracts may be combined into the same issuance as long as the grouped contracts meet underwriting standards. A Debt Service Reserve fund may be established to cover loan losses. Under the contemplated timeline for A2E2, the potential for bonding projects will begin after the initial funding capacity has been reached. Administrating Agency: Per the Arkansas PACE statute, "A governmental entity legally authorized to issue general revenue bonds may create a [PACE) district by adoption of an ordinance." The City of Fayetteville has formed a "Property Assessed Energy Improvement District" (PACE District) under the authority of Ordinance No. 5624. See Exhibit G2. Other governmental entities (for example, county, city, or incorporated town or village) may join the PACE District upon approval by the PACE Board. Participating Arkansas municipalities will pass an enabling ordinance that will reflect the state enabling PACE statute. A third -party administrative firm may be selected by the PACE Board to manage the program and complete day-to-day activities. Public Benefit Consideration: A basic component of the PACE financing concept is the idea that embedded in any energy efficiency, renewable energy, or water conservation retrofit performed on private property is an intrinsic benefit to the public interest in terms of increasing energy independence, lowering stress on the energy grid, stimulating the local economy through energy savings, job creation, and reducing Arkansas's carbon emission pollution. A2E2 is designed with rigorous consumer protections, quality assurance, and best practices in energy efficiency and renewable energy contracting standards. This approach guarantees the most Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 5 favorable energy savings and retum-on-investment on a contract -to -contract basis, combining to provide the best public benefit. Local Business Growth, Job Creation and Economic Development: It is estimated that generating $20 million in economic activity through the A2E2 program in retrofitting the City of Fayetteville's buildings and homes would create or retain more than 100 jobs, saving residents and businesses hundreds of thousands in energy costs, and making a substantial contribution to the City's climate change measures and sustainability goals. Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 6 Background A broad coalition of Arkansas businesses and advocacy groups organized by the Arkansas Advanced Energy Association (AREA) helped to educate, spread awareness, and build support, ensuring the passage of Arkansas's PACE enabling legislation by the General Assembly on April 9, 2013. By emphasizing that PACE builds stronger communities through wealth retention, job creation, higher property values, and more cash flow for business owners, this coalition worked together with co -sponsoring and key legislators to build the bi-partisan support necessary to make PACE a reality. With Gov. Mike Beebe's signature on April 15, 2013, the enabling statute became ACT 1074 of 2013, (Ark. Code Ann. Section 8-15-101 et seq.) Arkansas thus became the 30t'' state to pass PACE. As of the date of this publication, there are 31 states that have passed PACE into law. Leading up to enactment, PACE gained the support of the Arkansas Bankers Association, the Associated General Contractors of Arkansas, Arkansas Municipal League, Association of Arkansas Counties, Public Policy Panel, Arkansas Chapter of U.S. Green Building Council and Citizens First Congress. See Exhibit G1. Learning from the failed and some might suggest reckless lending practices in the subprime mortgage industry over the last decade, the PACE program contemplated for the City of Fayetteville must incorporate rigorous standards and protections to prevent lending and/or contractor abuses that have been evidenced in other such pilot programs instituted around the country. As such, the working model chosen for the Arkansas Advanced Energy Equity program was designed to deliver specific industry best practices, consumer protections, data verification and performance metrics drawn from trade standards developed and supported by the Arkansas Department of Environmental Quality (ADEQ), Arkansas Advanced Energy Association (AAEA), Building Performance Institute (BPI), Residential Energy Services Network (RESNET), Efficiency First's Home Performance Resource Center case studies, and the U.S. Department of Energy (DOE) best practice guidelines for PACE financing programs. The rigors of the herein -described underwriting process are considered necessary in order to dissuade abuse that could potentially damage the integrity and viability of this PACE program in the City of Fayetteville. Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 7 Wh PACE? The innovative clean energy funding mechanism, Property Assessed Clean Energy or "PACE", has been named one of Harvard Business Review's ten breakthrough ideas of 2010 and Scientific American's top 20 ideas that can 'change the world'. PACE is a new funding model that allows local governments to partner with property owners to achieve savings on energy costs through energy efficiency and renewable energy improvements. PACE removes historical barriers to energy efficiency and renewable energy installations: - Eliminates initial capital requirements, replaced with yearly payments that correspond to the lifespan of the installation. - Will be accessible to residential and business property owners of all income levels. - Will incorporate energy efficiency, renewable energy, and water conservation upgrades to properties. - Will be sustainable, scalable, and flexible; it will be self-sufficient with little to no public financial support. PACE is -a sound business approach for growing energy efficiency and renewable energy industries in Arkansas: - Job Creation: In the recent recession, Arkansas's building and construction trades lost four times the amount of jobs as the rest of our economy. PACE could create thousands of local quality jobs. - Economic Activity: A PACE program could generate more than $2.5 billion dollars of economic activity with 30% market penetration over 10-15 years. Commercial property PACE projects will likely account for millions of dollars of economic activity in the first year alone. - Domestic Manufacturing: 90% of materials used in energy efficiency retrofits are currently manufactured in the USA. - Economic Stimulus: Increasing energy independence acts as a local stimulus by saving money on energy importation. PACE energy savings are particularly beneficial for Arkansans in the long term due to projected coal -generated energy costs rising in the near future: - 43% of Arkansas's power is coal -generated. While below the national average, recent regulatory rulings will make coal -generated power more expensive. Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 8 • Nationally, coal accounts for 83% of U.S. carbon emissions, contributing to climate change. • U.S. Residential Electricity prices have gone up 50% in last decade. PACE helps address immediate and long term environmental concerns: According to the White House PACE Policy Framework, if only 15% of residential property owners nationwide participated, their emissions reductions would contribute 4% of the savings needed for the U.S. to reach 1990 greenhouse gas emissions levels by 2020. PACE financing increases the accessibility and affordability of energy saving measures, consequently lowering energy bills and reducing the City's environmental footprint. PACE programs streamline financing of energy efficiency and renewable energy investments in three key ways: • Property tax special assessments provide a secure, well -established payback mechanism that will lead to lower borrowing costs. The security of the payback mechanism makes it possible for PACE financing to be offered with no money down. • The economies of scale from making PACE financing available to a large group of borrowers can reduce overhead and transaction costs. • Effective administration of Arkansas PACE programs will create more consumer confidence in the economic value of energy efficiency, renewable energy, and water conservation investments. PACE financing underwriting structure is different than a traditional bank loan: A2E2 is structured to address risks that could arise, in that property tax special assessments under PACE increase homeowner debt payment and take priority over private liens in the event of foreclosure by: - Making this an opt -in, voluntary program subject to strict underwriting. • Encouraging repayment through an escrowed account (should the property owner opt for a tax assessment and not loan servicing by the lender), as it reduces the risk of non-payment of property tax special assessments. - Ensuring the PACE loan does not cause the owner to owe more on the property than the property is worth. Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 9 General Program Information Program Size: Fully scalable. The initial source of funds is anticipated to be available from a community bank. We have commitments from financial partners up to $150M. Naturally, the goal is to upgrade and improve as many properties as possible to increase savings, stimulate economic development, and upgrade the PACE District's existing buildings infrastructure. Administrating Agency: The Energy Improvement District PACE Board will oversee the administrative framework and may contract with a third -party Program Administrator. Participants: City of Fayetteville's commercial and residential property owners that meet the eligibility requirements and underwriting standards of project lender. Please see Required Underwriting Criteria, Page 30. Number of Projects: Unlimited. Types of Potentially Eligible Projects: Energy efficiency, renewable energy, weatherization, and water conservation property improvements. Please see Eligible Projects, Page 23. Size of Financing: $2,500 minimum and up. Program Administration and Quality Assurance Fees: 3% of project total to be paid upon closing. Interest Rate: To be determined upon review of credit. Application Processing Fee: $25. This fee is non-refundable and payable upon application submission. Annual reviews will determine if the fee should be increased or decreased. Penalty: There is no penalty for paying off the loan in advance.' Prepayment can be made directly to the program administrator. Late payments are subject to a penalty and will be treated the same as other penalties. Term: Up to 20 years. Term will depend on project type and size of loan. Particular Terms For Commercial Properties: Loans less than $15,000 may have up to a 10-year term; loans greater than $15,000 may have up to a 20-year term. All repayments are paid through property taxes unless Applicant chooses lender -servicing. Property taxes are due by December 31st of each year. Applicant may choose to pay in installments (option will be on property tax bill) or through their bank escrow payments. Coordinating an escrow repayment plan with the Mortgage Company is the responsibility of the Applicant. ' Subject to project lender approval if funded through retail bank. Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 10 Particular Terms For Residential Properties: Loans less than $7,000 may have up to a 10-year term; loans between $7,000 and $10,000 may have up to a 15-year term; and loans greater than $10,000 may have up to a 20-year term. Federal Investment Tax Credit (ITC): 30% for qualified energy efficiency upgrades and qualified renewable energy upgrades.2 Reservations and Disclaimers: It is the Applicant's responsibility to determine if they qualify for the Federal ITC. If in doubt, Applicants should consult a tax advisor. The PACE Board or Program Administrator will not provide tax advice to residents. Except as otherwise provided by the Arkansas Advanced Energy Equity program, the PACE Board is not responsible for costs associated with obtaining an initial energy audit. It is the Applicant's responsibility to apply for any additional incentives or rebates. There is no guarantee that an application received by the PACE Board or Program Administrator will be funded. The PACE Board reserves the right to decline an Applicant if any of the application or underwriting requirements are not met. The PACE Board provides no warranties; participating property owners must repay their special tax assessment even if an energy improvement system fails before the special tax assessment is repaid. In the event that a participant property owner sells their property before the assessment is paid back in full, the assessment stays with the property and payments continue with the new property owner. Participating property owners may be required to pay off the assessment in the event of a sale, based on the requirement of the purchaser's mortgage institution. The PACE Board makes no warranties as to the survivability of the assessment in the event of a sale. Failure to repay a PACE project loan through the special property tax assessment could result in the default and foreclosure of the property. 2 NOTE: Tax credits may expire. Also, other local, state, and utility incentives may be available. Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 11 Step -By -Step Process — Commercial Program Acquire and assess potential commercial energy efficiency project. Program participants will be primarily drawn from the customer base of energy consultants, contractors, and ESCOs (energy service companies), in addition to community outreach to property managers and owners. Initial applications that provide basic property and owner data will be followed by a preliminary credit review and analysis of energy efficiency needs. The program application will be available in different formats including online through a program web portal and/or hard copies. The preliminary credit review will be performed by our lending partner. These preliminary reviews will take place within 48 hours and should determine basic eligibility and potential scope of each project. For a sample program application, see Exhibit C2. 2. Commercial energy audit contracted and engaged. The property owner will contact a participating commercial energy auditor for an analysis of their property to generate a list of approved potential energy efficiency improvements through the methodologies outlined in Exhibit C3 and Exhibit C5.3 The property owner can then select the improvements that they wish to finance through the Program based on the results of the energy audit, which will be the basis for the scope of work. This process can take up to 60 days for a small commercial building or up to 180 days for a large building. 3. Completion of the design phase. Once the scope of work has been defined with the input of the energy auditor as well as the property owner, the design phase can begin. The property owner will engage the contractor to develop a detailed design for implementation of the improvements. This can take up to 90 days for a smaller building and another 120 days for a large building. As with the energy audit, this cost can be rolled into the program financing. This process may occur simultaneously to the audit process. 4. Loan application documents forwarded to rrnancing institute. With design and construction documents complete, along with the scope of work, the owner can submit a full loan application to the lending institution. Please see sample loan application attached as Exhibit C6. The full application will have final construction costs and projected energy savings attached. Any additional administrative fees will be rolled into the project financing. It may take 30 to 45 days for the loan to close once the full application has been submitted with the supporting documentation. 5. Construction phase. Once financing has been approved for the project by the lending institution, construction of the improvements will begin. For larger projects, progress payment(s) can be made. If so, there may be progress inspections, as well as inspections and verifications required for the actual construction, such as building permits. 3 Final approved contractor list will be generated by Program Administrator during implementation phase. Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 12 6. Project verification and quality control. Once the project is completed, the property owner will verify with the lending institution and the Program Administrator that the work has been completed. All construction liens will be signed off on and funding completed. In addition, the Program Administrator will provide to the PACE Board of Directors a detailed verification of a sampling of program projects as a quality control measure. 7. Post improvement measurement and verification. As part of the verification process, the property owner will be asked to sign a release to allow the Program Administrator access to their utility bills for the year prior to improvements through the completion of the improvements and the final payment of the loan. Please see consent to release utility data attached as Exhibit C7. This will allow the Program Administrator to gather data that will verify the efficacy of the improvements for the subject property, and ultimately, the entire program. If the subject property is not performing as projected, follow up with the property owner can be done to identify potential causes. If the deviation from projections is not caused by external variables, such as weather and/or usage, the improvements can be analyzed to verify that they were installed correctly and whether corrections may be warranted. If the subject property is performing as projected with the improvements, this information will be shared with the property owner. This data, along with the improvement specifications, will be aggregated by the Program Administrator to provide ongoing reports to relevant authorities to gauge the economic impact, the overall energy savings, and estimated green house gas emissions reductions the PACE Program generates for the community. Please see the database description attached as Exhibit C9. 8. Ongoing payments. The property owner will continue to make payments per the terms of the loan agreement directly to the lending institution or to the property tax collector depending on which method is chosen by program participant. Should program participant choose the former loan -servicing method, only in the event of default will the assessment be recorded. Please see a sample assessment contract attached as Exhibit C8. Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 13 Typical Commerical PACE Properties Below are 4 broad categories of commercial properties and some observations on their characteristics with regard to their potential as a market for PACE financed projects. 1. Office/commercial: Most commercial leases are "triple net," meaning the tenant pays utilities, property insurance, and taxes on the property. This arrangement can diminish the incentive to use PACE for energy efficiency improvements. However, PACE can be proposed to the owner as a way to upgrade their property without it showing on the owner's balance sheet, and PACE -funded property improvements can provide lease marketing opportunities for the owner. PACE can be proposed to the tenant as a way to improve cash flow. 2. Industrial: With owner -occupied industrial properties, there is potential for large scale savings. Such properties may present a wide range of technical issues and may require specialized contractors/consultants to address those issues. The PACE project could also provide marketing opportunities for the company. 3. Multi -unit residential: Split incentives are an issue here. Contractor skillset is standardized to a large extent. Lease turnover could help with passing assessments through to tenants, and it may be possible to implement the program through a lease amendment. Potentially large energy reduction opportunities could increase the property value and could go into increased rent. The PACE project could provide marketing opportunities for the owner. In addition, condominium developments would have similar incentives as those for single -unit residential or the condominium association could implement PACE. In such a case, PACE would function similar to a triple net lease in that the condominium association may be able to pass through costs and savings to the individual condominium owners, depending on how the association governing documents are drafted. 4. Hotel/Motel: The hotel/motel industry presents large market potential. Hotel projects would have a relatively standardized skill -set and large energy usage savings that the owner could realize, while at the same time increasing property value and not adding to the owner's balance sheet. The project could be a great public relations opportunity for a hotel or motel. Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 14 A2E2—Arkansas Advanced Energy Equity Commercial Program Loan Application Process Flow Chart Consuttant/engineer Provide required Generates scope Notices, potential Of work and Lease addendums Project plan. r L' Project parameters Project financing Verify feasibility, ROI Reviewed and Requirements Detailed project plan Modified to be Identified, Generated and approved. resubmitted Program application Identified specialized Equip ment/circumstances No Administrative Orregulatory issues. Plan Approval Work perfarmed Yes based on detailed project plan. Post project VApproval metrics and verification. Lien waivers signed. Funds dispersed Verify encumbrances, to contractor(s). Title, identify permitting if no alternative issues. payment schedule Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 15 Sample Estimated Payment Schedule — Commercial Program Commercial Project Cash Flow Analysis Project amount $25,000.00 Term 20 years Interest 7% Monthly payment: $194.00 Avg. Monthly Utilities $1,800.00 Monthly savings (20%) $360.00 Net positive monthly cash flow: $166.00 Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 16 A2E2—Arkansas Advanced Energy Equity Cash Flow Chart with Bonding Phase 1. V5 application fe 4. Reimbursed for Program administrator Residential Applicant 3. Interim ft 6. Applicant Makes payments On property taxes 4. Project Paid for. Commercial Applicant 2. Applicant pays for Initial energy audit Audit orfcontractor Bank/Lending Institution i. Bond sold, nterim financing Said off. Bond Authority/ Tax Collector i. Bond holders Paid. Bond Trustee 6. Applicant Makes payments On property taxes Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 17 Step -by -Step Process — Residential Program Market outreach into the community. Program will be marketed through community outreach and strategic partnerships. Trade alliances between energy auditors, home performance contractors and Realtors, as well as financial partners and utilities would serve to direct applicants into the program. 2. Prequalification and initial screening. Property owners will fill out an online application to provide basic information on themselves and their property. Please see sample program application attached as Exhibit R2. Prequalification for program applicants will be based on self -reporting. The property owners eligibility will be determined by a credit analysis and if the property meets the required underwriting criteria. 3. Energy audit of the property. The property owner will select a qualified energy auditor from a list of energy auditors that are participating in the program.' If the property owner has been referred to the program by an energy auditor, they can submit that auditor's information on the application and that auditor will be the default vendor for the energy audit. A certified energy audit is performed per the standards set forth in the Building Performance Institute's (BPI) technical specifications by the energy auditor and paid -for by Applicant.5 Please see BPI's technical specifications document attached as Exhibit R4. The cost of the energy audit may be rolled into the overall financing for the project. 4. Scope of work defined. The energy auditor will recommend improvements to the property based on the audit results and a pre -defined "loading order" of improvements. Please see loading order of improvements attached as Exhibit R5. The loading order defines those improvements that will 1) offer the most increase in efficiency for the smallest capital investment (greatest energy savings) and 2) puts improvements in logical order. For example, improving a property's insulation and air sealing may reduce the required size of a replacement furnace therefore, it becomes more financially prudent to properly insulate and seal a home before replacing the furnace. The property owner will select the improvements based on the recommendations of the energy auditor. If there are improvements that the property owner wishes to finance out of the loading order, the application can reflect this along with an explanation to be considered for approval. Please see scope of work document attached as Exhibit R6. Loan application, scope of work and audit documents will be submitted to the program Final approved contractor list will be generated by program administrator during implementation phase 5 A certified energy audit is highly recommended to achieve the best energy savings, home safety, and public benefit. A select group of improvements are eligible without performing an energy audit. If Applicant opts for no energy audit, proposed project must qualify under the Arkansas PACE statute, namely, being verified by program administrator as "providing positive cash flow in which the costs of the improvements are lower than the energy savings on an average monthly basis," and per the U.S. Dept. of Energy PACE guidelines, having an "expected Savings -to -Investment Ratio (SIR) greater than one," with the, "financed package of energy improvements [being] designed to pay for itself over the life of the assessment." Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 18 administrator, which will be forwarded to the lending institution for loan approval. For a sample loan application, see Exhibit R7. 5. Full loan approval. Once the scope of work has been defined through input from the audit results and the property owner, the lending institution will run a full credit report and review the scope of work for loan approval. The lending institution will contact the property owner upon loan approval for loan closing. The property owner will then sign -off on the loan closing documents, including a truth -in -lending statement and assessment contract. Please see a sample of loan application attached as Exhibit R7. The energy auditor and contractor will be notified of the loan and work approval to commence work on the improvements. 6. Improvements implemented by contractor. Work will be performed by the participating contractor previously selected by the homeowner during the scope of work phase. Once the work has been completed, the homeowner signs off on the work verification and assessment contract, which is then sent to the lending institution. The homeowner will also be asked to sign a consent form to release their property's utility data for the year preceding the improvements and the year following the improvements. Please see consent to release utility data attached as Exhibit R8. At this point the lending institution will disburse the funds to the contractor(s), who will forward any lien waivers to the lending institution. The property owner will receive a loan statement showing the total disbursement amounts. 7. Payments commence on the loan. The homeowner will begin to make payments on the loan directly to the lending institution or to the property tax collector depending on which method is chosen by program participant. Should program participant choose the former loan servicing method, the assessment contract will only be recorded in the event of a default on the loan payments.' For a sample assessment contract, see Exhibit R9. 8. Data collated and quality control. A sampling of projects will be reviewed for quality assurance, with the samplings focused on making sure that as many contractors/auditors are reviewed as possible. Please see the quality control methodology document attached as Exhibit R10. As projects are completed, the improvements and utility data will be collated to generate reports to track the program's proliferation and overall efficacy at increasing energy efficiency and carbon emission reduction. Please see the database description attached as Exhibit RI I. 5 Currently there is a limitation on availability for PACE financing for single-family residential properties due to concerns raised by the Federal Housing Finance Agency (FHFA). There are, however, alternative financing options available with the A2E2 program for residential property owners, including home equity financing or energy efficiency mortgages (EEMs). There is pending Federal legislation that if passed would open up PACE -financing for residential properties. Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 19 A2E2—Arkansas Advanced Energy Equity Residential Program Loan Application Process Flow Chart Preliminary Assessment contract Application filed, recorded, Interim $25 fee. funding dispersed. Work verification signed Applicant notified No Preliminary by Applicant In writing Approval? Yes Yes Measurements Contractor Certified Audit And No analyzes Performed, data verification Discrepancy Sent to program match initial and explains administrator audit? Or fixes work. List of projects 01 Post work audit approved performed, data Based on ROI sent to program and Energy savings. administrator Work performed Truth in lending Statement and based on Assessment contract approved list. Signed by Applicant if Applicant opts for no energy audit, proposed project must qualify under the Arkansas PACE statute, namely, being verified by program administrator as "providing positive cash flow in which the costs of the improvements are lower than the energy savings on an average monthly basis," and per the U.S. Dept. of Energy PACE guidelines, having an "expected Savings -to -Investment Ratio (SIR) greater than one," with the, "financed package of energy improvements [being] designed to pay for itself over the life of the assessment." Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 20 Sample Payment Schedule — Residential Program Residential cash flow analysis - Energy efficiency upgrades only Project amount $ 5,000.00 Term 15 years Interest 7% Monthly payment: $ 45.00 Avg. Monthly Utilities $ 220.00 Monthly savings (30%) $ 66.00 Net positive monthly cash flow: $ 21.00 Energy efficiency plus renewable (ground source heat) Project amount $ 12,000.00 Term 20 years Interest 7% Monthly payment: $ 93.00 Avg. monthly utilities $ 300.00 Monthly savings (60%): $ 180.00 Net positive monthly cash flow: $ 87.00 Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 21 Sample Application Checklist Date of application: Name of Applicant: Address of house applied for: Name of Mortgage Company: Name of holder of any other Mortgages: House is owner -occupied? Yes ❑ No ❑ Owner has no overdue property tax? Yes ❑ No ❑ Owner has no overdue municipal tax? Yes ❑ No ❑ Is owner current on mortgage? Yes ❑ No ❑ Has house received an energy audit within the previous 2 years? Yes ❑ No ❑ is the house within the geographic jurisdiction of Fayetteville's Energy Improvement District? Yes ❑ No ❑ Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 22 Eligible Proiects Eligible projects for the Arkansas Advanced Energy Equity (A2E2) program include energy efficiency improvements, renewable energy installations, weatherization, and water conservation measures for commercial and residential properties. The Arkansas PACE enabling legislation enables the following types of property improvements as eligible for coverage: • Insulation in walls, roofs, attics, floors, foundations • Insulation in heating and cooling distribution systems • Storm windows and doors, multiglazed windows and doors, heat -absorbing or heat -reflective windows and doors, and other window and door improvements designed to reduce energy consumption • Automatic energy control systems • Heating, ventilating, or air conditioning distribution system modifications and replacements • Caulking and weatherstripping • Replacement or modification of lighting fixtures to increase energy efficiency • Energy recovery systems • Daylighting systems • Photovoltaic systems • Solar thermal systems • Wind systems • Biomass systems • Geothermal systems • White/green roofs Note: These improvements may be subject to prerequisites, and some may be given priority and/or be phased in over time, at the direction of the PACE Board of Directors. Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 23 The following tables list various qualifying energy efficiency, renewable energy, and water conservation improvements: Enerqy Efficiency Improvements --Commercial and Residential Measure Name Requirement Spec Doors, Glass U 0.40 or less, SHGC 0.40 or less Doors, Solid, Insulating Energy Star Geothermal Well Drilling Custom HVAC Air Conditioning - Split System Unit 14.5 SEER or 12 EER HVAC Heat Pumps - Geothermal Exchange Closed Loop Z 15.5 EER HVAC Heat Pumps - Geothermal Exchange Open Loop z 17.8 EER Insulation, Duct Energy Star Insulation, Reflective or Radiant Barriers Energy Star Insulation, Sub -floor R19 minimum Lighting, High Efficiency Fixtures Energy Star Pool Equipment, Pool Circulating Pumps variable flow and/or multi -speed with controllers Sealing, Duct Sealing, Whole House Energy Star Sk i hts U value 0.60 or less, SHGC 0.30 or less Vegetated Roofs Water Heater, Natural Gas Storage Z 0.67 EF and Energy Star Water Heater, Tankless ? 0.82 EF and Energy Star Weather-stripping Energy Star White or Reflective Roofs Window Filming NFRC glazing ratings Windows Energy Star Renewable Energy Improvements ---Commercial and Residential Measure Name Re uirement Spec Electric Vehicle Plug-in Station Photovoltaic PV Systems Rated by SRCC Solar Rating and Certification Corp.) Solar Thermal Systems for Hot Water Rated by SRCC Solar Thermal Systems for Pool Heating Rated by SRCC Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 24 Water Conservation Improvements —Commercial and Residential Measure Name Requirement Spec Aerators, Faucet 5 1.50 gpm Core Plumbing System Energy Star Graywater System Local Codes Hot Water Heater, Instantaneous Enerqy Star Hot Water Recirculation System Energy Star Hot Water S tem, Demand Initiated Energy Star Insulation, Hot Water Pipes R4 Irrigation Control System ET Weather Based with Rain Sensor/Shut-off Irrigation S tem Matched Precipitation ratespray heads or drip Rainwater Cistern Permanently Installed Showerhead s 1.50 gpm Toilets, High Efficienc y 5 1.28 gpf Water Softener, Demand Initiated Energy Star Whole House Water Manifold System Energy Star Energy Efficiency Improvements —Residential Only Measure Name Re uirement S ec Attic Fan Energy Star Cool Roof Energy Star Exterior Siding, Insulating Enerqv Star Home Energy Management Control System, Permanent Custom HVAC Air Conditioning - Package Unit a 14 SEER/11 EER HVAC Furnace, Natural Gas 2: 90 AFUE HVAC Heat Pump HVAC High Efficiency Air Filter / Air Cleaner H dronic Radiant Heat Must be in combination with efficient water heating Insulation, Attic R30 minimum Insulation, Crawls ace R19 minimum Insulation, Wall R13 minimum Openings for Natural Light 5 0.40 U value Whole House Fan System Energy Star Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 25 Energy Efficiency Improvements —Commercial Only Measure Name Requirement Spec Building Energy Management System Custom Coatings, Reflective Roof and Wall Energy Star Cool roofs stem Energy Star Customer Electric Vehicle Plug-in Station Custom High Efficiency Electric Hand Dryer HVAC Air Conditioning - Package Unit 13 SEER or 11 EER HVAC Duct Zoning Control System Custom Lighting Control Systems with Occupancy Sensors Custom Motors and Controls Custom Water Conservation Improvements —Commercial Only Measure Name Re uirement Spec Aerators , Faucet 0.50 gpm Cooling Condensate Reuse Custom Cooling Tower Conductivity Controllers Custom Deionization Custom Filter Upgrade Custom Foundation Drain Water Custom Industrial Process Water Use Reduction Custom Pre -rinse Spray Valves 1.2 gpm Recycled Water Source Custom Urinals 1 pint Urinals, Waterless waterless Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 26 Approved Contractor Qualifications Commercial - Commercial Applicants can work with their preferred contractors if fully bonded, insured, and licensed in the State of Arkansas. Program Administrator will approve each project's contracting team to ensure qualifications. Contractors will pay a registration set-up fee to participate. Participating contractors' logo and company profile will be listed on program website. - Commercial PACE project energy contractors must be certified by ASHRAE or have the capacity to perform at the least an "ASHRAE Level 2" analysis. Commercial projects require a more comprehensive and technical energy consumption analysis than residential energy audits. The analysis requirements for commercial will be unique for each property and handled on a case -to -case basis. - Commercial contractors must be fully bonded, insured, and licensed professional contractors in the State of Arkansas. Residential Residential Applicants in this program must select approved Home Energy Auditors and Home Performance Contractors from program's certified contractor list. Contractors will pay a registration set-up fee to participate. Participating contractors' logo and company profile will be listed on program website. - Home Energy Auditors under this program must meet the certification requirements set by the Building Performance Institute (BPI) or the Residential Energy Services Network (RESNET). For quality assurance, the A2E2 program requires Home Energy Auditors to have completed a training program leading to certification by either the Building Performance Institute (BPI) or the Residential Energy Services Network (RESNET). - Approved Energy Auditors under this program must follow the on-the-job procedures of a qualifying home energy audit (see below). Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 27 Recommended Residential Energy Audit Procedure and Content The A2E2 program supports the following definitions of what a qualifying residential energy audit actually entails —as performed on the job site: A2E2 endorses the Building Performance Institute (BPI) standard for Home Energy Auditing and recommends that audits performed within the State of Arkansas conform to the then current BPI Home Energy Auditing Standard with the additional requirement of a cost -benefit analysis using computer software approved by BPI, RESNET, U.S. Department of Energy (DOE), or other pertinent statewide agency. Please see BPI's technical specifications document, Exhibit R4. This standard's goal is to direct the energy auditor to develop a comprehensive fist of measures which lead to whole -building, science -based energy improvements to existing low-rise residential buildings (single-family and multifamily). In this standard, these buildings are called "homes." An energy audit is an evaluation of a home's existing energy profile and the potential to improve the home's energy performance, and considers the policies and procedures of applicable residential energy programs. The current BPI Home Energy Auditing Standard includes, but is not limited to the following: Scope: The auditor will conduct a building -science -based evaluation of homes (residential low rise buildings) in terms of energy usage, durability, and occupant health/safety and provide a comprehensive written scope of work to improve the home (provided that such improvements are on the program list of eligible improvements). This work scope shall be based on an evaluation of the whole house according to the requirements of this standard and the objectives of the customer. The work scope shall not be based primarily on a narrow product line, services of a contractor or convenience. The objective of the work scope is to optimize home performance cost-effectively, while maintaining or improving health and safety, and satisfying customer objectives. The scope of work shall: - Be based on building -science principles and include the use of appropriate equipment in diagnosing opportunities for improving energy efficiency, and minimizing health and safety hazards. • Include a cost -benefit analysis of recommended improvements including consideration of applicable energy programs, incentives, regulations, energy costs, fuel process, and typical local energy -consumption levels. Cost -benefit analysis is to be based on computer analysis using software approved by BPI, RESNET, U.S. Department of Energy (DOE), or other pertinent statewide agency. Arkansas Advanced Energy Equity (A2E2) -- Program Manual Page 28 - Include a base load energy use analysis and advice to clients on energy use reduction strategies. When energy -consumption records are available, the audit shall include an analysis of energy consumption records (at least 12 months) to justify estimates of energy savings from the recommendations. • Include a recommended work scope that recognizes best -practice installation procedures as well inclusion of a comprehensive set of specific energy efficiency and health/safety measures warranted by the site -specific circumstances. - Include pre -work and post -work verification (for example, diagnostic testing). Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 29 Required Underwriting Criteria The following criteria must be met in order for a residential or commercial Applicant to qualify: Commercial • Applicant is a commercial property owner. • Applicant has no outstanding and unsatisfied tax liens on the property. • Applicant has no overdue property tax on the property. • Property is current on all mortgage debt. • Applicant has no overdue municipal service charges. • Applicant or property is not currently involved in a bankruptcy proceeding. • Commercial Applicants are required to have their mortgage lenders approve and sign -off on the project. • Underwriting criteria for commercial projects will be handled on a case -by -case basis as the variables for project size and scope vary so greatly. The mortgage holder and bank providing interim financing, the program administrator, and the energy contractor will work hand in hand to design the most beneficial commercial PACE property improvement. Residential • Applicant is a property owner. • Applicant has no outstanding and unsatisfied tax liens on the property. • Applicant has no overdue property tax. • Applicant has no notices of default or other evidence of property -based debt delinquency for the lesser of the past three years, or the property owner's period of ownership. • Property is current on all mortgage debt. • Applicant has no overdue municipal service charges. • Applicant or Nome is not currently involved in a bankruptcy proceeding. • Applicant has clear and undisputed title to the home, agrees to pay off any outstanding debt secured by a mortgage or deed of trust on the home, or agrees to obtain a subordination of such debt from the debt holder. Applicants must prove that they are the legal owners of a property, unanimous approval of property -holders is required, and the title should be clear of easements or subordination agreements that conflict with the special tax assessment. • The assessed value of the home is equal to or greater than 110% of the outstanding mortgage(s) plus PACE project costs. For example, if the Applicant has a remaining mortgage of $55,000, a home equity line of credit for $10,000 and a PACE application for $10,000, the assessed value of the home must be at least $93,500. Equation: Nome value zt total property debt x 110%. Program Administrator will access property tax bill to determine assessed value of property taxes and calculate the recommended special property tax amount. Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 30 Clarifying Questions General inquiries regarding the Arkansas Advanced Energy Equity program can be directed to: Steve Patterson Arkansas Advanced Energy Association Executive Director steve(a-)-arkansasadvancedener_gy.cam (501)537-0190 Byron DeLear Energy Equity Funding, LLC Chairman 1 CEO bvron(a-)-energveguitvfunding.com (314) 445-7911 Tom Appelbaum Energy Equity Funding, LLC President 1 COO tom(&energyeguityfunding.com (314) 985-5673 Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 31 Acknowledgements The Arkansas Advanced Energy Equity (A2E2) program has been designed by a team led by Energy Equity Funding and Arkansas Advanced Energy Association with support for PACE from the Arkansas Bankers Association, Arkansas Association of General Contractors, state chapter of the U.S. Green Building Council, Arkansas Municipal League, Association of Arkansas Counties, Arkansas Homebuilders Association, and other statewide stakeholders. Valuable market research, information, language, and statistics have been drawn from Set the PACE St. Louis and other PACE programs and pilots around the country, including national clean energy stakeholder groups and statewide ones, U.S. Department of Energy, Lawrence Berkeley National Laboratory, Building Performance Institute (BPI), Residential Energy Services Network (RESNET), and Efficiency First's Home Performance Resource Center. A2E2 has been in development for a year and represents hundreds of team hours of research. A2E2 has brought together a comprehensive and integrated PACE team that supports local interests and local control. Our design team is a fully integrated set of industry partners in underwriters and financing, energy auditors, performance contractors, and marketing and legal. We've developed a scalable business model to cater to the unique needs and characteristics of the City of Fayetteville, State of Arkansas and the broader Midwestern marketplace. Many challenges evidenced by other PACE pilot programs have been addressed through this model. Arkansas Advanced Energy Equity (A2EZ) — Program Manual Page 32 Resources for More Information PACE Now: www. pacenow.orq Arkansas Advanced Energy Association: www.arkansasadvancedene[gy.com Energy Equity Funding LLC: www.energyeguityfunding.com Set the PACE St. Louis www.setthe2acestlouis.com White House Policy Framework for PACE programs: www.whitehouse.gov/assets/documents/PACE Principles.0 Efficiency First: www.efficienc irst.o Arkansas Advanced Energy Equity (A2E2) — Program Manual Page 33 Arkansas Advanced Energy Equity Program A2E2 Exhibits 6.27.14 ENERGY aaea LLC; ARKANSAS ADVANCFC FNFP,GY A55CCIATIC3".I A2E2 Exhibits General: G1 Revised Statutes Arkansas Act 1074 (PACE Enabling Statute)....................................................4 G2 City of Fayetteville Ordinance No. 5624 (establishing PACE Board)..........................................17 Commercial: C2 Commercial Program Application................................................................................................20 C3 Commercial Energy Audit Methodology Document....................................................................22 C5 ASHRAE Technical Specifications..............................................................................................29 C6 Commercial Loan Application.....................................................................................................33 C7/R8 Consent to Release Utility Data..................................................................................................34 C8/R9 Assessment Contract..................................................................................................................35 C9/R11 Database Description..................................................................................................................53 Residential: R2 Homeowner Program Application...............................................................................................55 R4 BPI Technical Specifications.......................................................................................................57 R5 Loading Order of Improvements.................................................................................................66 R6 Scope of Work Document...........................................................................................................72 R7 Loan Application and Agreement................................................................................................85 R8/C7 Consent to Release Utility Data..................................................................................................86 R9/C8 Assessment Contract..................................................................................................................87 R10 Residential QA Protocol............................................................................................................105 R11/C9 Database Description................................................................................................................106 Arkansas Advanced Energy Equity Program [Gc7 I M NO I E#R,�A L 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Stricken language would be deleted from and underlined language would be added to present law. Act 1074 of the Regular Session State of Arkansas As Engrossed: S3151133 S3/14 13 S3120113 89th General Assembly A Bill Regular Session, 2013 SENATE BILL 640 By: Senators D. Johnson, J. Woods By: Representatives Leding, Barnett, C Armstrong, Hawthorne, McGill, B. Overbey, T. Thompson, Sabin, D. Whitaker For An Act To Be Entitled AN ACT TO CREATE JOBS, RETAIN WEALTH, AND GROW ARKANSAS'S ECONOMY BY ENABLING PROPERTY ASSESSED CLEAN ENERGY FINANCING; TO AUTHORIZE THE ESTABLISHMENT OF ENERGY IMPROVEMENT DISTRICTS TO FUND LOANS FOR ENERGY EFFICIENCY IMPROVEMENTS, RENEWABLE ENERGY PROJECTS, AND WATER CONSERVATION IMPROVEMENTS; AND FOR OTHER PURPOSES. Subtitle TO AUTHORIZE THE ESTABLISHMENT OF ENERGY IMPROVEMENT DISTRICTS TO FUND LOANS FOR ENERGY EFFICIENCY IMPROVEMENTS, RENEWABLE ENERGY PROJECTS, AND WATER CONSERVATION IMPROVEMENTS. BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: SECTION 1. Arkansas Title 8 is amended to add a new chapter to read as follows: Chapter 15 — Energy Efficient Facilities 8-15-101. Title. This chapter shall be known and may be cited as the "Property Assessed Clean Energy Act". As Engrossed: S3/5/13 S3/14/13 S3/20/13 SB640 1 8-15-102. Definitions. 2 As used in this chapter: 3 (1)(A) "Bond" means a revenue bond or note issued under this 4 chapter. 5 B `Bond" includes any other financial obligation 6 authorized by this chapter, the laws of this state, or the Arkansas 7 Constitution_;_ 8 (2) "District" means a property assessed energy improvement 9 district established in this state by_law for the express purpose of managing 10 the PACE program; 11 (3) "Governmental entity" means a municipality, county, 12 combination of cities or counties or both, or statewide district; 13 4 "Owner" means an individualpartnership, association 14 corporation, or other legal entity that is recognized by law and has title or 15 interest in any real pro2ertyi 16 (5) "PACE program" means a property assessed clean energy 17 program under which a real property owner can finance an energy efficiency 18 improvement, a renewable energy project, and a water conservation improvement 19 on the real property; and 20 (61_ "Person" means an individual, partnership, association, 21 corporation, or other legal entity recognized by law as having the power to 22 contract. 23 24 8-15-103. Legislative findings. 25 The _General -Assembly finds that: 26 (1) It is in the best interests of the state to authorize 27 districts that make available to citizens one 1 or more financing programs, 28 including without limitation a PACE program, to fund energy efficiency 29 improvements, renewable energy projects, and water conservation improvements 30 on residential, commercial, industrial, and other real properties at the 31 request of the owner; 32 2 The programs described in subdivision 1 of this section 33 will benefit the citizens of this state by: 34 (A) Decreasing -the cost of providing funds to 35 varticipatina citizens and lowering the aggregate issuance and servicing 36 costs of loans; and As Engrossed: S315113 S3114113 S3120113 SB640 1 2 the state that B might Making funds available to rural communities not otherwise create and finance the programs throughout described 3 in subdivision (1) of this section; and 4 (3) The programs described in subdivision (1) of this section 5 will further the public purpose of: 6 A Creating Jobs and stimulating the state's economy; 7 (B) Generating significant economic development through 8 the investment of the proceeds of loans in local communities, including 9 increased sales tax revenue; 10 (C) Protecting participating citizens from the financial 11 impact of the rising cost of electricity produced from nonrenewable fuels; 12 (D) Providing positive cash flow in which the costs of the 13 improvements are lower than the energy savings on an average monthly basis; 14 (E) Providing the citizens of this state with informed 15 choices and additional options for financing improvements that may not 16 otherwise be available; 17 (F) Increasing the value of the improved real property for 18 participating citizens; 19 (G) Improving the state's air quality and conserving 20 natural resources, including water; 21 (H)Attracting manufacturing facilities and related jobs 22 to the state; and 23 (I) Promoting energy independence and security for the 24 state and the nation. 25 26 8-15-104. Immunity. 27 a The powers and duties of a district conferred by this chapter are 28 public and governmental functions exercised for a public purpose and for 29 matters of public necessity. 30 (b) The district and its personnel are immune from suit in tort for 31 the performance of its duties under this chapter unless immunity from tort is 32 expressly waived in writing. 33 34 8-15-105. Authority to create. 35 (a) A governmental entity legally authorized to issue general revenue 36 bonds may create a district by adoption of an ordinance. As Engrossed: S315113 S3114113 S3120I13 SB640 1 (b) A combination of governmental entities may create a district by 2 each governmental entity: 3 1 Adopting an ordinance that 2rovides for the governmental 4 entity's participation in the district; and 5 (2)Entering in_t_o _a joint agreement with one (1) or more other 6 participating governmental entities. 7 (c) This section shall not limit additional governmental entities from 8 becoming members of the district under § 8-15-106. 9 10 8-15-106._ Membership in an existing district. 11 (a) To become a member of an existing district, the governing body of 12 a governmental entity shall: 13 fl} Adopt an ordinance that provides for the participation of 14 the governmental entity in the district; and 15 (2) Enter into _an_agreement with the other participating members 16 of the district. 17 (b) The agreement between members of a district shall establish the 18 terms and conditions of the operation of the district with the limitations 19 provided in this chapter. 20 21 8-15-107. Board of directors. 22 (a)A district created under this chapter shall be operated and 23 controlled by a board of directors. 24 (b)_ The board of directors shall manage and control each district, 25 includiny, withoutlimitation the operations, business, and affairs of the 26 district. 27 (c)_ The board of directors shall be solely responsible for selecting 28 the chair of the board of directors and establishing the procedures by which 29 the board of directors shall operate. 30 (d)_.A director shall not receive compensation in any form for his or 31 her services as a director. 32 (e) Each director shall be entitled to reimbursement by the district 33 for any necessary ex enditures incurred in connection with the performance of 34 his or her general duties as a director. 35 36 8-15-108. Membership on the board of directors. A2E2 Exhibits: G 1 Revised Statutes Arkansas Act 1074 8 As Engrossed: S315113 S3114/13 S3120113 SB640 1 (a) The board of directors of a district shall consist of at _least 2 seven (7) directors. 3 (b) The board of directors shall include- 4 (1) For a statewide district, the members specified in the 5 agreement establishing the district; ' 6 (2) For a district composed of a combination of one (1) or more 7 counties and one (1) or more cities: 8 (A) The county judge or his or her designated 9 representative of each county that isa member of the district; 10 (B) The mayor or his or her designated representative of 11 each city_ that is a member of the district; and 12 (C) If the number of directors is fewer than seven (7) 13 after fulfillin the requirements of subdivisions (b)(2)(A) and (B) of this 14 section, additional members shall be appointed as specified in the agreement 15 establishing the district until a total of seven (7) directors has been 16 appointed; 17 (3) For a district composed of one (I) -or more counties: 18 (A) The county judge or his or her designated 19 representative of each count that is_amember of the district; and 20 (B) If the number of directors is fewer than seven (7) 21 after fulfilling the requirements of subdivision (b)(3)(A) of this section, 22 additional members shall be appointed as specified in the agreement 23 establishing the district until a total of seven (7) directors has been 24 appointed; and 25 (4) For a district composed of one (1) or more cities: 26 (A) The mayor or his or her designated representative of 27 each city that is a member of the district; and 28 (B) If the number of directors is fewer than seven (7) 29 after fulfilling the requirements of subdivision (b)(4)(A) of this section, 30 additional members shall be appointed as specified in the agreement 31 establishing the district until a_total _of seven_(7-y_directors has-been 32 appointed. 33 (c) The designated representative of a county iudge or mayor under 34 subsection b of this section shall be a qualified elector of the 35 iurisdiction that the designated representative is appointed to represent. A2E2 Exhibits: G1 Revised Statutes Arkansas Act 1074 9 As Engrossed: S3/5/13 S3/14/13 S3/20/13 SB640 1 8-15-109. Terms of directors. 2 (a) A director who is a public official may serve on the board of 3 directors of a district during his or her term of office as the county -judge 4 or mayor of a member of a district. 5 (b) A director who is the designated representative of the mayor or 6 county ludge of a member of the district serves at the pleasure of the mayor 7 of the city or the county judge of the county that is a member of the 8 district. 9 10 8-15-110. District boards of directors — Meetings. 11 (a) The board of directors of a district shall hold quarterly meetings 12 and special meetings, as needed, in the courthouse or other location within 13 the district. 14 (b) The time and place of the ouarterly meetings shall be on file in 15 the office of the district board of directors. 16 17 8-15-111. District boards of directors — Powers and duties. 18 (a) The board of directors of a district may: 19 (1) Issue revenue bonds on behalf of the district; 20 (2) Make and adopt all necessary bvlaws for its organization and 21 operation; 22 (3) Elect officers and employ personnel necessary for its 23 operation; 24 (4) Operate, maintain, expand, and fund a PACE project; 25 (5) Apply for, receive, and spend grants for any purpose under 26 this chapter; 27 (6) Enter into agreements and contracts on behalf of the 28 district; 29 (7) Receive property or funds by gift or donation for the 30 finance and support of the district; 31 (8) Reimburse a governmental entity for expenses incurred in 32 performing a service for the district; 33 (9) Assign assessments to a private lending institution; and 34 (10)___Do all things necessary or appropriate to carry out the 35 powers expressly granted or duties expressly imposed under this chapter. 36 (b) The board of directors shall: As Engrossed: S3/5/13 S3/14/13 S3/20/13 SB640 1 (1) Allow a commission of: 2 (A) One and five -tenths percent (1.5%) for the extension 3 of district assessments —by —the —county —assessor or county clerk; 4 (B) One and five -tenths percent (1.5%) for the collection 5 of district assessments by the county collector; and 6 (C) One -eighth percent (0.125%) for servicesof a__ county 7 treasurer in disbursing the moneys collected for district assessments; and 8 (2) Adopt rules consistent with this chapter or with other 9 legislation that in its iudgment may be necessary for the property 10 enforcement of this chapter. 11 12 8-15-112. Reporting requirement — Collection of assessments. 13 (a)(1)(A) By March 1 of each year or upon the creation of a district 14 that uses or intends to use the county collector for collection of district 15 assessments shall file an annual report with the county clerk in any county 16 in which a portion of the district is located. 17 (B) The annual report required under this section shall be 18 available for inspection and copying by assessed landowners in the district. 19 (C) The county clerk shall not charge any costs or fees 20 for filing the annual report required under this section. 21 (D) The district shall deliver a filed copy of the annual 22 report required under this section to the county collector within five (5)_ 23 days of filing. 24 (2) The annual report required under this section shall contain 25 the following information as of December 31 of the current calendar year: 26 (A) A list of contracts, identity of the parties to the 27 contracts. and obligations of the district; 28(B)--Any indebtedness including bonded indebtedness and 29 the reason for the indebtedness, including the following: 30 (1) The stated payout or maturity date of the 31 indebtedness, if any; and 32 (ii) The total existing delinquent assessments and 33 the party responsible for the collection; 34 (C) Identification of each member of the board of 35 directors of the district and each member's contact information; 36 D The date time and location for any scheduled meeting A2E2 Exhibits: G1 Revised Statutes Arkansas Act 1074 11 As Engrossed: S3I5113 S3114113 S3120113 SB640 1 of the district for the following year; 2 (E) The contact information for the district assessor; 3 (F) Information concerning to whom the county treasurer is 4 to pay district assessments; 5 �G) An explanation of the applicable statutory_ penalties, 6 interest, and costs; 7 H The method used to com ute district assessments• and 8 I A statement itemizing the income and expenditures of 9 the district, including a statement of fund and account activity for the 10 district. 11 (b)(1) A district that does not comply with subsection (a) of this 12 section commits a violation punishable by --a fine of not less than one hundred 13 dollars 100 nor more than one thousand dollars 1 000 for each offense. 14 (2) A fine recovered under subdivision (b)(1) of this section 15 shall be deposited into the county clerk's cost fund. 16 (O U )_ On or before December 31, the district shall file its list of 17 special assessments for the following calendar year with the county clerk. 18 2 A After filing the list of s ecial assessments under 19 subdivision (c)(1) of this section, the district shall del_i_vera copy of the 20 filed list of special assessments to the preparer of the tax books. 21 (B) If the county collector is not the designated preparer 22 of the tax books, the district shall deliver a copy of the filed list of 23 special assessments to the county collector. 24 (3) The list of special assessments required under subdivision 25 (c)(1) of this section shall contain: 26 (A) A list of each parcel with an assessment levied 27 against it within the district; and 28 (B) The contact information for the district assessor. 29 (4) The list of special assessments required under subdivision 30 (c)(1) of this section shall not include assessments on parcels that 31 otherwise would not appear on the tax books for the following year. 32 5 After the December 31 deadline to file the list of s ecial 3`3 assessments required under subdivision (c)(1) of this section, the county 34 collector may reject an assessment submitted by the district for inclusion in 35 the list of special assessments. 36 (d)(l) After the district files the list ofspecial assessments As Engrossed: S315113 S3114113 S3/20113 SB640 1 recuired under subsection (c). the county collector shall collect the 2 assessments at the same time the county collector collects the other taxes on 3 the property, 4 (2) The county collector shall pay the funds collected under 5 subdivision (d)(1) of this section to the county treasurer at the same time 6 that the county collector pays all other taxes to the county treasurer. 7 (3) The county treasurer shall distribute the funds received 8 under subdivision (d)(Z) of this section to the district in the same manner 9 as he or she distributes funds to other tax entities. 10 11 8-15-113. Financing projects. 12 (a) A district may establish a PACE program to provide loans for the 13 initial acquisition and installation of energy efficiency improvements, 14 renewable energy projects, and water conservation improvements with 15 consenting real property owners of existing real property and new 16 construction. 17 (b)(1) The district may authorize by resolution the issuance of bonds 18 or the execution of a contract with a governmental entity or a private entity 19 to provide the loans under subsection (a) of this section. 20 (2) The resolution shall include without limitation the 21 following: 22 (A) The type of renewable energy project, water 23 conservation improvement, or energy efficiency improvement for which the loan 24 may be offered; 25 (B) The proposed arrangement for the loan program, 26 including without limitation: 27 (1) A statement concerning the source of funding 28 that will be used to pay for work 2erformed under the loan contract; 29 (11) The interest rate and time period during which 30 contracting real property -owners would repay the loan; and 31 111 The method of apportioning all or anY 2ortion 32 of the costs incidental to the financing, administration, and collection of 33 the arrangement among the consenting real propertyowners and the 34 governmental _entity; 35 (C) A minimum and maximum aggregate dollar _amount that may 36 be financed per property; As Engrossed: S315113 S3114113 S3/20/13 SB640 1 (D)(i) A method for prioritizing requests from real 2 property owners for financing if the requests appear likely to exceed the 3 authorization amount of the loan program. 4 (11) Priority shall be given to those requests from 5 real property owners that meet the eligibility requirements on a first come, 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 first served basis. (E) Identification of a local official authorized to enter into loan contracts on behalf of the district; and (F) A draft contract specifying the terms and conditions proposed by the district. c)(1) The district may combine the loan payment required by the loan contract with the billing for the real property tax assessment for the real property where the renewable energy project, water conservation improvement, or the energy efficiency improvement is installed. (2) The district may establish the order in which a loan payment will be applied to the different charges. (3) The district may not combine the billing for a loan payment required by a contract authorized under this section with a billing of another county or political subdivision unless the county or political subdivision has given its consent by a resolution or ordinance. (d) The district shall offer private lending institutions the opportunity to participate in local loan programs established under this section. (e)(1)(A) In order to secure a loan authorized under this „section, the district may place a lien equal in value to the loan against any real property where the renewable energy projects water conservation improvement, or the energy efficiency improvement is installed. B The lien shall attach to the real property when it is filed in the county recorder's office for record. (2)(A)(i) The priority of the lien created under this chapter is determined based on the date of filing of the lien. (ii) Except as provided in subdivision (e)(2)(A)(iii) of this_section, the priority of the lien shall be determined in the same manner as the priority for other real property tax and assessment liens. (iii) A lien created under this chapter shall be As Engrossed: S3/5/13 S3/14/13 S3/20/13 SB640 1 subordinate to any real or Personal PrORerty tax liens. 2 (iv) A district shall discharge the lien created 3 under this chapter upon full payment of the lien. 4 (B) If the real property is sold, the lien shall stay 5 attached to the real property, and the loan created under this chapter will 6 be owed by the new real property owner. 7 (C) If the real property enters into default or 8 foreclosure: 9 (1) Pay_menr of the assessment shall not be sought 10 from a member of the district who does not own the real property that entered 11 into default or foreclosure; 12 (112 Repayment of the assessment shall not be 13 accelerated automatically; and 14 (iii)_ The balance of the assessment shall be repaid 15 according to the terms of the agreed -upon schedule. 16 (3) The district may bundle or package the loans for transfer to 17 private lenders in a manner that would allow the liens to remain in full 18 force to secure the loans. 19 (f)(1) Before the enactment of an ordinance under this section, a 20 public hearing shall be held at which interested persons may obiect to or 21 inquire about the proposed loan program or any of its particulars. 22 2 The public hearing shall be advertised one 1 time per week 23 for two (2) consecutive weeks in a newspaper of general circulation in the 24 district. .25 26 8-15-114. Program guidelines. 27 The board of directors, together with any third -party administrator it 28 may select, shall determine: 29 (1)_The _guidelines of the PACE program,_ including without 30 limitation that: 31 (A) The base energy performance evaluation shall be 32 completed by a certified and qualified energy eval_uationprofessional_to 33 determine existing energy use and options for improved energy efficiency; 34 (B) The approved improvements create a positive cash flow; 35 (C) Work shall be performed by qualified and certified 36 contractors in the field of energy efficiency and methods of renewable energy A2E2 Exhibits: G1 Revised Statutes Arkansas Act 1074 15 As Engrossed: S315/13 S3/14/13 S3/20/13 1 installation: SB640 2 (D) Performance testing and verification shall be 3 performed by a Qualified professional after the work is completed; 4 (E) Adequate consumer protections are in place; and 5 (F) The applicable underwriting standards for the 6 participants in the program are established; 7 (2) The qualifications of the vendors performing installations 8 under this chapter; 9 (3) The mechanisms by -which the district will remit the received 10 specialassessment payments and „any cost reimbursement; and 11 (4) Any other matters necessary to implement and administer the 12 PACE program. 13 14 8-15-115. Payment by special assessments. 15 The credit and taxing power of the State of Arkansas will not be 16 pledged for the debt evidenced by the bonds which will be payable solely 17 from the revenues received from the special assessments on the participants' 18 real property under this chapter. 19 20 8-15-116. Bonds. 21 (a) A district may: 22 (1) Issue bonds to provide the PACE program loans authorized by 23 this chapter; and 24 2 Create a debt reserve fund of legally available moneys from 25 nonstate sources as partial security for the bonds. 26 (b) Bonds issued under this chapter and income from the bonds. 27 including any profit made on the sale or transfer of the bonds, are exempt 28 from taxation in this state. 29 (c) Bonds issued under this chapter shall: 30 (1)(A) Be authorized by a resolution of the board of directors. 31 (B) The authorizing bond resolution may contain any terms, 32 covenants and conditions that the board of directors deems to be reasonable 33 and desirable; and 34 (2) Have all of the qualities of and shall be deemed to be 35 negotiable instruments under the laws of the State of Arkansas. 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 As Engrossed: S3/5/13 S3114/13 S3/20/13 SB640 8-15-117. Sale. The bonds may be sold in such a manner, either at public or private sale, and upon such terms as the board of directors of a district shall determine to be reasonable and expedient for effectuating the purposes of this chapter. 8-15-118. Revolving fund. (a) A district may maintain a revolving fund to be held in trust by a banking institution chosen by the board of directors separate from any other funds and administered -by the board of directors. (b) A district may transfer into its revolving fund money from any permissible source, including_ (1) Bond revenues; (2) Contributions; and (3) Loans. 8-15-119. Notice to mortgage lender. At least thirty (30) days before the execution of an agreement with a district, an owner shall provide written notice to each mortgage lender holding a lien on the owner's pronerty of the owner's application to articipate in a PACE grogram. Is/D. Johnson APPROVED: 0411112013 A2E2 Exhibits: G2 City of Fayetteville Ordinance No. 5624 17 ORDINANCE NO.5524 AN ORDINANCE CREATING A PROPERTY ASSESSED ENERGY IMPROVEMENT DISTRICT COEXTENSIVE WITH THE CITY OF FAYETTEVILLE NAMED "ENERGY IMPROVEMENT DISTRICT NO. I" TO FACILITATE A PACE PROGRAM AND ADOPTING CERTAIN PROVISIONS RELATED THERETO WHEREAS, pursuant to the authority granted by Arkansas Code Annotated § 8-15-101 et seq. (the "Property Assessed Clean Energy Act'), the City of Fayetteville may create a Property Assessed Energy Improvement District, either solely or in combination with one or more other governmental entities; and WHEREAS, such a district, once created, has independent legal and financial authority, including the authority to issue bonds; and WHEREAS, such districts were authorized to permit the creation and implementation of, among other things, a property assessed clean energy (PACE) program under which a real property owner may finance an energy efficiency improvement, a renewable energy project, or a water conservation improvement for their property on a voluntary basis, with loan repayment tied to collection of real property taxes, NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby enacts ARTICLE XXVI ENERGY IMPROVEMENT DISTRICT NO. I to the Code of Fayetteville, which shall read as follows: "ARTICLE XXVI ENERGY IMPROVEMENT DISTRICT NO. 1 33.380 Establishment and Purpose There is hereby created an Energy Improvement District No. I which territorial jurisdiction shall be coextensive with the City of Fayetteville and the territory of any other agreeing and participating governmental entity that may hereafter join. Energy Improvement District No. 1 shall exercise such authority and power as granted by the Property Assessed Clean Energy Act, Ark. Code Ann. § 8-15-101, et seq. within the boundaries of the District. Page 2 Ordinance No. 5624 33381 Board of Directors, Membership, Terms of Office (A) Energy Improvement District No. 1 shall be governed by a Board of Directors consisting of seven (7) members. One member shall be the Mayor or the Mayor's designee. Should the Mayor designate a member, said member shall serve at the pleasure of the Mayor. The remaining six (6) members shall be qualified electors of the District chosen by the Fayetteville City Council, each to serve a term of two (2) years. In making its Board appointments, the City Council shall give due consideration to candidates with connections to or relations with local utility companies, lending or bonding institutions and the advanced energy industry. City Council appointed members shall be subject to the term limit provisions of Section 33.329(B). (B) Should additional governmental entities enter into an agreement with the City of Fayetteville for participation in and addition to Energy Improvement District No. 1, the composition and terms of members of the Board of Directors shall be as agreed between the City of Fayetteville and other participating and agreeing governmental entities. 33.382 Legal and Financial Independence In the operation of its business, Energy Improvement District No. 1 is legally and financially independent of the City of Fayetteville. No debt entered into by the District shall ever be construed as an obligation of the City of Fayetteville or of any other governmental entity which may participate in the District." PASSED and APPROVED this 15' day of October, 2013. APPROVED: LM ATTEST: �SONDRA E. SMITH, City Clerk/Treasurer G�EFt K �`�••' C1TY 0 '.EVI LLE s'�. c q y� l iEln EwV Co�Co�� it ' k";W Arkansas Advanced Energy Equity Program (AM) Commercial Program Application This short questionnaire is designed for the Program Administrator and Lending Institution to best assess the property's eligibility for the A2E2 Program. Please answer as honestly and accurately as possible so that an accurate assessment can be made. This will help prevent wasting time, effort, and money on your part if there is something that may prevent your eligibility for the program. Property Information: Name of property owner/manager: Property Address: Zip code: Total Square Footage of the property: Number of stories: Footprint of building (sq. footage of ground level): Nature of commercial use of the property: ❑ Office ❑ Warehouse ❑ Industrial/Manufacturing ❑ Multi -unit Residential ❑ Hotel/Motel Other (please describe) Number of tenants: Average monthly expenditure on gas: $ Average monthly expenditure on electric: $ What type of roof is on this property? ❑ Shingle ❑ Tile ❑ Flat ❑ Other (specify): Is there a capital expenditure project being planned for the property that may qualify as an improvement under the A2E2 program: Are there any other unique issues or information that may be pertinent to participation in the A2E2 program? : What projects do you anticipate financing through the A2E2 program? Contractor referral: If you were referred to the program by an energy auditor or contractor please indicate below: Contractor company name: Property owner/manager acknowledgement and contact information: Please supply the following contact information and place a check in front of your preferred method of contact: Telephone: ❑ Mobile ❑ Home ❑ Work ❑ Email: By signing below you acknowledge that the A2E2 program will contact you within 2 — 4 business days with the results of your preliminary evaluation for eligibility as a participant in the program. Any action taken on your part prior to preliminary approval for participation in the Program may not be financed by the Program and ultimately, participation in the Program will depend on further information and credit verification. Position: ❑ Property owner ❑ Property manager ❑ Other Signed: Print name: Arkansas Advanced Energy Equity Program (AM) Commercial Energy Audit Methodology Document Program Summary The Arkansas Advanced Energy Equity Program (A2E2) Commercial Program contemplates projects ranging from smaller, shorter duration and relatively inexpensive energy efficiency improvements (Category 1 in table below) to much larger, longer duration and considerably more capital intensive improvement projects (Category 4). The economics of the projects tend to improve as the projects increase in size and sophistication —given that (i) the larger projects tend to incorporate more systemic and substantive changes (realizing greater cost savings), (ii) the longer range projects would be expected to incorporate the simpler, shorter duration projects that would have paid for themselves in the first few years, and (iii) the larger projects may result in more affordable funding (lower points and/or interest rates). Please see the attached summary list of potential (though not exhaustive) efficiency measures that might be implemented as part of this PACE program. This program is expected to be managed by the Program Administrator ("PA"). The PA's role in the process will be to: • Market the program to the public • Manage application flow • Provide Audit Quality Control • Provide Contractor Quality Control • Provide Final Construction Loans • Work with Third Party Disburser • Respond to PACE Board • Solicit Applications • Prequalify Applicants • Provide Loan Commitments • Provide final project approval Provide final project close out • Provide on -going Measurement & Verification Note that it is expected that many of the functions or roles subscribed to the PA herein will be delegated by the PA to other project participants, such as, for example, the project lender. Thus, all references herein to the PA should be understood to include the PA's delegate. The PA is expected to be comprised of a team that includes the Arkansas Advanced Energy Equity Program (A2E2) principal lender and technical, administrative, and marketing team members as appropriate to the needed tasks. On the following pages are: 1. Description of the project flow. 2. A listing of customary energy efficiency measures and how they relate to probable energy savings and related payback periods. Project Flow The following is a discussion of program elements needed based on a probable sequence of events once an owner decides to seek a loan for energy efficiency improvements. 1. Eligibility: a. Properties located within the Energy Improvement District. b. Properties with sufficiently demonstrated energy inefficiency for which cost savings from improvements in efficiency can independently support the cost of project funding. 2. Prequalification: The owner submits a prequalification letter of intent that suggests measures that would be factored into a preliminary project feasibility calculation — prior to getting a qualifying audit. The prequalification letter shall include (i) building address, (ii) tax records locator number; and (iii) a release to allow the PACE Program Administrator (PA) to secure utility data from local gas, electric, water and sewer service providers. a. The following parameters will be analyzed by the PA or Qualified Contractor to determine if the project is likely to qualify: i. Building Square Footage ("SF") / Type of Use / Hours of Operation ii. Gas and Electric Usage iii. Baseline Data for future Measurement and Verification (M&V) are established from utility usage regressions to weather. iv. "Pre" building performance is benchmarked through EPA Energy Star program v. Probable project size and cost effectiveness. b. Upon review by PA, a decision will be rendered relative to initial eligibility and prequalification requirements. For those projects deemed eligible and qualified, a notice will be issued requesting a more detailed application from the applicant — including both financial and technical information. 3. Application Process: For Projects deemed eligible to proceed in the process, the PA will issue an application to the owner that articulates the basic terms of the agreement: a. An energy audit of the building is required. i. For commercial buildings under 5,000 SF, audits may be provided by qualified residential auditors. ii. For commercial buildings between 5,000 and 10,000 SF, audits may be provided by a qualified residential auditor, with a review from an audit professional that is qualified for the commercial program. iii. For commercial buildings 10,000 SF and over, an investment grade audit is required from a qualified professional acceptable to the PA (and to the lending A2E2 Exhibits: C3 Commercial Energy Audit Methodology Document 24 institution). This audit will follow the guidelines for an ASHRAE Level II energy audit (Please see ASHRAE Technical Specifications, Exhibit C5). b. The audit will be quality controlled (QC) to meet key early test parameters. c. The subsidized cost of the audit and the QC effort are borne by the owner until such time as the minimum recommendations of the audit are implemented. These costs are reimbursable through the PACE loan. d. There will be annual Measurement and Verification (M&V) requirements for the life of the loan. These M&V costs are also eligible for inclusion in the loan package. e. Other terms, conditions and limitations yet to be determined in the process of developing application, contract and financial instrumentation specific to the PACE program. f. Owner acknowledgement of these terms, etc. will be required in order to proceed in this PACE application process, along with the audit, referenced above. 4. Audit Processing & Project Approval: Based on the PA's assessment of the audit findings, the PA prepares a contract that stipulates the minimum measures to be implemented to qualify for the final loan package and the maximum that is available within the economic constraints of the program. This results in a conditional loan commitment from the PA's underwriter. The program offer is sent to the owner for signature. Once it is signed the owner is now authorized to implement the project. 5. Project Design: Owner goes through design and bids process: a. Project is designed b. Bids are obtained by general contractor on the work to be done c. General contractor selects contractor(s) d. Bids or contractor pricing form basis of loan commitment e. Final Loan Application based on final bids f. Loan is approved by the project underwriter and executed by all parties. 6. Implementation Effort: a. Owner enters into contract with contractor(s) b. Contractor(s) takes out necessary permits c. Periodic draws approved by design professional and owner d. Title company disbursement of funds for PA e. Lien Waivers are secured at each payment f. Contractor submits Substantial Completion documents g. Designer provides final punch list h. City inspectors sign off on work for City code compliance L Project is fully Commissioned 7. Final Project Inspection: Verification of installation and final inspection and payment by PA. A2E2 Exhibits: 0 Commercial Energy Audit Methodology Document 25 8. Annual Measurement & Verification: PA performs on -going M&V a. If results do track projections, notification sent to owner b. If results do not track projections, notification sent to owner with follow up meeting to determine cause(s) of apparent failure to yield projected results. If the cause is equipment failure or improper equipment operation or scheduling, possible remedies are developed. If the owner has changed operating procedures or expanded utilization, new calculations are developed to project the new actual savings. c. "Post" performance measured through EPA Energy Star program. Certificates applied for if project now qualifies as an "Energy Star Building". Note that the above items and contracts with property owners will require disclaimers that the PA does not warrant or represent that the projected savings will occur. Arkansas Advanced Energy Equity Program (AM) Draft Outline of Recommendations for Commercial Properties The A2E2 program will finance Energy Efficiency Measures (EEMs) in commercial buildings. Typical EEMs are listed below within typical payback timeframe categories: Category 1 Category 2 Category 3 Category 4 Short Payback Medium Payback Long -Term Payback Special Situation (< Three Years) (4-6 Years) (7+ years) (15+ year) Schedule Changes (turn Boiler Upgrade to Boiler Upgrade to systems off when not Lighting Upgrades condensing (Esp. Steam condensing (Esp. Steam needed) to hot water) to hot water) Operating Setpoint Chiller Upgrades: Chiller Upgrades: changes (turn systems Control Changes Replace air cooled Replace air cooled down when less (see Category 1) compressor system with compressor system capacity needed) water cooled. with water cooled. Demand Control Variable Frequency Constant Air to Variable Lighting Upgrades Ventilation (see Drives Air Volume (See Category 1) (see Category 2) Category 3) Variable Frequency Control Changes Drives (modify heating (provide mechanized and cooling drive and means of making delivery systems — such Direct Digital Controls New Dbl Glazed schedule changes or as fans and pumps —to (see Category 2) Windows operating setpoint run at a variable changes) volume rather than a constant volume Water Side Tower Constant Air to Variable Constant Air to Variable Demand Control Economizer (if outdoor Air Volume (more Air Volume (more Ventilation (install temperature and extensive upgrade than extensive upgrade than device to measure level humidity is low Variable Frequency Variable Frequency of carbon dioxide in use cooling enough, Drives —involves Drives — involves building air so that tower to make chilled installing control boxes installing control boxes ventilation actors only instead of water, within building ductwork within building when needed] to provide , chiller, to manage variances in ductwork to manage cooling for building or volume of air flow) variances in volume of process loads) air flow) Outdoor Air Ground Source Heat Economizer Tower Upgrades Pump (see Category 1) Outdoor Air Direct Digital Controls Economizer (install (provide a more Water Side Tower Chiller Heat Recovery device that allows automated mechanism Economizer (see for Domestic Hot Water outdoor air to cool for Control Changes — Category 2) and summer reheat building when outside digital instead of temperature and analog or manual) A2E2 Exhibits: C3 Commercial Energy Audit Methodology Document 27 Category 1 Category 2 Category 3 Category 4 Short Payback Medium Payback Long -Term Payback Special Situation (< Three Years) (4-6 Years) (7+ years) (15+ year) humidity are low enough) Exhaust Energy Exhaust Energy Exhaust Energy Recovery Increase Wall and Roof Recovery Recovery Insulation High Albedo Roofing High Albedo Roofing (reflects sunlight) (reflects sunlight) Green/Vegetated Roofs White, Cool, or Reflective Roofs As suggested in the table above, EEMs may have different payback timeframes depending on operating profiles, projected existing equipment life, and opportunities to upgrade equipment. Participants in the Arkansas Advanced Energy Equity Program (A2E2) program may be required to meet the additional criteria with respect to investment terms, such as the following: 1. All loans are required to provide positive cash flow to the building owner in the first year based on energy savings alone. This means that the annual energy cost savings will be greater than the principal and interest payments for the A2E2 loan. Maintenance savings and life cycle cost savings are not to be considered in generating the required payback periods to qualify for loans. 2. Unless subsumed within Category 2 or Category 3 improvements, all recommended Category 1 improvements must be completed before any Category 2 or Category 3 improvements are eligible for financing under the Arkansas Advanced Energy Equity Program (A2E2) program. 3. The maximum loan term is 17 years. The loan term shall be, at most, twice the simple payback of combined Energy Efficiency Measures (EEMs) to be implemented. For example, if the simple payback of all of the EEMs implemented is 8 years, then the maximum loan term will be 16 years. 4. The recommended EEMs identified in a qualified audit must have a composite payback of at least 4 years. For example, items with short paybacks (Category 1) must be combined with items having medium or long term paybacks (up to 15 years) to bring the composite payback up to a minimum of 4 years. Individual EEMs with paybacks longer than 15 years (Category 4) are not generally considered as candidates for this program unless they involve life cycle equipment replacement and/or it is an infrastructure redevelopment that will have long term benefits to the building. Such EEMs are to be blended with other (Category 1-3) EEMs so that the composite payback is less than or equal to 15 years. To the extent that the necessary loan term would otherwise exceed 17 years, the participant will be required to provide additional equity to finance a portion of the improvements. 6. Clients will provide releases allowing the Arkansas Advanced Energy Equity Program (AM) program access to their utility usage data prior to and for the term of the loan. 7. Program participants will provide access to the facility to verify implementation of all EEMs prior to the loan draws from the Arkansas Advanced Energy Equity Program (AM) program. 8. All commercial and industrial equipment and controls will be fully commissioned to demonstrate proper function prior to final loan draw. A2!">2 Exhibits: C5 A5HR4E Technical Speci ications 29 ASHRAE Procedures for Commercial Building ]Energy Audits PRELIMINARY ENERGY USE ANALYSIS Before any level of energy analysis is begun, it is valuable to perform a preliminary energy use analysis to determine a building's current energy and cost efficiency relative to other, similar buildings. This is normally done by calculating the energy use and cost per square foot per year, which can indicate the potential value of further levels of analysis. This preliminary analysis generally includes the following steps. 1. Determine the building's gross conditioned square footage and record this on the building characteristics form. Classify the primary use of the building. Ensure that the standard definition of gross area is used. PrellminM Energy Use Mulysbs Cakulato ketu/si • Con4aro to AIMEW �I \ Ski s::'• 8 �'r�'�fleru � C3LYalrivi OEM., D Qt1ffo�(.10=d (30aA)an o!Y�1• flr• :::'u!.F1L'ra:Y1.Ti} °C«i� CJi �1r11[m Figure 1. Visual Comparison of Three (3) Levels of ASHRAE analysis. 2. Assemble copies of all utility bills and summarize them for at least a one-year period, preferably three years. Review the monthly bills for opportunities to obtain a better price through taking advantage of different utility rate classes. Review the monthly patterns for irregularities. Note if a bill is missing or if it is estimated rather than actual consumption. 3. Complete the energy performance summary to develop the energy index and the cost index for each fuel, or demand type, and their combined total using ASHRAE Standard 105 methods. 4. Compare the Energy Utilization Index (EUI) and the cost index with buildings having similar characteristics. The owner of the subject building may have similar buildings for this comparison. Comparison should also be made with publicly available energy indices of similar buildings. In all cases, care should be taken to ensure that comparison is made with current data, using consistent definitions of building usage and floor area. 5. Derive target energy, demand, and cost indices for a building with the same characteristics as this building. A range of methods are available for this work: • Pick from any database of similar buildings those buildings with the lowest energy index. • Pick an index based on the knowledge of an energy analyst experienced with this type of building. 6. Compare the energy and cost savings for each fuel type if the building were to reach the target Energy Utilization Index. Using these value(s), determine if further engineering analysis is recommended. LEVEL I — WALK-THROUGH ANALYSIS This process includes all of the work done for the preliminary energy use analysis, plus the following. 1. Perform a brief walk-through survey of the facility to become familiar with its construction, equipment, operation, and maintenance. 2. Meet with owner/operator and occupants to learn of special problems or needs of the facility. Determine if any maintenance problems and/or practices may affect efficiency. 3. Perform a space function analysis, guided by the forms in the "Walk -Through Data" section. Determine if efficiency may be affected by functions that differ from the original functional intent of the building. 4. Perform a rough estimate to determine the approximate breakdown of energy use for significant end -use categories, including weather and non -weather related uses. 5. Identify low-cost/no-cost changes to the facility or to operating and maintenance procedures, and determine the savings that will result from these changes. 6. Identify potential capital improvements for further study, and provide an initial estimate of potential costs and savings. The report for a Level 1 analysis should contain the building characteristics and energy use summary as well as the following. t. Quantification of savings potential from changing to a different utility price structure. 2. Discussion of irregularities found in the monthly energy use patterns, with suggestions about their possible causes. 3. The energy index of similar buildings. Report the source, size, and date of the sample used in this comparison. The names of comparable buildings should be given if known. 4. The method used to develop the target indices. Where comparison is made to other buildings, state their names. Where the experience of someone other than the author is used to develop the target, provide the source. Where the target is developed by calculation, show the calculation or quote the name and version of software used and include both input and output data. 5. Total energy and demand cost by fuel type for the latest year and preceding two years if available. Show potential savings in dollars using the energy index format of ASHRAE Standard 105. 6. The fraction of current costs that would be saved if the energy index were brought to the target level. 7. A summary of any special problems or needs identified during the walkthrough survey, including possible revisions to operating and maintenance procedures. 8. A preliminary energy use breakdown by major end uses. 9. The listing of low-cost/no-cost changes with the savings for these improvements. 10. The potential capital improvements, with an initial estimate of potential costs and savings LEVEL I[ —ENERGY SURVEY AND ENGINEERING ANALYSIS This analytical procedure is guided by Level I analysis and includes the following additional work: 1. Review mechanical and electrical system design, installed condition, maintenance practices, and operating methods. Where drawings have been kept up to date, this task will be much easier. 2. Review existing operating and maintenance problems. Determine planned building changes. 3. Measure key operating parameters and compare to design levels, for example, operating schedules, heating/cooling water temperature, supply air temperature, space temperature and humidity, ventilation quantities, and light level at the task. Such measurements may be taken on a spot basis, or logged, manually or electronically. 4. Prepare a breakdown of the total annual energy use into end -use components, as illustrated in the 1999 RSHRAE Handbook Applications, Chapter 34, Figure 4, or as shown in the section "Energy Analysis Summary and Recommendations." A number of calculation methods are available, ranging from simplified manual calculations to fully detailed computer simulation of hour -by -hour building operations for a full year. 5. List all possible modifications to equipment and operations that would save energy. Select those that might be considered practical by the owner. List preliminary cost and savings estimates. 6. Review the list of practical modifications with the owner/operator and select those that will be analyzed further. Prioritize the modifications in the anticipated order of implementation. 7. For each practical measure, estimate the potential savings in energy cost and its energy index. To account for interaction between modifications, assume that modifications with the highest operational priority and/or best return on investment will be implemented first. A number of calculation methods are available, ranging from simplified manual calculations to rerunning computer simulations, if performed in Step 4, above. 8. Estimate the cost of each practical measure. 9. Estimate the impact of each practical measure on building operations, maintenance costs, and non - energy operating costs. 10. Estimate the combined energy savings from implementing all of the practical measures and compare to the potential derived in the Level I analysis. It should be clearly stated that savings from each modification are based on the assumption that all previous modifications have already been implemented and that the total savings account for all of the interactions between modifications. 11. Prepare a financial evaluation of the estimated total potential investment using the owner's chosen techniques and criteria. These evaluations may be performed for each practical measure. 12. Following submission of the report of the Level 1I analysis, meet with the owner to discuss priorities and to help select measures for implementation or further analysis. The report for a Level II analysis should contain at least the following. 1. A summary of energy use and cost associated with each end -use. Show calculations performed or quote the name and version of software used and include both input and output pages. Provide interpretation of differences between actual total energy use and calculated or simulated end -use totals. 2. A description of the building, including typical floor plans and inventories of major energy -using equipment. (This information may be included as an appendix.) 3. A list of measures considered but felt to be impractical, with brief reasons for rejecting each. 4. For each practical measure, provide: • a discussion of the existing situation and why it is using excess energy; • an outline of the measure, including its impact on occupant health, comfort, and safety; a description of any repairs that are required for a measure to be effective; • the impact on occupant service capabilities, such as ventilation for late occupancy or year-round cooling; • an outline of the impact on operating procedures, maintenance procedures, and costs; • expected life of new equipment, and the impact on the life of existing equipment; • an outline of any new skills required in operating staff and training or hiring recommendations; • calculations performed or provide the name and version of software used and include both input and output data. 5. A table listing the estimated costs for all practical measures, the savings, and financial performance indicator. For the cost of each measure, show the estimated accuracy of the value quoted. This table should spell out the assumed sequence of implementation and state that savings may be quite different if a different implementation sequence is followed. 6. A discussion of any differences between the savings projected in this analysis and the estimated potential derived in the Level I analysis. 7. Overall project economic evaluation. S. Recommended measurement and verification method(s) that will be required to determine the actual effectiveness of the recommended measures. 9. Discussion of feasible capital -intensive measures that may require a Level III analysis. A2E2 Exhibits: C& Commercial Loan Application 33 EXAMPLE OF PRELIMINARY LOAN APPLICATION (DRAFT) Call XXX-XXX•XXXX• Fax Completed and Signed Application to XXX•XXX-XXXX. IMPORTANT INFORMATION: If you are applying for individual lease or for joint lease with another person (including a joint account or an account that you and another person will use) complete all sections providing information about each individual applicant, joint applicant or user. If you are applying to guarantee the obligations of a business, complete all sections providing information about yourself. Persons providing Information who are not Applicants, Guarantors, or Company Authorized Signers should not sign this statement. BUSINESS INFORMATION Legal Business Name ORA Name Tax Identification No, Street Address (rho P.O. Boxes) Billing Address (no P.O. Boxes) D Sale Proprietorship CdylCounrylSWWZIP 0 Individuals applying jointly for business purpose lease EgLspment Location (d different from above): Street AddressACdylCounty/StatemP p General Partnership. Contact Phone No. Fan No. 73 Limited Partnership ( ) f 1 Z1 Corp. or Ltd. Liability Co. Nature of Business Time in Business Tme as Owner No. of Employees Gross Annual Revenue Date at Org. State of Org. Is your business sales tax exempt? If 'YES' indicate tax exempt number. ❑ NO []YES E-Mail Address M Other. GUARANTOR INFORMATION �ACL 20% OR MORE OWNERS AND OF#4ERGUARANTORS) PrWapaYPartnerlptlxxr TUe % Ownership Date of Butts Sodal Seemly a U.S. Citizen ❑ YES ❑ NO Home Address City State ZIP Home Phone f) Billing Address (if different) City State LP Phone f I PrincipallPartnerfOlfloer Title % Ownership Date of Birth Social Security p U.S. Citizen OYES ❑NO Home Address City State ZIP Home Phone U."Address fif4ifferenl) city State ZIP Phone EQUIPMENTa^ r Please indicals the equipment you are planning to acquire: Equipment Supplier. Estimated Total Equipment Costs: S Structure: []Nominal (e.g. $t) Purchase Option Lease ❑ Fair Market Value Purchase Option Lease ❑ Trac TERM: Months BANK REFERENCE Bank Reference Name AccountlLoan Officer phone No. f ) A¢aunt type: Account No. Currant Balance Average Balance is months) .. Checking [] Savings LI Loan ri Line of Credit $ $ 'You; the -Applioenr (both tennis indude the business entity as well its all of the individuals named above), oartdy to us that you are applying for credit for b usiress reasons, and not for personal, fanny or household purposes. Applicant autthorizits XX)D XXX to obtain information from others concerning Applicant's credit and trade eli&ftng, indudtng Applicant's personal credit report, and other relevant inldmhation impacting this application. and it the Lease is approved, from time to time during the tern of the Lease. In addition to the information requested on this application, may subsequently request additional information from Appkarit IMPORTANT INFORMATION: Except as otherwise, prohibited by law, you agree and consent that the affiliates In XXXXXXX (cellectivety'ienWr'} may share with each odw all Information about you that tender has or may obtain forthe purposes, among othar things, of evaluating credit applications or offering you products or services that Lender Wleves may be of (merest to you. Under the Fair Credit Raporfing Act then is certain credit Information that cannot be shened about you lunless you are a busirwils) If you t►ll Lender by writing to Lender at: XXXXXXX. Please provide your name, address, social security number and account number(s). As an authorized agent of the applicant company, you mpresmi that you have revie,wed this document and the information (herein is true, correct and complete. A photo static copy of this authorization shall be es valid as the original. COMPA NY A ND GUARA N TOR Well clatify that well have read and agree with applicable terms and conditions above. Company Authorised Signature Title Date Company Authorized Signature Title Date Guarantor I Owner 1 Individual Signature Guarantor I Owner I Individual Signature Arkansas Advanced Energy Equity Program (AM) Exhibit C7/118 (DRAFT) unnty Account nomers, oy opnonaury signing oeiow, are nereoy autnonzing the utnity proviaers usteu oeiow Ito release billing history, utility consumption history, and other data associated with the listed account I I numbers. This data will be viewed by the City of Fayetteville, the PACE District Board of Directors, and their third party service providers (collectively, the "Program") for the purposes of technical and credit evaluation as pertaining to a potential loan being applied for by the listed Homeowner. By signing below, you are authorizing the Program to access data up to 2 years prior to the date on this form. Further, if a loan is issued through A2E2 for energy upgrades on the property associated with the listed utility accounts, you are authorizing the Program to access the same data going forward for the full term of the loan. Accessing such data after a loan closes enables full circle feedback to I the Assessment Provider, Installing Contractors, and Program Administrator to validate performance j resultant of improvements financed through the Program. Signature(s) of Authorized Utility Account Holders Fuel Type #1: Name on Account: t r � Utility Provider: Phone Number: Account Number: I I Signature: Date: Fuel Type #2: Name on Account: Utility Provider: Phone Number: Account Number: i Signature: Date: Fuel Type #3: Name on Account: Utility Provider: Phone Number: Account Number: Signature: Date: DRAFT CONTRACT / WORK VERSION TO MARKUP Arkansas Advanced Energy Equity Program (A2E2) ASSESSMENT CONTRACT This Assessment Contract ("Contract") is made and entered into as of this day of , by and between the Energy Improvement District Board of Directors, an Arkansas political subdivision ("PACE Board"), and ("Owner'). RECITALS A. The PACE Board has established the Arkansas Advanced Energy Equity Program ("A2E2" or "Program") pursuant to which the PACE Board may levy assessments against developed residential, commercial, and industrial properties located in the specific Energy Improvement District, with the consent of the owners of such properties, to finance the acquisition, construction, or installation of certain qualifying renewable energy systems and energy efficient improvements. The purpose and method of administering assessments under the Program are described in the A2E2 Program Manual and Administrative Guidelines adopted by the PACE Board on , 20_, as it may be amended from time to time (the "Report"). B. The PACE Board is authorized by the PACE statute Arkansas Act 1074 (the "Act" C. Owner has submitted to PACE Board that certain A2E2 Loan Application dated , 20_, a copy of which is attached hereto as Exhibit "A" and incorporated herein by this reference (the "Application"). The Application describes, among other things, the renewable energy system(s) and/or energy efficiency improvements which are to be financed under the Program, and to be constructed or installed on the property of Owner described in Exhibit "B" attached hereto and incorporated herein by this reference (the "Property"). The PACE Board has approved the Application as provided in the Report. D. Owner wishes to participate in the Program by executing this Contract with PACE Board and using monies advanced by the Program hereunder to finance the acquisition, construction, or installation on the Property of energy efficiency, renewable energy renewable, and/or water conservation improvements described in the Application ("Energy Improvements"). The Energy Improvements and their construction and/or installation are collectively referred to herein as the "Work." NOW, THEREFORE, in consideration of the mutual covenants contained herein and other valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows: Section 1. Contract Documents; Term. (a) This Contract, together with the Application and the documents and instruments attached to and referenced in this Contract and the Application, are collectively referred to herein as the "Contract Documents." (b) The term of this Contract shall be until the Assessment described herein and all accrued interest thereon, together with any applicable penalties, costs, fees, and other charge have been paid in full. Section 2. Loan Amount; Assessment; Incidental Expenses. (a) Subject to the conditions set forth herein, the PACE Board agrees to advance monies to Owner in the amount of the actual cost of the Work (the "Loan Amount"), provided the Loan Amount shall not exceed Dollars ($ ) (the "Maximum Loan Amount"). The Program Administrator and/or Project Lender shall determine the Loan Amount on the basis of the best available written evidence of the Work's actual cost and in the exercise of the Program Administrator's best judgment. The Program Administrator shall determine the Loan Amount before advancing monies to Owner hereunder and following the post -completion inspection of the Energy Improvements by A2E2 Staff, as described in Section 4 below. In the event that the actual cost of the Work exceeds the Maximum Loan Amount, Owner shall be solely responsible for the payments of all costs of the Work which exceed the Maximum Loan Amount, and Owner agrees to in any event to complete the Work and to fund all costs associated with such completion which may exceed the Maximum Loan Amount. (b) In consideration of the monies advanced by the PACE Board hereunder, Owner promises to pay, without offset or deduction, an assessment levied against the Property pursuant to this Contract, the Act and applicable law (the "Assessment") together with the interest thereon as described herein. Upon execution of this Contract, the PACE Board will execute and cause to be recorded a notice of assessment in the office of the County Recorder ("County Recorder") substantially in the form set forth in Exhibit "C" attached hereto and incorporated herein by this reference (the "Notice of Assessment"). (c) Upon recordation of the Notice of Assessment, the Assessment and each installment thereof and the interest and penalties thereon, shall constitute a lien upon the Property until paid. Initially, as reflected in the Notice of Assessment, upon recordation of the Notice of Assessment, the Assessment shall equal the Maximum Loan Amount. Following the PACE Board's advance of monies to Owner hereunder, the Assessment shall equal the Loan Amount. (d) Interest shall accrue on the unpaid Assessment from the date the PACE Board disburses the Loan Amount to Owner at the simple interest rate of seven percent (7%) per annum and shall be payable in installments as set forth on Exhibit "D" attached hereto and incorporated herein by this reference. Interest shall be computed on the basis of three hundred sixty (360) days a year. If a court of competent jurisdiction determines the interest or other charges provided for herein in connection with the Assessment or the Annual Administrative Assessment (described in paragraph (f) below) exceed the limits permitted by applicable law, then: (i) any such interest or charge shall be reduced by the amount necessary to reduce the interest or charge to the permitted limit; and (ii) any sums already collected which exceed permitted limits will be refunded by the PACE Board. The Program Administrator, in its discretion, may make the refund by making a direct payment to Owner or by crediting the refund amount against the next installment or installments of the Assessment (described in paragraph (e) below). (e) Annual installments of the Assessment, together with the annual interest of the Assessment, shall be collected on the property tax bill pertaining to the Property. The annual portion of the assessment coming due in any year, together with the annual interest on the Assessment, shall be payable in the same manner and at the same time and in the same installments as general taxes on real property. The amount of each Assessment installment and the interest on the unpaid Assessment that will be placed on the tax roll each year is set forth in Exhibit "D." (f) In addition to the Assessment, until the Assessment and the interest thereon is paid'in full, Owner promises to pay, without deduction or offset, an annual administrative assessment levied against the Property pursuant to this Contract, the Act and applicable law to pay costs incurred by the PACE Board resulting from the administration and collection of the Assessment and from the administration or registration of any associated bonds or other financing arrangement, as described in the Report, and from the administration of any reserve fund and other related funds (the "Annual Administrative Assessment"). The Annual Administrative Assessment shall not exceed fifty dollars ($50) per year. The Program Administrator shall annually determine the amount of the Annual Administrative Assessment, not to exceed the amount set forth in the preceding sentence. The Annual Administrative Assessment shall be collected in the same manner as the Assessment. The Annual Administrative Assessment shall become a lien upon the Property at the same time as the property tax becomes a lien each year on the Property. (g) The execution of this Contract by the parties constitutes the confirmation of the Assessment and the Annual Administrative Assessment by the PACE Board and the levy of the Assessment and the Annual Administrative Assessment against the Property without any further action required by the parties. Owner expressly consents to the levy of the Assessment and Annual Administrative Assessment on the Property and the recordation of the Notice of Assessment, all as described herein, in the Act and in applicable law. (h) The lien of the Assessment shall be co -equal to and independent of the lien for general taxes, and, except as provided in Government Code section , not subject to extinguishment by the sale of the Property on account of the nonpayment of any taxes, and is prior and superior to all liens, claims and encumbrances on or against the Property except (i) the lien for general taxes or ad valorem assessments in the nature of and collected as taxes levied by the State of Arkansas or any county, special district or other local agency, (ii) the lien of any special assessment or assessments the lien date of which is prior in time to the lien date of the Assessment, (iii) easements constituting servitudes upon or burdens to the Property, (iv) water rights, the record title to which is held separately from the title to the Property, and (v) restrictions of record. (i) Owner acknowledges that as cumulative remedy, if any installment of the Assessment, or any interest thereon, together with any penalties, costs, fees, and other charges accruing under applicable taxation provisions are not paid when due, the PACE Board may order that the same be collected by an action brought in a court of competent jurisdiction to foreclose the lien of the Assessment to the extent permitted, and in the manner provided by, applicable law. Q) Owner may prepay the Assessment, in whole or in part, at any time upon the payment of the amount, including an amount equal to $ or percent (%) of the amount of the Assessment to be prepaid, determined by the Program Administrator in accordance with the Report. Owner shall notify the Program Administrator in writing of Owner's determination to prepay the Assessment, in whole or in part, at least thirty (30) business days prior to the date Owner intends to prepay the Assessment. (k) Owner expressly acknowledges that the construction and/or installation of the Energy Improvements on the Property confer a special benefit to the Property in an amount at least equal to the Assessment. (1) Owner expressly waives the notice, protest and hearing procedures of any applicable law other than the Act with respect to the levy and collection of the Assessment and Annual Administrative Assessment. Section 3. Use of Proceeds Owner shall use the Loan Amount for the sole purpose of paying the reasonable costs and expenses of the Work on the Property, and in connection therewith Owner shall comply with all requirements set forth in the Contract Documents. Section 4. Loan Disbursement Procedures (a) Notwithstanding anything to the contrary contained herein, the PACE Board shall have no obligation to disburse the Loan Amount hereunder unless and until each of the following conditions is satisfied, or any such condition is expressly waived by the Program Administrator: (i) The receipt by the Program Administrator of a written certification from Owner, and the contractor(s), if any, that performed the Work, stating the actual cost of the Work and that the Work is complete. Such certification shall be in form and substance acceptable to the Program Administrator. (ii) An inspection of the Work by PACE Board staff, and a determination by the Program Administrator that the Work has been completed in full compliance with the requirements of the Contract Documents. (iii) The receipt by the Program Administrator of such other documents and instruments as the Program Administrator may require, including but not limited to, if applicable, the sworn statements of contractor(s) and releases or waivers of lien, all in compliance with the requirements of applicable law. (iv) Owner has, as appropriate, executed and delivered to the Program Administrator the Contract Documents and other such documents or instruments pertaining to the Loan Amount or the Work as the Program Administrator may require. (v) As of the date of disbursement of the Loan Amount, the Program Administrator shall have determined that the representations of the Owner contained in the Contract Documents are true and correct, and no Default (as defined in Section 13 below) shall have occurred or be continuing. (vi) No stop payment or mechanic's lien notice pertaining to the Work has been served upon the PACE Board and remains in effect as of the date of disbursement of the Loan Amount. (vii) The PACE Board shall have received a title policy with regard to the monies advanced to Owner hereunder. (viii) Owner will, within fifteen (15) business days of presentation by the Program Administrator, execute any and all documents or instruments required by the Contract Documents in connection with the disbursement of the Loan Amount. (b) Upon satisfaction of waiver of the conditions described in paragraph (a) above, the PACE Board will disburse the Loan Amount to Owner, provided, the PACE Board shall not be under any obligation to disburse the Loan Amount until the first day of the month immediately following the month in which all of the foregoing conditions were satisfied or waived. Section 5. Reports. Owner agrees, upon request of the Program Administrator, to promptly deliver to the Program Administrator, or, if appropriate, cause its contractor(s) to promptly deliver to the Program Administrator, a written status report regarding the Work. Section 6. Representations and Warranties of Owner. Owner promises that each representation and warranty set forth below is true, accurate, and complete as of the date of this Contract, and the date of the disbursement of the Loan Amount. The disbursement of the Loan Amount shall be deemed to be a reaffirmation by Owner of each and every representation and warranty made by Owner in this Contract. If Owner is comprised of the trustees of a trust, the following representations shall also pertain to the trustor(s) of the trust. A2E2 Exhibits: C8/R9 Assessment Contract 40 (a) Formation; Authority. If Owner is anything other than a natural person, it has complied with all laws and regulations concerning its organization, existence and the transaction of its business, and is in good standing in each state in which it conducts its business. Owner is the owner of the Property and is authorized to execute, deliver and perform its obligations under the Contract Documents, and all other documents and instruments delivered by Owner to the PACE Board in connection therewith. The Contract Documents have been duly executed and delivered by Owner and are valid and binding upon and enforceable against Owner in accordance with their terms, and no consent or approval of any third party, which has not been previously obtained by Owner, is required for Owner's execution thereof or the performance of its obligations contained therein. (b) Compliance with Law. Neither Owner nor the Property is in violation of, and the terms and provisions of the Contract Documents do not conflict with, any regulation or ordinance, any order of any court or governmental entity, or any building restrictions or governmental requirements affecting Owner or the Property. (c) No Violation. The terms and provisions of the Contract Documents, the execution and delivery of the Contract Documents by Owner, and the performance by Owner of its obligations contained therein, will not and do not conflict with or result in a breach of or a default under any of the terms or provisions of any other agreement, contract, covenant, or security instrument by which Owner or the Property is bound. (d) Other Information. All reports, documents, instruments, information and forms of evidence that have been delivered to the PACE Board concerning the disbursement hereunder and the Loan Amount are accurate, correct, and sufficiently complete to give the PACE Board true and accurate knowledge of their subject matter. (e) Lawsuits. There are no lawsuits, tax claims, actions; proceedings, investigations or other disputes pending or threatened against Owner or the Property which may impair Owner's ability to perform its obligations hereunder, or which may impair the PACE Board's ability to levy and collect the Assessment and the Annual Administrative Assessment. (f) No Event of Default. There is no event that is, or with notice or lapse of time or both would be, a Default under this Contract. (g) Accuracy of Declarations. The declarations of Owner contained in the Application are accurate, complete, and true. Section 7. Owner's Covenants. Owner promises to keep each of the following covenants: (a) Completion of Work and Maintenance of Energy Improvements. Owner shall, or shall cause its contractor(s) to, promptly commence construction of the Work, and diligently continue such Work to completion, in good and workmanlike manner and in accordance with sound construction and installation practices. Owner shall maintain the Energy Improvements in good condition and repair. (b) Compliance with Law and Agreements. In commencing and completing the Work, Owner shall comply with all existing and future laws, regulations, orders, building restrictions and requirements of, and all agreements with and commitments to, all governmental, judicial and legal authorities having jurisdiction over the Property or the Work, and with all recorded instruments, agreements, covenants and restrictions affecting the Property. (c) Permits, Licenses and Approvals. Owner shall properly obtain, comply with and keep in effect all permits, licenses and approvals which are required to be obtained from any governmental authority in order to commence and complete the Work. Owner, upon the request of the Program Administrator, shall promptly deliver copies of all such permits, licenses and approvals to the Program Administrator. (d) Site Visits. Owner grants the PACE Board, its agents and representatives the right to enter and visit the Property at any reasonable time, after giving reasonable notice to Owner, for the purposes of observing the Work. The PACE Board will make reasonable efforts during any site visit to avoid interfering with Owner's use of the Property. Owner shall also allow the PACE Board to examine and copy records and other documents of Owner which relate to the Work. Any site visit, observation or examination by the PACE Board shall be solely for the purposes of protecting the PACE Board's rights under the Contract documents. (e) Protection Against Lien Claims. Owner shall promptly pay or otherwise discharge any claims and liens for labor done and materials and services furnished to the Property in connection with the Work. Owner shall have the right to contest in good faith any claim or lien, provided that it does so diligently and without delay in completing the Work. (f) Insurance. Owner shall provide, maintain and keep in force at all times until the Work is completed, builder's all risk property damage insurance on the Property, with a policy limit equal to the full replacement cost of the Work. (g) Notices. Owner shall promptly notify the PACE Board in writing of any Default under this Contract, or any event which, with notice or lapse of time or both, would constitute a Default hereunder. Section 8. Completion of the Work. (a) Consent and Authorization. This Contract constitutes consent and authorization, pursuant to Section of the Act, for Owner to purchase directly the related equipment and materials for the Energy Improvements and to contract directly for the construction and/or installation of the Energy Improvements on the Property. (b) Date of completion of the Work. Subject to Section 13(f) below, Owner agrees to complete the Work on or before , 20_ Section 9. Mechanic's Lien and Stop Notices. In the event of the filing of a stop notice or the recording of a mechanic's lien pursuant to applicable law of the State of Arkansas and relating to the Work, the Program Administrator may summarily refuse to disburse the Loan Amount, and in the event Owner fails to furnish the Program Administrator a bond causing such notice or lien to be released within ten (10) days of notice from the Program Administrator to do so, such failure shall, at the option of the PACE Board, constitute a Default under the terms of this Contract. Owner shall promptly deliver to Program Administrator copies of all such notices or liens. Section 10. Indemnification. (a) Owner shall indemnify, defend, protect and hold harmless the PACE Board and all agents, employees, attorneys and representatives of the PACE Board (collectively, the "The PACE Board Parties"), from and against all losses, liabilities, claims, damages (including consequential damages), penalties, fines, forfeitures, costs and expenses (including all reasonable out-of-pocket litigation costs and reasonable attorneys' fees) and any demands of any nature whatsoever related directly or indirectly to, or arising out of or in connection with, (i) the Contract Documents, (ii) the disbursement of the Loan Amount, (iii) the Work, (iv) the Energy Improvements, (v) any breach or Default by Owner under the Contract Documents, (vi) the levy and collection of the Assessment [and the Annual Administrative Assessment], (vii) the imposition of the lien of the Assessment, and (viii) any other fact, circumstance or event related to the PACE Board's extension and disbursement of the Loan Amount to Owner or Owner's performance of its obligations under the Contract Documents (collectively, the "Liabilities"), regardless of whether such Liabilities shall accrue or are discovered before or after the disbursement of the Loan Amount. (b) The indemnity obligations described in this Section 10 shall survive the disbursement of the Loan Amount, the payment of the Assessment in full, the transfer or sale of the Property by Owner, and the termination of this Contract. Section 11. Waiver of Claims. For and in consideration of the PACE Board's execution and delivery of this Contract, Owner, for itself and for its successors -in -interest to the Property and for anyone claiming by, through, or under Owner, hereby waives the right to recover from and fully and irrevocably releases the PACE Board Parties from any and all claims, obligations, liabilities, causes of action, or damages, including attorneys' fees and court costs, that Owner may now have or hereafter acquire against any of the PACE Board Parties and accruing from or related to (i) the Contract Documents, (ii) the disbursement of the Loan Amount, (iii) the levy and collection of the Assessment and the Annual Administrative Assessment, (iv) the imposition of the lien of the Assessment, (v) the issuance and sale of any bonds or other evidence of indebtedness, or other financial arrangements entered into by the PACE Board pursuant to the Program, (vi) the performance of the Work, (vii) the Energy Improvements, (viii) any damage to or diminution in value of the Property that may result from the Work, (ix) any personal injury or death that may result from the Work, (x) the selection of manufacturer(s), dealer(s), supplier(s), contractors(s) and/or installer(s), and their action or inaction with respect to the Work or the Energy Improvements, (xi) the merchantability and fitness for any particular purpose, use or application of the improvements, (xiii) the workmanship of any third parties, and (xiv) any other matter with respect to the Program. This A2E2 Exhibits: C8/R9 Assessment Contract 43 release includes claims, obligations, liabilities, causes of action, and damages of which Owner is not presently aware or which Owner does not suspect to exist which, if known by Owner, would materially affect Owner's release of the PACE Board Parties. OWNER HEREBY ACKNOWLEDGES THAT IT HAS READ AND IS FAMILIAR WITH THE PROVISIONS OF ARKANSAS CIVIL CODE SECTION ("SECTION "), WHICH IS SET FORTH BELOW: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." BY INITIALING BELOW, OWNER HEREBY WAIVES THE PROVISIONS OF SECTION SOLELY IN CONNECTION WITH THE MATTERS WHICH ARE THE SUBJECT OF THE FOREGOING WAIVERS AND RELEASES. Owner's initials The waivers and releases by Owner contained in this Section 11 shall survive the disbursement of the Loan Amount, the payment of the Assessment in full, the transfer or sale of the Property by Owner, and the termination of this Contract. Section 12. Further Assurances. Owner shall execute any further documents or instruments consistent with the terms of this Contract, including documents and instruments in recordable form, as the PACE Board shall from time to time find necessary or appropriate to effectuate its purposes in entering into this Contract and disbursing the Loan Amount. Section 13. Events of Default. (a) Subject to the further provisions of this Section 13, the failure of any representation or warranty of Owner contained herein to be correct in all material respects, or the failure or delay by Owner to perform any of its obligations under the terms or provisions of the Contract Documents, other than with respect to the payment of the Assessment, shall constitute a nonmonetary default hereunder ("Default"). Owner must immediately commence to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence, but in any event, within the time set forth in Section 13(b) below. (b) If a Default occurs, prior to exercising any remedies under the Contract Documents or the Act, the PACE Board shall give Owner notice of such Default. If the Default is reasonably capable of being cured within thirty (30) days, Owner shall have such period to effect a cure prior to the exercise of remedies by the PACE Board under the Contract Documents or the Act. If the Default is such that it is reasonably capable of being cured, but not within such thirty (30) day period, and Owner (i) initiates corrective action within such thirty (30) day period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then Owner shall have such additional time as is reasonably necessary to cure the Default prior to exercise of any remedies by the PACE Board. However, in no event shall the PACE Board be precluded from exercising its remedies if its security becomes or is about to become materially jeopardized by any failure to cure a Default, or if the Default is not cured within one hundred and twenty (120) days after the first notice of Default is given. (c) Subject to the provisions of paragraph (b) above, if any Default occurs the PACE Board may exercise any or all rights and remedies available to it under applicable law, at equity, or as otherwise provided herein. Upon the election of the PACE Board, if there has been no disbursement of the Loan Amount, this Contract shall terminate and, except as otherwise expressly provided herein, the parties have no further obligations or rights hereunder. (d) Subject to the provisions of Section 17 hereof, any and all costs and expenses incurred by the PACE Board in pursuing its remedies hereunder shall be additional indebtedness of Owner to the PACE Board hereunder. (e) Except as otherwise expressly stated in this Contract or as otherwise provided by applicable law, the rights and remedies shall not preclude exercise by the PACE Board, at the same time or different times, of any other rights or remedies for the same Default or any other Default. No failure or delay by the PACE Board in asserting any of its rights and remedies as to any Default shall operate as a waiver of any Default or of any such rights or remedies, or deprive the PACE Board of its rights to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. (f) Performance of the covenants and conditions imposed upon Owner hereunder with respect to the commencement and completion of the Work shall be excused while and to the extent that, Owner is prevented from complying therewith by war, riots, strikes, lockouts, action of the elements, accidents, or acts of God beyond the reasonable control of Owner; provided, however, that such event is not caused by the fault, negligent or misconduct of Owner; and provided, further, as soon as the cause or event preventing compliance is removed or ceases to exist the obligations shall be restored to full force and effect and Owner shall immediately resume compliance therewith and performance thereof. (g) Remedies with respect to the nonpayment of the Assessment or other amounts payable by Owner hereunder are governed by the provisions of Section 2 hereof. Section 14. Compliance with Local, State and Federal Laws. Owner shall perform the Work, or cause the Work to be performed, in conformity with all applicable laws, including all applicable federal, state and local occupation, safety and health laws, rules, regulations and standards. Owner agrees to indemnify, defend and hold the PACE Board Parties harmless from and against any cost, expense, claim, charge or liability relating to or arising directly or indirectly from any breach or failure of Owner or its contractor(s) or agents to comply with such laws, rules or regulations. The indemnification A2E2 Exhibits: C8/R9 Assessment Contract 45 obligations described in this Section 14 shall survive the disbursement of the Loan Amount, the payment of the Assessment in full, the discharge of the lien, and the termination of this Contract. Section 15. Severability. Each and every provision of this Contract is, and shall be construed to be, a separate and independent covenant and agreement. If any term or provision of this Contract or the application thereof shall to any extent be held to be invalid or unenforceable, the remainder of this Contract, or the application of such term or provision to circumstances other than those to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Contract shall be valid and shall be enforced to the extent permitted by law. Section 16. Notices. All notices and demands shall be given in writing by certified mail, postage prepaid, and return receipt requested, or by personal delivery (by recognized courier service or otherwise). Notices shall be considered given upon the earlier of (a) personal delivery or (b) two (2) business days following deposit in the United States mail, postage prepaid, certified or registered, return receipt requested. Notices shall be addressed as provided below for the respective party; provided that if any party gives notice in writing of a change of name or address, notices to such party thereafter be given as demanded in that notice: Arkansas Advanced Energy Equity Program (A2E2) c/o City of Fayetteville 113 W Mountain St, Fayetteville, AR 72701 Attention: [PROGRAM Administrator] To Owner: Attention: Section 17. Attorney's Fees and Costs. In the event that any action is instituted to enforce payment or performance under this Contract, the parties agree that the non -prevailing party shall be responsible for and shall pay all costs and all attorneys' fees incurred by the prevailing party in enforcing this Contract. Section 18. No Waiver. No disbursement of the Loan Amount based upon inadequate or incorrect information shall constitute a waiver of the right of the PACE Board to receive a refund thereof from Owner. Section 19. Governing Law. This Contract shall be governed by the laws of the State of Arkansas. Any legal action brought under this Contract must be instituted in the Superior Court of Arkansas, or in an appropriate municipal court in that County or in the United States District Court for Arkansas. Section 20. Amendment of Contract. No modification, rescission, waiver, release or amendment of any provision of this Contract shall be made except by a written agreement executed by Owner and the PACE Board. Section 21. The PACE Board May Assign; Role of the PACE BOARD. The PACE Board, at its option, may (i) assign any or all of its rights and obligations under this Contract, and (ii) pledge and assign its right to receive the Assessment and the Annual Administrative Assessment, and any other payments due to the PACE Board hereunder, without obtaining consent from Owner. Section 22.Owner Assignment Prohibited. In no event shall Owner assign or transfer any portion of this Contract or Owner's rights or obligations under the Contract without the prior express written consent of the PACE Board, which consent may be granted or withheld in the sole and absolute discretion of the PACE Board. Section 23. Relationship of Owner and THE PACE BOARD. The relationship of Owner and the PACE Board pursuant to this Contract is that of debtor and creditor and shall not be or be construed to be a joint venture, equity venture, partnership, or other relationship. Section 24. General. Time is of the essence of this Contract and of each and every provision hereof. This Contract, together with the other Contract Documents, constitutes the entire agreement between the parties hereto, and there shall be no other agreement regarding the subject matter thereof unless signed in writing by the part to be charged. If there is more than one "Owner," the obligations hereunder of all Owners shall be joint and several. Section 25. Counterparts. This Contract may be executed in several counterparts, each of which shall be deemed an original, and all of such counterparts together shall constitute one and the same instrument. Section 26. Special Termination. Notwithstanding anything to the contrary contained herein, this Contract shall terminate and be of no further force or effect if Owner.has submitted to the Program Administrator a notice of its decision to cancel this transaction on or Assessment prior to the date and time described in the Notice of Right to Cancel which was delivered to Owner upon its execution of this Contract. Section 27. No Third Party Beneficiary Rights. This Contract is entered into for the sole benefit of Owner and the PACE Board and, subject to the provisions of Sections 10, 11 and 21, no other parties are intended to be direct or incidental beneficiaries of this Contract and no third party shall have any right in, under or to this Contract. IN WITNESS WHEREOF, Owner and the PACE Board have entered into this Contract as of the date and year first above written. OWNER: THE PACE BOARD: District Board of Directors, a political subdivision in the State of Arkansas Date of Execution by Owner: By: Name: 20 Title: ATTEST: STATE OF ARKANSAS } ss. COUNTY OF } On , before me, a notary public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacities (ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of Arkansas that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (This area for official notarial seal) STATE OF ARKANSAS COUNTY OF } ss. } On , before me, a notary public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacities(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. certify under PENALTY OF PERJURY under the laws of the State of Arkansas that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (This area for official notarial seal) EXHIBIT "A" [ATTACH COPY OF EXECUTED AND APPROVED APPLICATION] EXHIBIT "B" DESCRIPTION OF THE PROPERTY EXHIBIT "A" [ATTACH COPY OF EXECUTED AND APPROVED APPLICATION] EXHIBIT "D" SCHEDULE OF ASSESSMENT INSTALLMENTS, INTEREST THEREON, [AND THE MAXIMUM ADMINISTRATIVE ASSESSMENT] [to be provided] Arkansas Advanced Energy Equity Program (A2E2) Exhibit C9/R11 Database Information Database content While financial information will be maintained by the lending institution, per their internal lending data retention protocols, certain project information pertaining to specific participating properties that can be aggregated to track program performance will be collected and maintained by the program administrator. Some of this data will include specific property information, such as address and physical description, the prioritized improvements recommended by the auditor, the improvements actually implemented along with the estimated energy savings of those improvements. The administrator will also collect actual utility data when available to compare with estimates. This data could be used to calculate estimated emissions reductions on a property and overall program basis. On an aggregate basis, this data will be able to demonstrate the efficacy of the program. The specific fields required to maintain such data would include standard property information, i.e. homeowner name, street address, structure type, square footage, etc. Fields specific to the project information would be derived from the scope of work information and audit data to be supplied. Additional data would be calculated or derived from this information for generating reports and aggregation purposes. Software to be used for maintaining project database While there are many `off the shelve" database applications that could potentially be utilized in a program such as this, this is relatively new approach to the market of energy efficiency. There have been some smaller vendors that have attempted to address software application needs for energy efficiency projects on an aggregate basis, these are mostly for energy auditors to manage workload and do not address the specific reporting needs of a program such as this. The most likely way to address all of the data management and reporting requirements of the program is to utilize a customizable SQL based relational database product that can generate reports that are tailored to the requirements of the PACE Board and can be maximized for the benefit of the program. By building on a customizable SQL based relational database, alterations can be made as the program develops to address any reporting and calculation needs that may be unforeseen at program inception. While there would be some difference in the data generated, the basic database structure of program is applicable to both residential and commercial projects. 'j Q I �D W17 Arkansas Advanced Energy Equity Program (AM) Preliminary Program Application Residential Property This short questionnaire is designed for the Program Administrator and Lending Institution to best assess the homeowner's eligibility for the AMProgram. Please answer as honestly and accurately as possible so that an accurate assessment can be made. This will help prevent wasting time, effort, and money on your part if there is something that may prevent your eligibility for the program. Home Information: Name: Zip code: Property Address: Number of years at this address: Owner of the property? Y ❑ N ❑ (only a property owner is eligible for the Program, if you are renting, however, your landlord can apply). Number of residents living at this address: What fuel does your house use for heating? ❑ Gas ❑ Electric ❑ Other (specify): What is the age of your furnace? What is your average monthly utility bill? $ What type of structure is your house? ❑ Brick ❑ Frame ❑ Other (specify): What type of roof is on this property? ❑ Shingle ❑ Tile ❑ Flat ❑ Other (specify): Do you have a basement? ❑ Yes ❑ Slab ❑ Crawl Space Is your home a single family residence? ❑ Yes ❑ Duplex ❑ Quadplex ❑ Other (if the building is larger than a quadplex, you may need to fill out a commercial A2E2 application). Is there something specific that you would like to address through participating in the A2E2 program (such as drafts, just saving money, etc.): Financial Information: The lending institution will do a preliminary credit approval based on self reported information prior to doing a full credit check of the applicant. Gross monthly household income: $ Real estate taxes (annual): $ Home owners insurance (annual): $ Estimated monthly payment obligations: $ Contractor referral: If you were referred to the program by an energy auditor or contractor please indicate below: Contractor company name: Homeowner acknowledgement and contact information: Please supply the following contact information and place a check in front of your preferred method of contact: Telephone: ❑ mobile ❑ Email: ❑ home ❑ work By signing below you acknowledge that the A2E2 program will contact you within 2 — 4 business days with the results of your preliminary evaluation for eligibility as a participant in the program. Any action taken on your part prior to preliminary approval for participation in the Program may not be financed by the Program and ultimately, participation in the Program will depend on further information and credit verification. Signed (homeowner): Print name: Arkansas Advanced Energy Equity Program (AM) Exhibit R4 — BPI Technical Specifications (Excerpted from BPI-1100-T-2012, Home Energy Auditing Standard) 1. Scope This standard practice defines the minimum criteria for conducting a building -science -based evaluation of existing detached single-family dwellings and townhouses that have independent mechanical systems for each dwelling unit (heating, cooling, water heating, and ventilation); direct access to outdoors for each dwelling unit; and were designed to have continuous party walls with no penetrations to adjacent units, with such party walls extending from ground to roof where the dwelling unit is attached to one or more adjacent single-family dwelling units. The evaluation will address energy usage, and limited aspects of building durability and occupant health and safety. The evaluation will provide a comprehensive scope of work to improve the home and will include a cost -benefit analysis. 2. General Energy Audit Requirements Energy audits shall be based on building science principles and include the use of appropriate equipment in diagnosing opportunities for improving energy efficiency and minimizing health and safety hazards. All energy audits shall include the following: 2.1 A review with the occupant(s), if available, about any concerns they may have related to the performance of their home. 2.2 Immediate disclosure to occupant(s) if any emergency or urgent health and safety hazard or situation is present in the home. 2.3 A report that meets the requirements laid out in this standard. All energy audit reports shall include the following: 2.4 Information on energy programs, incentives, regulations and energy costs relevant to prioritized recommendations for improving the home. 2.5 When energy -consumption records are available, a baseline energy use analysis. 2.6 A comprehensive set of specific energy efficiency and health and safety measures, warranted by the site -specific circumstances, that provides advice to clients on reduction strategies. 3. Health and Safety Related Requirements The energy audit shall: 3.1 Include a test of all combustion appliances in accordance with Section 7 of this standard. 3.2 Evaluate ventilation requirements in accordance with Section 8 of this standard. 3.3 Identify signs of moisture problems in accordance with Section 9 of this standard. All energy audit reports shall include the specific information needed to implement, maintain and/or improve existing levels of health and safety in the home. Additionally, the energy audit report shall identify ways to mitigate identified health and safety hazards. The energy audit report shall: 3.4 Identify existing health and safety hazards and hazards that may develop when the improvement measures are installed and specify preventative measures for each situation. 3.5 Inform customers about identified and potential fire, structural, health and safety hazards related to energy systems and any retrofit work recommended in the audit report. 3.6 Specify that any known or suspected lead, asbestos, or mold be addressed only by workers who are qualified and following appropriate containment, cleaning and/or abatement procedures. 3.7 Inform customers about potential radon risk. Recommend radon testing in accordance with Environmental Protection Agency (EPA) guidelines, unless an EPA guidelines -compliant radon- mitigation system is already in place. 3.8 Specify that identified electrical hazards, which may hinder planned energy conservation measures (ECMs), are mitigated prior to or in parallel with ECMs. 4. Disclosure and Ethics The energy audit report shall provide clear and accurate information to customers about ECMs and health and safety improvements. The energy audit report shall: 4.1 Disclose any current or potential conflicts of interest of the auditor. 4.2 Disclose any products and services that the auditor or his/her company provides in addition to energy auditing. 4.3 Communicate the cost-effectiveness and feasibility of the recommended ECMs, based on modeling, utility -bill history or typical usage and energy cost for similar homes in the area. 4.4 Communicate the importance of each recommended health and safety improvement. 4.5 Include a list of one or more qualified contractors who perform diagnostic testing and the retrofit work listed in the workscope. 5. Cost -Benefit Analysis The energy audit shall: 5.1 Include a customized cost -benefit analysis of a comprehensive package of ECMs, using one of the following three methods for cost -benefit analysis: 5.1.1 Computer analysis using qualified energy audit software in accordance with the U.S. Department of Energy's (DOE) Weatherization Program Notice 05-5. 5.1.2 Computer analysis, using building energy simulation software that shall at a minimum meet the following requirements: 1) Pass the software verification tests listed in Section 4.2.1 of Procedures for Certifying Residential Energy Efficiency Tax Credits — RESNET Publication No. 06-001, Nov 7, 2011. 2) Be capable of reporting energy consumption separately, by fuel type, for the following end uses at a minimum: space heating, space cooling, water heating, lighting, and other appliances. 5.1.3 A priority list set up as described in DOE WPN 01-4. The priority list shall include both seasonal and baseload ECMs and shall identify the type of housing covered by the priority list. (See Annex A.) When energy -consumption records are available, the audit shall include an analysis of energy consumption records (at least 12 months) to validate estimates of energy savings from the installed ECMs. The energy audit report shall include: 5.3 A tabular summary of the energy consumption records analyzed. 5.4 The results of the customized cost -benefit analysis of comprehensive package of ECMs performed in accordance with item 5.1. 6. Prioritizing Recommendations The energy audit shall include the following requirements: 6.1 Interview with customers to understand their priorities and goals for home improvements. The energy audit report shall include recommendations detailing proposed ECMs. These recommendations shall be based on an evaluation of the whole house according to the requirements of this standard and the objectives of the customer. The recommendations shall not be based primarily on a specific product line, services of a contractor, or convenience. The objective of the recommendations is to optimize home performance cost- effectively, while maintaining or improving health and safety and satisfying customer objectives. The energy audit report shall include: 6.2 A prioritized list of health and safety improvements noting their urgency and importance based on health impacts. 6.3 A prioritized list of ECMs, building repairs and renovation work recommended according to customer objectives and cost-effectiveness. 6.4 Results of diagnostic testing including a brief description of the diagnostic testing and its purpose. 6.5 Recommendation for verification (such as diagnostic testing) after ECMs are complete. 7. Combustion Appliance Testing The energy audit shall include inspection of combustion systems for safety problems. Specifically the energy audit shall: 7.1 Test for gas leakage at connections of natural gas and propane piping systems. 7.2 Identify and communicate situations that require health and safety remediation, following Section 7 — such as a gas leak or actionable levels of ambient carbon monoxide — clearly and immediately to the customer and recommend solutions to mitigate the problem. 7.3 Inspect for oil leakage in oil -fired heating and water -heating systems. 7.4 Inspect combustion venting systems for damage, leaks, disconnections, inadequate slope and other safety hazards. 7.5 Include combustion appliance zone (CAZ) pressure tests, carbon monoxide (CO) tests and spillage tests on all combustion appliances venting into atmospheric chimneys, including fan- assisted gas appliances. 7.6 If the outlet of the exhaust is accessible, include a CO test on all sealed -combustion and power- vented appliances (without atmospheric chimneys). 7.7 Test gas ovens and unvented appliances for CO. 7.8 Inspect solid fuel burning appliances for safe operation and efficiency. The energy audit report shall specify remediation of conditions specified by this standard, and shall specify that post -retrofit combustion appliance testing be conducted. The energy audit report shall also: 7.9 Specify repair for combustible gas leaks and replacement for hazardous or damaged gas connectors. 7.10 Specify repair for oil leaks and replacement for hazardous or damaged components. 7.11 Specify repair or replacement for any safety hazard or damage in the combustion venting systems. 7,12 If ambient CO reaches actionable levels during the energy audit, specify measures to mitigate high ambient CO2 level. 7.13 If a combustion appliance spillage reaches actionable level, specify measures to mitigate spillage. 7.14 If CO in undiluted flue gases of vented combustion appliances is more than actionable levels, specify service to reduce CO. 7.15 For oil -fired appliances, if smoke test is more than actionable levels, specify a clean and tune. 7.16 For sealed -combustion and power -vented appliances, if CO is more than actionable levels, specify service to reduce CO. 7.17 For gas range burners, specify a clean and tune if the flame has any discoloration, flame impingement, or an irregular pattern or if burners are visibly dirty, corroded or bent. 7.18 Recommend smoke alarms for homes, per local code, or, at a minimum one per floor level. 7.19 Recommend CO monitorstalarms in homes with combustion appliances or attached garages, per local code, or, at a minimum one per floor level. 7.20 Recommend final combustion testing at project completion to ensure compliance with the above standards. 7.21 Recommend removal of any unvented heaters or appliances used as a secondary heating source. Any measures that reduce the air exchange rate in the building shall not be recommended if an unvented heater remains in place. 7,22 When a recommendation to replace atmospherically -vented combustion equipment is made, and when cost-effective, the audit report shall recommend replacement with sealed - combustion, direct -vented, or power -vented equipment (or non -combustion equipment, such as a heat pump), which is ENERGY STAR -labeled. 7.23 Recommend replacement of solid fuel burning appliances with UL-listed and EPA - certified appliances if the existing appliance is not UL-listed or has signs of structural failure. 8. Indoor Air Quality and Ventilation The energy audit shall include inspection of air infiltration sources, air barriers and ventilation. Specifically the energy audit shall: 8.1 Identify sources of indoor air pollution for customers. 8.2 Determine whether the exhaust fans and clothes dryers vent to outdoors. 8.3 For houses with an attached garage, test to confirm that an effective air barrier exists or specify sealing of air leaks between the garage and house in the energy audit report. 8.4 Calculate mechanical ventilation requirements using the approach in ASHRAE 62.2 — 2010 Standard, Section 4. 8.5 Test local (spot) ventilation for kitchens and bathrooms according to ASHRAE Standard 62.2 — 2010, Section 5. 8.6 The following exceptions can reduce or eliminate the need to install a whole -building ventilation system. 8.6.1 Whole -building ventilation systems aren't required for homes without mechanical cooling in International Energy Conservation Code (IECC) Zones 1 and 2 or for homes that are conditioned for less than 876 hours per year. These exceptions all require that the local jurisdictional authority determines that windows are an acceptable method of ventilation (ASHRAE Standard 62.2 — 2010, Section 4.1). 8.6.2 An infiltration credit may be applied to reduce whole -building mechanical ventilation requirement. The credit may be determined using ASHRAE Standard 62.2-2010, Section 4.1.3, if the building enclosure has been tested with a blower door. When the infiltration credit is larger than the nominal fan size specified in 8.4, a whole -building mechanical ventilation system is not required. The energy audit report shall specify improvements as required to reduce pollution sources and to provide adequate ventilation as follows: 8.7 Recommend the removal of indoor air pollutants or implementation of source control measures. 8.8 Recommend sealing of air handler units and ducts that are located in an attached garage. 8.9 Recommend that all kitchen and bath ventilation exhaust directly to the outside, and at levels that meet or exceed ANSUASHRAE 62.2-2010. 8.10 RecommendtestedwholebuildingventilationratesmeetorexceedANSI/ASHRAE62.2- 2010. 8.11 Recommend all dryers exhaust to the outside. 8.12 Recommend air sealing known infiltration pathways between any attached garage and house. 9. Moisture Control Excessive moisture contributes to mold, indoor air pollution, and building durability problems. The energy audit shall include an inspection of each home for moisture problems. The energy audit shall: 9.1 Inspect for evidence of exterior water intrusion, such as roof leaks, foundation leaks, and ground -water intrusion. 9.2 Inspect for evidence of damage caused by interior water sources, such as plumbing leaks or condensation on piping or ductwork. 9.3 Inspect for effects of water damage on buildings, such as structural damage, mold, mildew, efflorescence, and stains. 9.4 Identify existing vapor retarders, flashing, gutters or other moisture -control strategies. The energy audit report shall specify measures for prevention and remediation of excessive moisture. The energy audit report shall: 9.5 Specify measures to prevent moisture problems or mitigate identified moisture problems, as applicable. 9.6 Specify that prior to any remediation of an identified moisture problem, any building material to be disturbed that is suspected to contain asbestos or lead must be tested for such hazards. The handling of any known or assumed asbestos- or lead -containing material must be done following all local, state and federal laws and regulations, including EPA and OSHA. 10. Building Enclosure Performance The energy audit shall include an evaluation of the performance of the building enclosure and include recommendations for upgrades as appropriate according to Sections 5 and 6. The energy audit shall: 10.1 Evaluate the envelope insulation level and performance. 10.2 Evaluatetheair-leakageofthebuildingenclosure,asdeterminedbyablowerdoortest.Pre- work blower -door testing may be deferred if it is specified as part of the energy audit report. 10.3 Evaluate window performance and fit by testing operation. 10.4 Evaluate the feasibility and energy savings of shading and solar -reflectance retrofits for the roof and/or wall. The audit report shall include: 10.5 The air -leakage rate of the building enclosure, as determined by a blower door test. When building enclosure air sealing is specified, a blower -door test when work is completed or as part of the final inspection shall be specified. 10.6 Recommendation that enclosure air -sealing work should be done prior to or at the same time as the insulation work. 10.7 Estimation of R-values of the opaque building materials used to define the boundaries of the conditioned space. Recommendation of insulation retrofits when cost effective and feasible. 10.8 Estimation of U-factors and solar heat gain coefficients (SHGCs) of windows, doors and skylights. 10.8.1 Evaluation of the feasibility and energy savings for window treatments, interior and exterior. 10.8.2 Evaluation of window improvements in thermal resistance and/or exterior shading devices. 10.9 Evaluation of the feasibility and energy savings of shading and solar -reflectance retrofits for the roof and/or walls. 11. Heating and Cooling (HVAC) Efficiency The energy audit shall include an evaluation of the performance of the building mechanical systems and the report shall recommend upgrades as appropriate according to Sections 5 and 6 of this standard. The energy audit shall: 11.1 Evaluate furnace performance and efficiency. 11.2 Evaluate air-conditioning and heat -pump performance and efficiency. 11.3 Evaluate duct performance, including filter effectiveness and duct sizing. 11.4 Evaluate ducts outside the conditioned space by visual inspection and test for tightness by one of the following. Pre -work duct testing may be deferred and specified as part of the workscope. 11.4.1 Quantitative testing using a duct pressurization device or whole house pressurization/depressurization (e.g., Delta Q.) 11.4.2 Qualitative testing using a pressure -pan, smoke generation device or equivalent method. Conduct this evaluation with a blower door. 11.5 For ducts fully inside the thermal boundary, perform a visual inspection, looking for leaks in the duct system and recommend sealing when there is a comfort issue or when duct leakage contributes to Combustion Appliance Zone (CAZ) issues. 11.6 Evaluate duct location and R-value; evaluate feasibility and energy savings of retrofit duct insulation. 11.7 Evaluate evaporative -cooler performance and efficiency. 11.8 Evaluate boiler performance and efficiency. 11.9 Evaluate steam -heating distribution performance. 11.10 Evaluate hot-water space -heating distribution performance. 11.11 Evaluate water heating and hot-water distribution performance. 11.12 Evaluate the feasibility and energy savings of HVAC equipment replacement. The energy audit report shall include: 11.13 Specification, when duct sealing is included as an ECM, that one of the approved diagnostic tests be performed when work is completed or as part of the final inspection. 11.14 Results of any HVAC equipment and distribution performance testing conducted and evaluation, including cost-effective ECMs. 11.15 Recommendation that when HVAC equipment is specified to be replaced, the installation of the replacement systems should comply with Air Conditioning Contractors of America (ACCA) 5 Ql HVAC Quality Installation Specification. 11.16 Specification that any equipment not replaced as part of the workscope be repaired or remediated as required. 12. Baseload Energy Efficiency and Water Conservation The energy audit shall include the establishment of baseload energy uses. The energy audit report shall recommend upgrades as appropriate, according to Sections 5 and 6. The energy audit shall include an evaluation of: 12.1 Refrigerator and freezer energy consumption. 12.2 Lighting efficiency, controls and efficient alternatives. 12.3 Clothes dryer vents (restrictions, lint build-up or indoor termination, and appropriate venting materials). 12.4 Pool and spa energy consumption and conservation strategies. 12.5 The efficiency of other major baseload energy users. 12.6 Installation of renewable energy systems or other on -site electricity generation. 12.7 Water usage of toilets, shower heads, faucets, and clothes washers. 12.8 Advise the customer about behavioral changes that may reduce energy or water consumption including: 12.8.1 Plug loads and associated electricity costs. 12.8.2 When energy -consumption records are available, calculated baseload energy consumption with space conditioning energy usage disaggregated from baseload energy usage. A comparison with energy use to similar homes in the region, when data is available. 12.8.3 Value of water efficiency or conserving strategies. 12.8.4 Value of turning off lights, televisions and other loads when not in use. The energy audit report shall: 12.9 Include a recommendation, based on Section 12, of: 12.9.1 Appropriate replacements for existing appliances and recommendations for removing appliances from service when more energy efficient alternatives are available. 12.9.2 Water -efficiency or conservation products and technologies. A2E2 Residential PACE Program Outline & Loading Order of Improvements (rev. 6/24/2014 City of Fayetteville) 1) Eligibility: Simple owners of residential property in the City who have met the program's financial criteria. 2) Process: The owner accesses the A2E2 program website to complete the following preliminary application: • Identity and financial information for credit pre- screening. This information is provided to the bank for initial credit review within 48 hours. • Information regarding the home (age, type, size, utility information, etc.) • Information regarding their expectations o what they would like to accomplish o what improvements they are hoping to finance • Information regarding how they learned about the program for purposes of referral of energy auditor and/or contractor. 3) Contractor Referral: if the bank's pre-screening of the financial information indicates that the owner is eligible for the program, the owner is notified (via e-mail or other contact information provided through the website) and is provided with a list of authorized energy auditors as well as home performance contractors offering audit services. Notes: If the owner indicated in the preliminary application that he or she was referred to the A2E2 program by an authorized energy auditor or home performance contractor, then the owner is not provided a list of auditors or contractors, but is instead directed back to the referring auditor or contractor. This creates an incentive for the auditors and contractors participating in the program to market the program to prospective customers. An owner will be notified that he or she may request a list of auditors or contractors if desired. A2E2 Exhibits: R5 Loading Order of improvements 67 • The owner will be notified that final loan approval will occur after completion of the energy audit and review of the plans and costs of the recommended improvements. If the bank determines that an owner is not eligible for the program based upon the pre-screening of the financial information, the owner is provided with a list of options to explore outside of the A2E2 program, including public weatherization programs, rebate programs and other financing options that may exist (private financing through contractors, utility companies, etc.). This referral will contain a disclaimer that the A2E2 program does not endorse any particular option and that the owner should make his or her own assessment as to whether such options meet his or her particular circumstances. 4) Energy Audit: The homeowner contacts a program authorized energy auditor (or home performance contractor offering audit services). The A2E2 program will allow an energy auditor to also serve as the home performance contractor for a particular owner, given the other safeguards that will exist, including pre -qualification of auditors and contractors, use of Building Performance Institute (BPI) protocol for energy audit, prioritization of improvements as described below and quality assurance measures. ■ Customer schedules energy audit. It is anticipated that the owner will be responsible for the cost of the energy audit, but that the cost will be capped at $500. Should the homeowner choose to proceed, this cost can be rolled into the loan for reimbursement to the owner at the time of funding. ■ Contractor performs energy audit to approved program standard using Building Performance Institute (BPI) certified building analyst on -site. Program audit standard should be based on BPI protocol without modeling requirements. ■ Audit includes, at a minimum, blower door test, combustion safety test, thorough visual inspection of all accessible house areas including basement and attic, evaluation of design efficiency of heating, ventilation and air conditioning (HVAC) systems. ■ Auditor completes A2E2 standardized report detailing findings of energy audit. ■ Auditor provides list of recommendations subject to program standards for improvement priority as follows: LOADING ORDER OF IMPROVEMENTS Priority 1- DUCT SEALING: if house has ductwork that runs outside of the conditioned space (generally attic or crawlspace), then the first priority shall be to assure that the ductwork is tightly sealed (using program approved methods and materials) and then insulated to R-2 (plenum) and R-4 (runs). Then... Priority 2 - AIR SEALING: if blower door test indicates air infiltration that exceeds Building Air Standard (BAS) by more than 20%, then the second priority shall be to install air sealing measures to reduce air leakage by 20% or to BAS, whichever comes first. Then... Priority 3 - ATTIC INSULATION: If attic insulation is less then R-25 and/or if attic kneewall insulation is improperly installed, then the third priority shall be to install attic insulation a level of R-49 and to provide properly installed kneewall insulation (if applicable). Then... Priority 4 -BASEMENT SEALING AND INSULATION: If the house has a basement whose walls are not insulated above or below grade, then accessible rim joists and walls shall be insulated using spray foam (for rim joists) and a minimum R- 11 wall insulation. Then... Priority 5 - FURNACE: If an existing gas furnace is less than 90% Annual Fuel Utilization Efficiency (AFUE) AND more than 10 years old, then the furnace shall be replaced with a furnace of 92% AFUE or greater efficiency (if possible). Ground Source or Air Source heat pumps may also be installed (required performance TBD). NOTE: If the existing furnace is of 60% AFUE design, then the homeowner may elect to replace the furnace as A2E2 Exhibits: R5 Loading Order of Improvements 69 a 'second' priority with only duct sealing taking a higher priority. Then... Priority 6 - AIR CONDITIONING: If an existing air conditioner is rated at less than 10 Seasonal Energy Efficiency Ratio (SEER) AND more than 10 years old, then the air conditioner shall be replaced with a replacement air conditioner and coil that achieves Air Conditioning, Heating and Refrigeration Institute (AHRI) "Certified Product Performance" of 14 SEER or higher. Then... Other improvements may be installed including: • Windows • Doors • Furnaces or Air conditioners whose performance does not call for priority replacement. • Health, Safety, Durability. • White or green roofs • Renewable energy improvements • Other 5) Improvement Plan Approval: Auditor submits report and recommended improvement list to program administrator. • Homeowner obtains prices and contracts with authorized program contractor(s) to make recommended improvements. Customer may void contract if program approval is not received. o Some homes may be visited by program administrator for verification of recommended improvements. • List of improvements is approved based on information provided in report. • Once the cost of the improvements is provided, the bank provides final loan approval and authorizes owner to complete improvements. 6) Improvements: • Loan documents between the owner and the bank are completed based upon the bid from the contractor. Loan disbursement is subject to satisfactory completion of the improvements, to be verified before funding. Contractor follows program standards including... • Blower door to be used to guide air sealing and to assure than result is not below BAS. • Combustion safety testing is completed before contractor leaves house after air sealing is completed. • HVAC sizing is accomplished using Air Conditioning Contractors of America (ACCA) Manual J or similar modeling software. • Efficiency is certified by AHRI. 7) After Improvements: Customer acknowledges completion by signed 'Certificate of Completion' Contractor submits completion certificate with other documents and invoice to program for payment. Once owner signs off on completion certificate, bank disburses loan proceeds and contractor is paid (and owner is reimbursed for costs of energy audit if owner chose that option at the time of loan approval). 8) Quality Assurance: Program administrator contracts with independent QA team member to conduct random quality assurance review by visiting homes to verify improvements: The goal will be to visit approximately 15% of all homes, although the quality assurance review may be tiered based upon the number of completed projects reported by each contractor. For example, the independent contractor will conduct a quality assurance review of 100% of a contractor's first 3-5 completed jobs, 20% of that contractor's next A2E2 Exhibits: R5 Loading Order of lmprovementsx 71 , 20 completed jabs and 5% of the contractor's completed jobs thereafter. Independent contractor compares audit report and recommended improvements to actual conditions found. Independent contractor compares improvements to authorized list and invoice. Independent contractor verifies accuracy of testing by repeating blower door and combustion safety testing. 8) Follow -Up: Program administrator measures overall program effectiveness by tracking utility usage. Program administrator receives permission from homeowner for utilities to release historic usage information (12 months). After 1, 2 and 3 years, program administrator obtains actual utility usage date and compare to pre -improvement levels. Arkansas Advanced Energy Equity Program (AM) Example of Project Scope of Work Form (DRAFT) This form should be completed jointly between Homeowner and an authorized contractor(s). Do not begin any work until a Notice to Proceed has been emailed to the homeowner. The Notice to Proceed will be issued once this form, the homeowner's loan, and general compliance issues have been reviewed and approved by the Program. The electronic version of this form, as an Adobe PDF, can be completely filled out electronically, including e-signatures. The form is set up to allow e-signatures by multiple parties if neccessary. Unapplicable sections can be ignored. There is no need to submit Page 1. Note: At the completion of work, a Certification of Completion will need to be submitted to release loan closing documents and issue payment to the contractors. Required Attachments As applicable, attach or separately submit the following: - A separate digital photograph of the full street facing side of the home, named with homeowner's last name in JPG format (minimum T'W') (no faxed photos accepted) Map showing location of the home with minimum of one closest intersection shown (Google or Mapquest required) • AHRI certificates for proposed HVAC equipment [(HVAC contractor from Section D, below, should provide this for you) Only required for HVAC Projects] Last Name: First Name: x Email Address: Phone Number: Project Street Address: City: State: Zip Code: Year House Constructed: # People Living Here: Conditioned Square Feet: Conditioned Basement? I [yes,no,n/a buttons] Co -Homeowner Data Last Name: First Name: x Email Address: Phone Number: State Historic Preservation Office Review If project includes new windows or doors and was built prior to 1967 the following digital .]pg photos are required: ff Photo of house to the left of the client E_ _I Photo of house to the right of the client i 1 Photo of house across the street I Photo looking up the street ' Photo looking down the street I The homeowner understands that State Historic Preservation Office review and approval is required for all projects and must attach or separately submit a digital photograph of ll the full street facing side of the home, named with homeowner's last name in JPG format (minimum 3"xS") (no faxed photos accepted), and a map showing location of the home with minimum of one closest intersection shown (Google or Mapquest preferred). Price (for Test-In/Out/CAZ and Blower Door): Authorized Contractor: Email Address: Representative: Phone Number: Note: Homeowner and Assessment Provider must independently agree to price and payment terms prior to conducting assessment. This Scope of Work Form should be completed after completion of an assessment. Test -In Data (prior to any improvements): Date of Assessment must be no older than 12 months from date of this form in order to qualify. Test Date: Ambient CO (ppm): Undiluted CO (ppm): Blower Door (CFMSO): Worst Case CAZ Depressurization (PA): Ventilation Required (CFMSO): CAZ Depressurization Limit (PA): [pull down] Excess Air Leakage (CFMSO): CAZ Depressurization (Pass/Fail): pass/fail i Duct Leakage (@25PA): Worst Case Spillage (Pass/Fail): pass/fail Highest Press. Pan Reading (PA): Worst Case Draft (Pass/Fail): pass/fail Assessment Recommendations: Computer Modeling Program (if used): Recommended ImprovementEst. Fuel Savings Description - Est. Cost Savings Est, Installation Including Health and SafeIkWh/vr or ri Matters Therms/vrl- Costs (5) A Proposed Finance Summary - Home Energy Assessment Price (Test-In/Out/CAZ & Blower Door]; $ 0 Less Homeowner Contribution/Commitment: I -$ Less Dealer/Contractor Incentives: -$ Less Instant Utility Incentives or Rebates: $ Total Loan Amount to be Paid to Home Energy Assessment Contractor: $ Certification of Accuracy: Contractor certifies the above data is accurate and real based on an assessment conducted in accordance with BPI standards. Savings estimates, if provided, are subject to weather, occupancy patterns and usage habits, and other variables beyond the control of the Assessment Provider and are not to be construed as guaranteed in any manner. Authorized Signature: Test -In Data must be provided in the Home Energy Assessment section above if air and/or duct sealing or insulation is selected as an improvement. T Authorized Contractor: I Representative: a Email Address: Phone Number: i Sched./Est. Installation Date (allow 7 days for project and loan approval): Air Sealing Descri tp ion [material used and location] uantity_(ft) Price Air Sealing: Air Sealing: Air Sealing: Air Sealing: Other: i Overall Targeted Air Sealing Blower Door Results (CFMSO): j Ducts Description (material used and location l Quantity M Price Duct Sealing: Duct Sealing: Other: Overall Targeted Duct Leakage (@25PA): Insulation Improvements Exist. UR Pro R Material Quantity {ft) Price Attic Insulation: I Wall Insulation: ' Crawl Space Insulation: i Duct Insulation: Pipe Insulation Other Improvements Description (material used and location) Price Duct Replacement: Attic Door Insulated Cover: Other (Inc. Health/Safety): Proposed Finance Summary - Insulation and Air/Duct Sealing Sum of Proposed Insulation and Air/Duct Sealing Costs: $ o Less Homeowner Contribution/Commitment: I -$ Less Dealer/Contractor Incentives: -$ Less Instant Utility Incentives or Rebates; -$ i Total Loan Amount to be Paid to Insulation and Air/Duct Sealing Contractor: $ For State Historic Preservation Office compliance reviews, proposed location of outside equipment must be described within'Proposed Condition' Authorized Contractor: Representative: I �Email Address; I Phone Number: Sched./Est. Installation Date (allow 7 days for project and loan approval): Existing Condition {incl. age): Proposed Condition: Existing Condition lincl. age): Proposed Condition: Existing Condition (incl. age): Proposed Condition: Existing Condition (incl. age): Proposed Condition: Check here to indicate that Manual J load calculations have been performed for all HVAC Icheckbox] replacements Check here to indicate that AHRI certificates for proposed HVAC equipment have been provided to homeowner (must be attached, or submitted separately, for approval of this (checkbox] Scope of Work Form) Check here to indicate that exterior equipment will be in the same location as existing [checkbox] Duct Sealing Description (material used and location Quantity N Price Test -In Data must be provided in the Home Energy Assessment section above if duct sealing to existing ductwork is selected as an improvement. ! Duct Sealing: Duct Sealing: i Overall Targeted Duct Leakage (@2SPA): Insulation Improvements Exist. IR Prop. L) Material Quantity (ft) Price Duct Insulation: Pipe Insulation Other Improvements Description (material used and location) Price Duct Replacement: Other (inc. Health/Safety): Proposed Finance Summary - HVAC and Water Heating Sum of Proposed HVAC and Water Heating Costs: $0 Less Homeowner Contribution/Commitment: -$ Less Dealer/Contractor Incentives: -$ Less Instant Utility Incentives or Rebates: ! -$ Total Loan Amount to be Paid to HVAC and Water Heating Contractor: �, $ .. 1 " Note that for roofing scope, only the cost difference/premium between standard roof and ENERGY STAR roof is eligible for financing. j Authorized Contractor: , Representative: G ' - �Email Address: Phone Number: Sched./Est. Installation Date (allow 7 days for project and loan approval): Condition: Proposed Condition: Existing i Condition: Proposed Condition: Existing Condition: Proposed Condition: -"1+. �e4 .�s.:.;..�n - V�'u+aq.�,' r Fx..Jt,, ska.4� Proposed FinanceSummaryars,lnadaw,s. antlRoofing, r 'Sum of Proposed Doors, Windows and Roofing Costs: $0 Less Homeowner Contribution/Commitment: -$ I Less Dealer/Contractor Incentives: -$ i 1 y I Less Instant Utility Incentives or Rebates: i -$ Total Loan Amount to be Paid to Doors, Windows and Roofing Contractor: $ 1 A2E2 Exhibits: R6 Scope of Work Document 81 For improvements not explicitly allowed in the Eligible Improvements List, a rationale for the improvement (and/or exception request) must be described within 'Proposed Condition' - T - - - - - Authorized Contractor: Representative: Email Address: i Phone Number: Sched./Est. Installation Date (allow 7 days for project and loan approval): improvement r" Descri tion, p Existing Condition: Proposed Condition: Existing � Condition: Proposed Condition: Existing Condition: Proposed Condition: r npas„edF'InaLnce Su m�ary Health WSafy"/ear Impoments ryt0;: Sum of Proposed Health & Safety/Other Improvements Costs: $o Less Homeowner Contribution/Commitment: ! -$ Less Dealer/Contractor Incentives: -$ Less Instant Utility Incentives or Rebates: -$ Total Loan Amount to be Paid to Health & Safety/Other Improvements $ Contractor listed in this Section: A2E2 Exhibits: R6 Scope of Work Document 82 I Loan Amount to be Paid to Home Energy Assessment Contractor: - $ Loan Amount to be Paid to Insulation and Air/Duct Sealing Contractor: I so � I Loan Amount to be Paid to HVAC and Water Heating Contractor: ' so I � Loan Amount to be Paid to Doors, Windows and Roofing Contractor: $ 0 Loan Amount to be Paid to Health & Safety/Other Improvements Contractor Listed in that Section: S0 TOTAL LOAN -FUNDED PROJECT COST (3% program fee will be automatically added to final loan amount): 0 $ Desired Loan Term (3-10 years) f � I I Notes: land is aware of the time limit associated withit (90 days from date of approval) and will arrang I to have all work completed and submit a Certification of Completion Form prior to that time. L I Date of Submission of Online Loan Application: Homeowner hereby acknowledges and understands that A2E2 does not endorse any particular contractor, but maintains a directory of contractors that have applied and been authorized to participate in the program. While the contractors in the directory have met certain requirements for participation, Homeowner will be entering Li into a direct relationship with the contractor of their choice and it is important to review credentials, qualifications, and references to make an informed decision. Please also note that the Program does not warrant any of the work performed and that the Homeowner is responsible for working directly with the selected contractor(s) to ensure that all work is performed to the Homeowner's satisfaction. Indicate if the undersigned is a family member and/or employee of any of the contractors that will be providing work on your home (this is an allowable arrangement but must be (yes/no] disclosed for quality assurance purposes). Homeowner Signature: Co -Homeowner Signature: l Date: I This sheet should be filled out and signed by either the homeowner or a'Lead Contractor', if one is willing to serve in that role (ie, general contractor). Initial Below The undersigned certifies that all quotes prepared and represented on this Project Scope of Work Form have been submitted by A2E2 authorized Li contractor(s). The undersigned acknowledges, understands and commits to adhere to all Program guidelines set forth in the Contractor Guide and on the A2E2 U website. I The undersigned is aware of the time limit associated with the online loan application (90 days from date of loan approval) and will work with homeowner to arrange to have all work completed and help the homeowner submit a Certification of Completion Form prior to that time. Authorized Signature: Name: Date: II If authorized signature above is the Prime (Lead/General) Contractor, provide the following: Company Name: Email Address: i Phone Number: EXAMPLE OF PRELIMINARY LOAN APPLICATION (DRAFT) Call XXX-XXX-XXXX• Fax Completed and Signed Application to XXX-XXX-XXXX. IMPORTANT INFORMATION: If you are applying for individual lease or for joint lease with another person (including a joint account or an account that you and another person will use) complete all sections providing Information about each individual applicant, joint applicant or user. if you are applying to guarantee the obligations of a business, complete all sections providing information about yourself. Persons providing Information who are not Applicants, Guarantors, or Company Authorized Signers should not sign this statement. BUSINESS INFORMATION Legal Business Name DBA Name Tax Identification No. Street Address (no P.O. Boxes) Billing Address (no P.D. Boxes) r- Sale Proprietorship QtYC*wtylSt3WZIP C'. Individuals applying jointly for business purpose lease Equipment Location (if different from above): Street AddressfCitylCounty7StalaMP ❑ General Partnership Contact Phone No. Fax No. Ll Limited Partnership ( ) I ) C Corp Liability Co Nature of Business Time in Business Time as Owner No. of Employees Gross Annual Revenue Date of Ong. Stele of Org. is your business sales tax exenpV 11"YES' indicate tax exempt number. []NO ❑ YES E4isail Address ❑ Other. GUARANTOR INFORMA TION (ALL 26% OR MORE OWNERS AND OTHER GUARANTaRs,i PmmapatlParmerfOfficar Title % Donorship Date of BiRlm Soael Seariy p U.S. Citizen ❑YES ❑NO Home Address City State ZIP Home Phone ( 1 Billing Address (ddifforent) City Stale Zip Phone I 1 Prvrdpal,PartrreNOfficer Title % Ownership Date of Birth Social Security it U.S. Citizen YES ❑NO Home Address City State ZIP Home Phone { 1 Billing Address (Hdifferentl City State ZIP Phone 1 1 EQUIPMENTa a Please indicate the equipment you are planning to acquire: Equipment Supplier: Estimated Total Equipment Costs: $ Structure: ❑ Nominal (e.g. $1) Purchase Option Lease © Fair Market Value Purchase Option Lease j] Trac TERM: Months BANK REFERENCE Bank Reference Name AccountlLoan Officer Phone No. ( ) Account type: Account No, Current Balance Average Balance (6 months) ❑ Checking CI Savings (-3 Loan ❑ Lina of Credit $ $ 'You,- the -ApptitanY {both terms rndude the business envy as well as all ol the individuals named above), certify to us that you are applying for credit for business reasons, and not for personal, family or hour ltgq purposes. Applicant auttodzes XXXXXXX to obtain information from other concerning Applicant's credit and trade standing, including Applicant's personal credit report, and other relevant information impeding this application, and if the Lease is approved, from time to time dung the term of the Lease. In addition to the Information requested on "a application, may subsequently request additional information from Applicant. IMPORTANT tNFORMATION: Except as otherwise prohibited by law, you agree and consent that the affillates in XXXXXXX IcoiMctivdy -Lender) may share with each ether ad infannstian about you that Lender has or may obtain for the purposes, among other things, of evaluating credit applications or offering you products or services that Lander believes maybe of interest to you. Under the Fair Credit Reporting Act there is certain credit hmfonnatton that cannot be shared about you (unless you am a business) if you tell Lender by writing to Lender at: XXXXXXX. Please provide your name, address, social security number and account number(s). As an authorized agent of the applicant company, you represent that you have reviewed this document and the information herein is true, correct and complete. A photo static copy of this authorization shall be as valid as he original. COMPANYI GUARANTOR WeA certify that well have read and agree with applicable terms and conditions above. Company Authonzad Signature Tide Date Company Authorized Signature Title Date Guarantor! Owner! Indrnctual Signature Guarantor! Ownerl Individual Signature A2E2 Exhibits: R8/C7 Consent to Release Utility Data 86 Arkansas Advanced Energy Equity Program (AM) Exhibit C7/R8 (DRAFT) Utility Account Holders, by optionally signing below, are hereby authorizing the utility providers listed below to release billing history, utility consumption history, and other data associated with the listed account numbers. This data will be viewed by the City of Fayetteville, the PACE District Board of Directors, and their third party service providers (collectively, the "Program") for the purposes of technical and credit evaluation as pertaining to a potential loan being applied for by the listed Homeowner. By signing below, you are authorizing the Program to access data up to 2 years prior to the date on this form. Further, if a loan is issued through A2E2 for energy upgrades on the property associated with the listed utility accounts, you are authorizing the Program to access the same data going forward for the full term of the loan. Accessing such data after a loan closes enables full circle feedback to the Assessment Provider, Installing Contractors, and Program Administrator to validate performance resultant of improvements financed through the Program. Signature(s) of Authorized Utility Account Holders Fuel Type ##1: Name on Account: Utility Provider: Account Number: Date: Fuel Type #2: Utility Provider: f Account Number: Phone Number: Signature: Name on Account: Phone Number: Signature: Date: i i Fuel Type ##3: Name on Account: Utility Provider: Phone Number: Account Number: Signature: Date: i A2E2 Exhibits: R9/C8 Assessment Contract 87 Exhibit C8/R9 DRAFT CONTRACT/ WORK VERSION TO MARKUP Arkansas Advanced Energy Equity Program (A2E2) ASSESSMENT CONTRACT This Assessment Contract ("Contract") is made and entered into as of this day of , by and between the Energy Improvement District Board of Directors, an Arkansas political subdivision ("PACE Board"), and (Owner"). RECITALS A. The PACE Board has established the Arkansas Advanced Energy Equity Program ("A2E2" or "Program") pursuant to which the PACE Board may levy assessments against developed residential, commercial, and industrial properties located in the specific Energy Improvement District, with the consent of the owners of such properties, to finance the acquisition, construction, or installation of certain qualifying renewable energy systems and energy efficient improvements. The purpose and method of administering assessments under the Program are described in the A2E2 Program Manual and Administrative Guidelines adopted by the PACE Board on , 20_, as it may be amended from time to time (the "Report"). B. The PACE Board is authorized by the PACE statute Arkansas Act 1074 (the "Act"). C. Owner has submitted to PACE Board that certain A2E2 Loan Application dated , 20_, a copy of which is attached hereto as Exhibit "A" and incorporated herein by this reference (the "Application"). The Application describes, among other things, the renewable energy system(s) and/or energy efficiency improvements which are to be financed under the Program, and to be constructed or installed on the property of Owner described in Exhibit "B" attached hereto and incorporated herein by this reference (the "Property"). The PACE Board has approved the Application as provided in the Report. D. Owner wishes to participate in the Program by executing this Contract with PACE Board and using monies advanced by the Programhereunder to finance the acquisition, construction, or installation on the Property of energy efficiency, renewable energy renewable, and/or water conservation improvements described in the Application ("Energy Improvements"). The Energy Improvements and their construction and/or installation are collectively referred to herein as the "Work." NOW, THEREFORE, in consideration of the mutual covenants contained herein and other valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows: Section 1. Contract Documents; Term. (a) This Contract, together with the Application and the documents and instruments attached to and referenced in this Contract and the Application, are collectively referred to herein as the "Contract Documents." (b) The term of this Contract shall be until the Assessment described herein and all accrued interest thereon, together with any applicable penalties, costs, fees, and other charge have been paid in full. Section 2. Loan Amount; Assessment; Incidental Expenses. (a) Subject to the conditions set forth herein, the PACE Board agrees to advance monies to Owner in the amount of the actual cost of the Work (the "Loan Amount"), provided the Loan Amount shall not exceed Dollars ($ ) (the "Maximum Loan Amount"). The Program Administrator and/or Project Lender shall determine the Loan Amount on the basis of the best available written evidence of the Work's actual cost and in the exercise of the Program Administrator's best judgment. The Program Administrator shall determine the Loan Amount before advancing monies to Owner hereunder and following the post -completion inspection of the Energy Improvements by A2E2 Staff, as described in Section 4 below. In the event that the actual cost of the Work exceeds the Maximum Loan Amount, Owner shall be solely responsible for the payments of all costs of the Work which exceed the Maximum Loan Amount, and Owner agrees to in any event to complete the Work and to fund all costs associated with such completion which may exceed the Maximum Loan Amount. (b) In consideration of the monies advanced by the PACE Board hereunder, Owner promises to pay, without offset or deduction, an assessment levied against the Property pursuant to this Contract, the Act and applicable law (the "Assessment") together with the interest thereon as described herein. Upon execution of this Contract, the PACE Board will execute and cause to be recorded a notice of assessment in the office of the County Recorder ("County Recorder') substantially in the form set forth in Exhibit "C" attached hereto and incorporated herein by this reference (the "Notice of Assessment"). (c) Upon recordation of the Notice of Assessment, the Assessment and each installment thereof and the interest and penalties thereon, shall constitute a lien upon the Property until paid. Initially, as reflected in the Notice of Assessment, upon recordation of the Notice of Assessment, the Assessment shall equal the Maximum Loan Amount. Following the PACE Board's advance of monies to Owner hereunder, the Assessment shall equal the Loan Amount. (d) Interest shall accrue on the unpaid Assessment from the date the PACE Board disburses the Loan Amount to Owner at the simple interest rate of seven percent (7%) per annum and shall be payable in installments as set A2E2 Exhibits: R9/C8 Assessment Contract 89 forth on Exhibit "D" attached hereto and incorporated herein by this reference. Interest shall be computed on the basis of three hundred sixty (360) days a year. If a court of competent jurisdiction determines the interest or other charges provided for herein in connection with the Assessment or the Annual Administrative Assessment (described in paragraph (f) below) exceed the limits permitted by applicable law, then: (i) any such interest or charge shall be reduced by the amount necessary to reduce the interest or charge to the permitted limit; and (ii) any sums already collected which exceed permitted limits will be refunded by the PACE Board. The Program Administrator, in its discretion, may make the refund by making a direct payment to Owner or by crediting the refund amount against the next installment or installments of the Assessment (described in paragraph (e) below). (e) Annual installments of the Assessment, together with the annual interest of the Assessment, shall be collected on the property tax bill pertaining to the Property. The annual portion of the assessment coming due in any year, together with the annual interest on the Assessment, shall be payable in the same manner and at the same time and in the same installments as general taxes on real property. The amount of each Assessment installment and the interest on the unpaid Assessment that will be placed on the tax roll each year is set forth in Exhibit "D." (f) In addition to the Assessment, until the Assessment and the interest thereon is paid in full, Owner promises to pay, without deduction or offset, an annual administrative assessment levied against the Property pursuant to this Contract, the Act and applicable law to pay costs incurred by the PACE Board resulting from the administration and collection of the Assessment and from the administration or registration of any associated bonds or other financing arrangement, as described in the Report, and from the administration of any reserve fund and other related funds (the "Annual Administrative Assessment"). The Annual Administrative Assessment shall not exceed fifty dollars ($50) per year. The Program Administrator shall annually determine the amount of the Annual Administrative Assessment, not to exceed the amount set forth in the preceding sentence. The Annual Administrative Assessment shall be collected in the same manner as the Assessment. The Annual Administrative Assessment shall become a lien upon the Property at the same time as the property tax becomes a lien each year on the Property. (g) The execution of this Contract by the parties constitutes the confirmation of the Assessment and the Annual Administrative Assessment by the PACE Board and the levy of the Assessment and the Annual Administrative Assessment against the Property without any further action required by the parties. Owner expressly consents to the levy of the Assessment and Annual Administrative Assessment on the Property and the recordation of the Notice of Assessment, all as described herein, in the Act and in applicable law. (h) The lien of the Assessment shall be co -equal to and independent of the lien for general taxes, and, except as provided in Government Code section , not subject to extinguishment by the sale of the Property on account of the nonpayment of any taxes, and is prior and superior to all liens, claims and encumbrances on or against the Property except (i) the lien for general taxes or ad valorem assessments in the nature of and collected as taxes levied by the State of Arkansas or any county, special district or other local agency, (ii) the lien of any special assessment or assessments the lien date of which is prior in time to the lien date of the Assessment, (iii) easements constituting servitudes upon or burdens to the Property, (iv) water rights, the record title to which is held separately from the title to the Property, and (v) restrictions of record. (i) Owner acknowledges that as cumulative remedy, if any installment of the Assessment, or any interest thereon, together with any penalties, costs, fees, and other charges accruing under applicable taxation provisions are not paid when due, the PACE Board may order that the same be collected by an action brought in a court of competent jurisdiction to foreclose the lien of the Assessment to the extent permitted, and in the manner provided by, applicable law. 0) Owner may prepay the Assessment, in whole or in part, at any time upon the payment of the'amount, including an amount equal to $ or percent ( _%) of the amount of the Assessment to be prepaid, determined by the Program Administrator in accordance with the Report. Owner shall notify the Program Administrator in writing of Owner's determination to prepay the Assessment, in whole or in part, at least thirty (30) business days prior to the date Owner intends to prepay the Assessment. (k) Owner expressly acknowledges that the construction and/or installation of the Energy Improvements on the Property confer a special benefit to the Property in an amount at least equal to the Assessment. (1) Owner expressly waives the notice, protest and hearing procedures of any applicable law other than the Act with respect to the levy and collection of the Assessment and Annual Administrative Assessment, Section 3. Use of Proceeds Owner shall use the Loan Amount for the sole purpose of paying the reasonable costs and expenses of the Work on the Property, and in connection therewith Owner shall comply with all requirements set forth in the Contract Documents. Section 4. Loan Disbursement Procedures (a) Notwithstanding anything to the contrary contained herein, the PACE Board shall have no obligation to disburse the Loan Amount hereunder unless and until each of the following conditions is satisfied, or any such condition is expressly waived by the Program Administrator: (i) The receipt by the Program Administrator of a written certification from Owner, and the contractor(s), if any, that performed the Work, stating the actual A2E2 Exhibits: R9/C8 Assessment Contract 91 cost of the Work and that the Work is complete. Such certification shall be in form and substance acceptable to the Program Administrator. (ii) An inspection of the Work by PACE Board staff, and a determination by the Program Administrator that the Work has been completed in full compliance with the requirements of the Contract Documents. (iii) The receipt by the Program Administrator of such other documents and instruments as the Program Administrator may require, including but not limited to, if applicable, the sworn statements of contractor(s) and releases or waivers of lien, all in compliance with the requirements of applicable law. (iv) Owner has, as appropriate, executed and delivered to the Program Administrator the Contract Documents and other such documents or instruments pertaining to the Loan Amount or the Work as the Program Administrator may require. (v) As of the date of disbursement of the Loan Amount, the Program Administrator shall have determined that the representations of the Owner contained in the Contract Documents are true and correct, and no Default (as defined in Section 13 below) shall have occurred or be continuing. (vi) No stop payment or mechanic's lien notice pertaining to the Work has been served upon the PACE Board and remains in effect as of the date of disbursement of the Loan Amount. (vii) The PACE Board shall have received a title policy with regard to the monies advanced to Owner hereunder. (viii) Owner will, within fifteen (15) business days of presentation by the Program Administrator, execute any and all documents or instruments required by the Contract Documents in connection with the disbursement of the Loan Amount. (b) Upon satisfaction of waiver of the conditions described in paragraph (a) above, the PACE Board will disburse the Loan Amount to Owner, provided, the PACE Board shall not be under any obligation to disburse the Loan Amount until the first day of the month immediately following the month in which all of the foregoing conditions were satisfied or waived. Section 5. Reports. Owner agrees, upon request of the Program Administrator, to promptly deliver to the Program Administrator, or, if appropriate, cause its contractor(s) to promptly deliver to the Program Administrator, a written status report regarding the Work. Section 6. Representations and Warranties of Owner. Owner promises that each representation and warranty set forth below is true, accurate, and complete as of the date of this Contract, and the date of the disbursement of the Loan Amount. The disbursement of the Loan Amount shall be deemed to be a reaffirmation by Owner of each and every representation and warranty made by Owner in this Contract. If Owner is comprised of the trustees of a trust, the following representations shall also pertain to the trustor(s) of the trust. (a) Formation; Authority. If Owner is anything other than a natural person, it has complied with all laws and regulations concerning its organization, existence and the transaction of its business, and is in good standing in each state in which it conducts its business. Owner is the owner of the Property and is authorized to execute, deliver and perform its obligations under the Contract Documents, and all other documents and instruments delivered by Owner to the PACE Board in connection therewith. The Contract Documents have been duly executed and delivered by Owner and are valid and binding upon and enforceable against Owner in accordance with their terms, and no consent or approval of any third party, which has not been previously obtained by Owner, is required for Owner's execution thereof or the performance of its obligations contained therein. (b) Compliance with Law. Neither Owner nor the Property is in violation of, and the terms and provisions of the Contract Documents do not conflict with, any regulation or ordinance, any order of any court or governmental entity, or any building restrictions or governmental requirements affecting Owner or the Property. (c) No Violation. The terms and provisions of the Contract Documents, the execution and delivery of the Contract Documents by Owner, and the performance by Owner of its obligations contained therein, will not and do not conflict with or result in a breach of or a default under any of the terms or provisions of any other agreement, contract, covenant, or security instrument by which Owner or the Property is bound. (d) Other Information. All reports, documents, instruments, information and forms of evidence that have been delivered to the PACE Board concerning the disbursement hereunder and the Loan Amount are accurate, correct, and sufficiently complete to give the PACE Board true and accurate knowledge of their subject matter. (e) Lawsuits. There are no lawsuits, tax claims, actions, proceedings, investigations or other disputes pending or threatened against Owner or the Property which may impair Owner's ability to perform its obligations hereunder, or which may impair the PACE Board's ability to levy and collect the Assessment and the Annual Administrative Assessment. (f) No Event of Default. There is no event that is, or with notice or lapse of time or both would be, a Default under this Contract. (g) Accuracy of Declarations. The declarations of Owner contained in the Application are accurate, complete, and true. Section 7. Owner's Covenants. Owner promises to keep each of the following covenants: (a) Completion of Work and Maintenance of Energy Improvements. Owner shall, or shall cause its contractor(s) to, promptly commence construction of the Work, and diligently continue such Work to completion, in good and workmanlike manner and in accordance with sound construction and installation practices. Owner shall maintain the Energy Improvements in good condition and repair. A2E2 Exhibits: R9/C8 Assessment Contract 93 (b) Compliance with Law and Agreements. In commencing and completing the Work, Owner shall comply with all existing and future laws, regulations, orders, building restrictions and requirements of, and all agreements with and commitments to, all governmental, judicial and legal authorities having jurisdiction over the Property or the Work, and with all recorded instruments, agreements, covenants and restrictions affecting the Property. (c) Permits, Licenses and Approvals. Owner shall properly obtain, comply with and keep in effect all permits, licenses and approvals which are required to be obtained from any governmental authority in order to commence and complete the Work. Owner, upon the request of the Program Administrator, shall promptly deliver copies of all such permits, licenses and approvals to the Program Administrator. (d) Site Visits. Owner grants the PACE Board, its agents and representatives the right to enter and visit the Property at any reasonable time, after giving reasonable notice to Owner, for the purposes of observing the Work. The PACE Board will make reasonable efforts during any site visit to avoid interfering with Owner's use of the Property. Owner shall also allow the PACE Board to examine and copy records and other documents of Owner which relate to the Work. Any site visit, observation or examination by the PACE Board shall be solely for the purposes of protecting the PACE Board's rights under the Contract documents. (e) Protection Against Lien Claims. Owner shall promptly pay or otherwise discharge any claims and liens for labor done and materials and services furnished to the Property in connection with the Work. Owner shall have the right to contest in good faith any claim or lien, provided that it does so diligently and without delay in completing the Work. (f) Insurance. Owner shall provide, maintain and keep in force at all times until the Work is completed, builder's all risk property damage insurance on the Property, with a policy limit equal to the full replacement cost of the Work. (g) Notices. Owner shall promptly notify the PACE Board in writing of any Default under this Contract, or any event which, with notice or lapse of time or both, would constitute a Default hereunder. Section 8. Completion of the Work. (a) Consent and Authorization. This Contract constitutes consent and authorization, pursuant to Section of the Act, for Owner to purchase directly the related equipment and materials for the Energy Improvements and to contract directly for the construction and/or installation of the Energy Improvements on the Property. (b) Date of completion of the Work. Subject to Section 13(f) below, Owner agrees to complete the Work on or before , 20 Section 9. Mechanic's Lien and Stop Notices. In the event of the filing of a stop notice or the recording of a mechanic's lien pursuant to applicable law of the State of Arkansas and relating to the Work, the Program Administrator may summarily refuse to disburse the Loan Amount, and in the event Owner fails to furnish the Program Administrator a bond causing such notice or lien to be released within ten (10) days of notice from the Program Administrator to do so, such failure shall, at the option of the PACE Board, constitute a Default under the terms of this Contract. Owner shall promptly deliver to Program Administrator copies of all such notices or liens. Section 10. Indemnification. (a) Owner shall indemnify, defend, protect and hold harmless the PACE Board and all agents, employees, attorneys and representatives of the PACE Board (collectively, the "The PACE Board Parties"), from and against all losses, liabilities, claims, damages (including consequential damages), penalties, fines, forfeitures, costs and expenses (including all reasonable out-of-pocket litigation costs and reasonable attorneys' fees) and any demands of any nature whatsoever related directly or indirectly to, or arising out of or in connection with, (i) the Contract Documents, (ii) the disbursement of the Loan Amount, (iii) the Work, (iv) the Energy Improvements, (v) any breach or Default by Owner under the Contract Documents, (vi) the levy and collection of the Assessment [and the Annual Administrative Assessment], (vii) the imposition of the lien of the Assessment, and (viii) any other fact, circumstance or event related to the PACE Board's extension and disbursement of the Loan Amount to Owner or Owner's performance of its obligations under the Contract Documents (collectively, the "Liabilities"), regardless of whether such Liabilities shall accrue or are discovered before or after the disbursement of the Loan Amount. (b) The indemnity obligations described in this Section 10 shall survive the disbursement of the Loan Amount, the payment of the Assessment in full, the transfer or sale of the Property by Owner, and the termination of this Contract. Section 11. Waiver of Claims. For and in consideration of the PACE Board's execution and delivery of this Contract, Owner, for itself and for its successors -in -interest to the Property and for anyone claiming by, through, or under Owner, hereby waives the right to recover from and fully and irrevocably releases the PACE Board Parties from any and all claims, obligations, liabilities, causes of action, or damages, including attorneys' fees and court costs, that Owner may now have or hereafter acquire against any of the PACE Board Parties and accruing from or related to (i) the Contract Documents, (ii) the disbursement of the Loan Amount, (iii) the levy and collection of the Assessment and the Annual Administrative Assessment, (iv) the imposition of the lien of the Assessment, (v) the issuance and sale of any bonds or other evidence of indebtedness, or other financial arrangements entered into by the PACE Board pursuant to the Program, (vi) the performance of the Work, (vii) the Energy Improvements, (viii) any damage to or diminution in value of the Property that may result from the Work, (ix) any personal injury or death that may result from the Work, (x) the selection of manufacturer(s), dealer(s), supplier(s), contractors(s) and/or installer(s), and their action or inaction with respect to the Work or the Energy Improvements, (xi) the merchantability and fitness for any particular purpose, use or application of the improvements, (xiii) the workmanship of any third parties, and (xiv) any other matter with respect to the Program. This release includes claims, obligations, liabilities, causes of action, and damages of which Owner is not presently aware or which Owner does not suspect to exist which, if known by Owner, would materially affect Owner's release of the PACE Board Parties. OWNER HEREBY ACKNOWLEDGES THAT IT HAS READ AND IS FAMILIAR WITH THE PROVISIONS OF ARKANSAS CIVIL CODE SECTION ("SECTION "), WHICH IS SET FORTH BELOW: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." BY INITIALING BELOW, OWNER HEREBY WAIVES THE PROVISIONS OF SECTION SOLELY IN CONNECTION WITH THE MATTERS WHICH ARE THE SUBJECT OF THE FOREGOING WAIVERS AND RELEASES. Owner's Initials The waivers and releases by Owner contained in this Section 11 shall survive the disbursement of the Loan Amount, the payment of the Assessment in full, the transfer or sale of the Property by Owner, and the termination of this Contract. Section 12. Further Assurances. Owner shall execute any further documents or instruments consistent with the terms of this Contract, including documents and instruments in recordable form, as the PACE Board shall from time to time find necessary or appropriate to effectuate its purposes in entering into this Contract and disbursing the Loan Amount. Section 13. Events of Default. (a) Subject to the further provisions of this Section 13, the failure of any representation or warranty of Owner contained herein to be correct in all material respects, or the failure or delay by Owner to perform any of its obligations under the terms or provisions of the Contract Documents, other than with respect to the payment of the Assessment, shall constitute a nonmonetary default hereunder ("Default"). Owner must immediately commence to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence, but in any event, within the time set forth in Section 13(b) below. (b) If a Default occurs, prior to exercising any remedies under the Contract Documents or the Act, the PACE Board shall give Owner notice of such Default. If the Default is reasonably capable of being cured within thirty (30) days, Owner shall have such period to effect a cure prior to the exercise of remedies by the PACE Board under the Contract Documents or the Act. If the Default is such that it is reasonably capable of being cured, but not within such thirty (30) day period, and Owner (i) initiates corrective action within such thirty (30) day period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then Owner shall have such additional time as is reasonably necessary to cure the Default prior to exercise of any remedies by the PACE Board. However, in no event shall the PACE Board be precluded from exercising its remedies if its security becomes or is about to become materially jeopardized by any failure to cure a Default, or if the Default is not cured within one hundred and twenty (120) days after the first notice of Default is given. (c) Subject to the provisions of paragraph (b) above, if any Default occurs the PACE Board may exercise any or all rights and remedies available to it under applicable law, at equity, or as otherwise provided herein. Upon the election of the PACE Board, if there has been no disbursement of the Loan Amount, this Contract shall terminate and, except as otherwise expressly provided herein, the parties have no further obligations or rights hereunder. (d) Subject to the provisions of Section 17 hereof, any and all costs and expenses incurred by the PACE Board in pursuing its remedies hereunder shall be additional indebtedness of Owner to the PACE Board hereunder. (e) Except as otherwise expressly stated in this Contract or as otherwise provided by applicable law, the rights and remedies shall not preclude exercise by the PACE Board, at the same time or different times, of any other rights or remedies for the same Default or any other Default. No failure or delay by the PACE Board in asserting any of its rights and remedies as to any Default shall operate as a waiver of any Default or of any such rights or remedies, or deprive the PACE Board of its rights to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. (f) Performance of the covenants and conditions imposed upon Owner hereunder with respect to the commencement and completion of the Work shall be excused while and to the extent that, Owner is prevented from complying therewith by war, riots, strikes, lockouts, action of the elements, accidents, or acts of God beyond the reasonable control of Owner; provided, however, that such event is not caused by the fault, negligent or misconduct of Owner; and provided, further, as soon as the cause or event preventing compliance is removed or ceases to exist the obligations shall be restored to full force and effect and Owner shall immediately resume compliance therewith and performance thereof. (g) Remedies with respect to the nonpayment of the Assessment or other amounts payable by Owner hereunder are governed by the provisions of Section 2 hereof. Section 14. Compliance with Local, State and Federal Laws. Owner shall perform the Work,'or cause the Work to be performed, in conformity with all applicable laws, including all applicable federal, state and local occupation, safety and health laws, rules, regulations and standards. Owner agrees to indemnify, defend and hold the PACE Board Parties harmless from and against any cost, expense, claim, charge or liability relating to or arising directly or indirectly from any breach or failure of Owner or its contractor(s) or agents to comply with such laws, rules or regulations. The indemnification A2E2 Exhibits: R9/C8 Assessment Contract 97 obligations described in this Section 14 shall survive the disbursement of the Loan Amount, the payment of the Assessment in full, the discharge of the lien, and the termination of this Contract. Section 15. Severability. Each and every provision of this Contract is, and shall be construed to be, a separate and independent covenant and agreement. If any term or provision of this Contract or the application thereof shall to any extent be held to be invalid or unenforceable, the remainder of this Contract, or the application of such term or provision to circumstances other than those to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Contract shall be valid and shall be enforced to the extent permitted by law. Section 16. Notices. All notices and demands shall be given in writing by certified mail, postage prepaid, and return receipt requested, or by personal delivery (by recognized courier service or otherwise). Notices shall be considered given upon the earlier of (a) personal delivery or (b) two (2) business days following deposit in the United States mail, postage prepaid, certified or registered, return receipt requested. Notices shall be addressed as provided below for the respective party; provided that if any party gives notice in writing of a change of name or address, notices to such party thereafter be given as demanded in that notice: Arkansas Advanced Energy Equity Program (A2E2) c/o City of Fayetteville 113 W Mountain St, Fayetteville, AR 72701 Attention: [PROGRAM Administrator] To Owner: Attention: Section 17. Attorney's Fees and Costs. In the event that any action is instituted to enforce payment or performance under this Contract, the parties agree that the non -prevailing party shall be responsible for and shall pay all costs and all attorneys' fees incurred by the prevailing party in enforcing this Contract. Section 18. No Waiver. No disbursement of the Loan Amount based upon inadequate or incorrect information shall constitute a waiver of the right of the PACE Board to receive a refund thereof from Owner. Section 19. Governing Law. This Contract shall be governed by the laws of the State of Arkansas. Any legal action brought under this Contract must be instituted in the Superior Court of Arkansas, or in an appropriate municipal court in that County or in the United States District Court for Arkansas. Section 20. Amendment of Contract. No modification, rescission, waiver, release or amendment of any provision of this Contract shall be made except by a written agreement executed by Owner and the PACE Board. Section 21. The PACE Board May Assign; Role of the PACE BOARD. The PACE Board, at its option, may (i) assign any or all of its rights and obligations under this Contract, and (ii) pledge and assign its right to receive the Assessment and the Annual Administrative Assessment, and any other payments due to the PACE Board hereunder, without obtaining consent from Owner. Section 22.Owner Assignment Prohibited. In no event shall Owner assign or transfer any portion of this Contract or Owner's rights or obligations under the Contract without the prior express written consent of the PACE Board, which consent may be granted or withheld in the sole and absolute discretion of the PACE Board. Section 23. Relationship of Owner and THE PACE BOARD. The relationship of Owner and the PACE Board pursuant to this Contract is that of debtor and creditor and shall not be or be construed to be a joint venture, equity venture, partnership, or other relationship. Section 24. General. Time is of the essence of this Contract and of each and every provision hereof. This Contract, together with the other Contract Documents, constitutes the entire agreement between the parties hereto, and there shall be no other agreement regarding the subject matter thereof unless signed in writing by the part to be charged. If there is more than one "Owner," the obligations hereunder of all Owners shall be joint and several. Section 25. Counterparts. This Contract may be executed in several counterparts, each of which shall be deemed an original, and all of such counterparts together shall constitute one and the same instrument. Section 26. Special Termination. Notwithstanding anything to the contrary contained herein, this Contract shall terminate and be of no further force or effect if Owner has submitted to the Program Administrator a notice of its decision to cancel this transaction on or prior to the date and time described in the Notice of Right to Cancel which was delivered to Owner upon its execution of this Contract. Section 27. No Third Party Beneficiary Rights. This Contract is entered into for the sole benefit of Owner and the PACE Board and, subject to the provisions of Sections 10, 11 and 21, no other parties are intended to be direct or incidental beneficiaries of this Contract and no third party shall have any right in, under or to this Contract. IN WITNESS WHEREOF, Owner and the PACE Board have entered into this Contract as of the date and year first above written. OWNER: THE PACE BOARD: Date of Execution by Owner: , 2a ATTEST: District Board of Directors, a political subdivision in the State of Arkansas By: _ Name: Title: STATE OF ARKANSAS } ss. COUNTY OF } On , before me, a notary public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacities (ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. certify under PENALTY OF PERJURY under the laws of the State of Arkansas that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (This area for official notarial seal) STATE OF ARKANSAS COUNTY OF } ss. } On , before me, a notary public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in hislherltheir authorized capacities(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. certify under PENALTY OF PERJURY under the laws of the State of Arkansas that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (This area for official notarial seal) EXHIBIT "A" [ATTACH COPY OF EXECUTED AND APPROVED APPLICATION] EXHIBIT "B" DESCRIPTION OF THE PROPERTY EXHIBIT "C" NOTICE OF ASSESSMENT [to be provided] EXHIBIT "D" SCHEDULE OF ASSESSMENT INSTALLMENTS, INTEREST THEREON, [AND THE MAXIMUM ADMINISTRATIVE ASSESSMENT] [to be provided] ResidentialQA Protocol Arkansas Advanced Energy Equity Program (AM) Exhibit R10 Residential QA Protocol Program staff will perform quality assurance inspections on a tiered percentage of all reported projects: n.• • First 3 — 5 jobs 100% 4 of the next 20 jobs 20% • All following jobs 5% Contractors will progress through the tier system as they successfully demonstrate work has been completed as reported according to HEP Materials and Installation standards and BPI standards. QA inspectors will evaluate work with relation to the Materials and Installation standards provided to you upon signing on as a program ally (attached). Of particular interest will be exhaust fan venting (bath fans) and moisture mitigation. We ask that you take the time to review the M and I standards and BPI standards with your staff to ensure that you are closely following required procedures. Improper installations may call for rework at the expense of the ally. The QA process will be random. However, QA inspectors can be available to meet you at job sites for your installations and 1 or test out processes. Please engage them as they look forward to working with you. Arkansas Advanced Energy Equity Program (AM) Exhibit C9/1311 Database Information Database content While financial information will be maintained by the lending institution, per their internal lending data retention protocols, certain project information pertaining to specific participating properties that can be aggregated to track program performance will be collected and maintained by the program administrator. Some of this data will include specific property information, such as address and physical description, the prioritized improvements recommended by the auditor, the improvements actually implemented along with the estimated energy savings of those improvements. The administrator will also collect actual utility data when available to compare with estimates. This data could be used to calculate estimated emissions reductions on a property and overall program basis. On an aggregate basis, this data will be able to demonstrate the efficacy of the program. The specific fields required to maintain such data would include standard property information, i.e. homeowner name, street address, structure type, square footage, etc. Fields specific to the project information would be derived from the scope of work information and audit data to be supplied. Additional data would be calculated or derived from this information for generating reports and aggregation purposes. Software to be used for maintaining project database While there are many `off the shelve" database applications that could potentially be utilized in a program such as this, this is relatively new approach to the market of energy efficiency. There have been some smaller vendors that have attempted to address software application needs for energy efficiency projects on an aggregate basis, these are mostly for energy auditors to manage workload and do not address the specific reporting needs of a program such as this. The most likely way to address all of the data management and reporting requirements of the program is to utilize a customizable SQL based relational database product that can generate reports that are tailored to the requirements of the PACE Board and can be maximized for the benefit of the program. By building on a customizable SQL based relational database, alterations can be made as the program develops to address any reporting and calculation needs that may be unforeseen at program inception. While there would be some difference in the data generated, the basic database structure of program is applicable to both residential and commercial projects. IT PACE Financing for Energy Efficiency Improvements .,;, ::andi neJ el.; lie -7 ll e Wabl :�Eh k. xlPlid. ec. s, 0 I '0 0000::.-. Lf 00 0 A6 Gi AL V .-A an (U 0 C U In CU ui CID t)ko U ACL (u qj CE (U CO r Ln cu LU 23 En O C 0 - CA u S Z' < CD Ice cu un u 2 .—— r�:: �* 0 C 4E �o, :3 Ln:3 CU 4) to o LU m u -�2 < rSf C > c a- > 0 -cc c E 7E 0 'E) -40' yo a) -e Ln C: 0 ra 0- ID I'D w 0 _A_ E . 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CL Y ,2 E a ry' _ Q , c n m a c 3 L ra U_ c> j E 3 E n b f� c� L O o° �n ,L-. n. �°. n o o t,n aj W w p y cu -c ,L L GO v V c o eL C a. 4 p W ti L c v a o " 4- LU R Q a a c` c c �� H O IV N a ) (u z ° E O L J � o 2, � Q w p a a a� z o E E �� E v a E O c yy> > yr` o v Q- n .T+ . d C `�^ V C m a-M Oa 7 y N y 7 in E as �a b 9 w $ t 6 p° E c U • o d'o d QrcQ a N O { v v� j L ._ L 'v ai J o u aaoo C 1, (A H a� CL L r, Q N U Q a '+- of r J O r d C V) D N () W m M L. C C / L � Qj O ; N w 4J N +-J 4J L O L d FAO �: ,- s Z 0 Commercial and Residential Contractors: How can Set the PACE St. Louis help grow your business? Looms cost financing for energy efficiency/ renewable energy upgrades is now available to commercial and residential prro�erty owners in the City of St. Louis. Set the PACE St. Louis is an innovative method for property owners to finance energy improvements for their homes or businesses. As part of the City of St Louis Sustainability Plan, Set the PACE St. Louis enables residential and commercial building owners to finance energy efficiency, water efficiency and renewable energy upgrades with a novel funding mechanism that offers distinct advantages over traditional equity loans. Set the PACE St. Louis Setthe PAC EStLou lls.com As a residential or commercial property .contractor, you and your customers should know about Set the PACE St. Louis. Set the PACE St. Louis offers a unique financing mechanism to enable more people to participate in the energy retrofit revolution. Some of the attractive and unique characteristics of PACE financing are: ✓ Off -balance sheet accounting ✓ Low up -front investment ✓ Immediate positive cash -flow ✓ Long-term financing ✓ Ability to pass payments through to tenants ✓ PACE financing stays with the property upon sale ✓ Low interest rates ✓ Greater long-term property value ✓ Can combine with utility incentives from Ameren Missouri and Laclede Gas Visit: SetthePACEStLouis.com [Energy effff denvy euperPtlisea 660tt HterzHy changed our company."" Property owners want to feel good about their investment, both in you and their property. This program offers you the chance to deliver to your customers an accessible means to improve their investment — an Residential and commercial contractors participating in Set the PACE St. Louis will receive a marketing kit that includes materials tailored for building owners. As a participating contractor, your business will be listed on the investment that's about St. Louis pride. Find Contractors section of the SetthePACEStLouis.com is the online portal through which you can explore the benefits of PACE financing and find out whether the contemplated property improvements are eligible. You can then sign up for the Set the PACE St. Louis program through an online application or by filling out a printable version. website. Prospective customers will visit the website and select their contractor(s) from this list. Program participation fees for residential or commercial contractors range from $1004800, depending on the contracting category or categories. For more information, please visit the Frequently Asked Questions (FAQ) and Contractor Registration sections on SetthePACEStLouis.com. Making your project eligible for PACE financing A certified energy audit is highly recommended to achieve the best energy savings, home or work ? safety and public benefit A select i group of prescriptive measures are eligible without performing an audit These measures have a high level of energy savings, such as, replacing a low efficiency furnace with a high efficiency model would qualify. Your project must qualify under the Missouri PACE statute, namely, being verified by a program administrator as having an economic benefit equal to or greater than the cost of the project, and per the U.S. Department of Energy PACE guidelines, having an "expected Savings -to -Investment Ratio (SIR) greater than one;' with the "financed package of energy improvements (being) designed to pay for itself over the life of the assessment" Set the PACE St. Louis 12545 Olive Blvd., Suite 184 Saint Louis, MO 63141 314,499.8756 SetthePACEStLouis.com L M x y Y ws 1.0 GL. 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A2 m c f O �� L � U C: Q c v L ^ a V r � o� o R ra cn m V) C 3° w "' w O `� t 'j O V +' U � o ' � V�1 c +� Lid Or�} O N O C:L ® (� u -� '*"■ o L b — +3 ° L i+ _C .r_^ -O L {n 0 V U rCv L O W O �O bA vas >, Oi z u y �_ ii rti C c LoL ? `TS Q 0 n cc Qi H H CITY OF oil Tayee�le ARKANSAS TO: Sondra Smith,.City Clerk FROM: Peter Nierengarten, Sustainability and Resilience Director - DATE: October 15, 2014 SUBJECT: Energy Improvement District Contract with A2E2 STAFF MEMO RECOMMENDATION: Please retain the attached original signed contract between the Fayetteville Energy Improvement District and Arkansas Advance Energy Equity (A2E2) in the file for Fayetteville Energy Improvement District No. 1. BACKGROUND: The Fayetteville Energy Improvement District No. 1 was established by Ordinance 5624 on October 15, 2013 and is "legally and financially independence of the City of Fayetteville." On October 13, 2014, the Energy Improvement District Board signed a contract with Arkansas Advanced Equity Energy (A2E2) to provide Property Assessed Clean Energy (PACE) program administration for Fayetteville. This contract was previously reviewed by the City Attorney's office to be sure that it included their preferred language and complied with City requirements. DISCUSSION: The Purchasing Department has indicated that they do not need to keep final signed copy of the contract because of the Board's legal and financial independence, so I am requesting that your office keep the original signed contract as part of the Energy Improvement District records. The full contract includes: • Final Signed A2E2 Contract &Appendix I — Scope of Service • Appendix II — RFP 10-14 • Appendix III —Response of A2E2 to RFP 14-10 Appendix II and Appendix III are very long documents (47 & 220 pages, respectively), therefore I am not delivering hard copies of these to you. Instead, I have delivered these files to you digitally. Mailing Address: 113 W. Mountain Street www.fayetteville-ar.gov Fayetteville, AR 72701 AGREEMENT FOR SERVICES I BY AND BETWEEN THE FAYETTEVILLE ENERGY IMPROVEMENT DISTRICT NO. 1, AND ARKANSAS ADVANCED ENERGY EQUITY, LLC. This Agreement (the "Agreement") is made this 13Ttiday of OCO , 2014, by and between the FAYETTEVILLE ENERGY IMPROVEMENT DISTRICT NO. 1 (the "DISTRICT"), having its principal place of business at 113 W. Mountain Street, Fayetteville, AR 72701 and ARKANSAS ADVANCED ENERGY EQUITY, LLC ("A2EV ), an Arkansas limited liability company having its principal place of business at 124 W. Capitol Ave., Ste. 1630, Little Rock, AR 72201. WITNESSETH THAT: WHEREAS, the City of Fayetteville has created, by ordinance, the DISTRICT, and the DISTRICT is authorized to create special tax assessments for the financing of energy efficiency improvements, renewable energy and weatherization projects and water conservation improvements to privately owned property located in the City of Fayetteville as enabled by Property Assessed Clean Energy (PACE) legislation (the "PACE Program"); and WHEREAS, A2E2 is a joint venture of Energy Equity Funding, LLC and the Arkansas Advanced Energy Association, LLC., that was formed to contract to provide the services proposed in the Response to RFP 14-10 incorporated herein as Appendix III; and WHEREAS, the DISTRICT desires to engage A2E2 to provide the services of Program Administrator in connection with the PACE Program. NOW, THEREFORE, the DISTRICT and A2E2, for the mutual consideration, the sufficiency of which is acknowledged, and under the terms and conditions hereinafter set forth, do agree as follows: 1. SCOPE OF SERVICES TO BE PERFORMED A2E2 agrees to perform the services described in Appendix 1, attached hereto and incorporated herein by this reference. The services to be performed by A2E2, described in Appendix I and in the balance of this Agreement, are hereinafter referred to as the "Services." A2E2 shall have sole responsibility for the performance of the Services, including all tasks and deliverables thereunder. H. PROJECTS For purposes of this Agreement, "Project" means a specific instance of financing under the PACE Program. A2E2 is not responsible for the management of any Project under the PACE Program, and is not acting as a contractor or subcontractor of any Project under the PACE Program. The selection of contractors, subcontractors, or service providers for any Project under the PACE Program is the sole responsibility of and shall be at the sole discretion of the owner of the Project, subject to A2E2's approval of the contractor as meeting or being exempt from the contractor qualifications of the PACE Program. M. TIME OF PERFORMANCE The Services of A2E2 will commence upon execution hereof and will terminate upon the expiration of the term of this Agreement or the termination of this Agreement pursuant to Section V, below, which ever occurs first. The DISTRICT shall cooperate with A2E2 in providing the agreed upon information and access to information as necessary for A2E2 to render the Services. IV. COMPENSATION A2E2 will be compensated for the Services by charging a three -percent (3%) administrative fee (the "Administrative Fee") to all Projects. The Administrative Fee will be capitalized with the Project's financing. The Administrative Fee will be AM's sole compensation under this Agreement. No compensation will be paid directly to A2E2 by the DISTRICT. V. TERM AND TERMINATION The initial term of this Agreement shall be two (2) years from the date this Agreement is approved by the DISTRICT. This Agreement shall automatically renew for up to three (3) additional one (1) year terms, for a total term of up to five (5) years, unless a non -renewing party provides the other party with a written notice of non -renewal not less than thirty (30) days prior to the effective date of the next renewal term. This Agreement may be terminated by either party by the terminating party giving the non - terminating party written notice of intent to terminate not less than thirty (30) days prior to the effective date of the termination. ►y mil I /: MM x The DISTRICT may, from time to time, request changes in the Services to be performed hereunder, including revisions due to the DISTRICT's adjustments in scope or quality of the PACE Program, or due to the enlargement of the DISTRICT. Such changes, and any other changes to the Agreement which are mutually agreed upon by and between the DISTRICT and A2E2, shall become effective only if incorporated in written amendments to the Agreement and executed by both parties hereto. VII. PUBLICITY The DISTRICT agrees to credit A2E2 by name and title in all publicity involving the PACE Program and/or any Project. A2E2 will reveal information about the PACE Program and/or any Project only upon the DISTRICT's prior written approval. A2E2 may issue marketing and promotional material, including press releases, regarding general information about the PACE Program and Projects participating in the PACE Program. Any public disclosure of information concerning a specific and identifiable Project shall be made only with the written approval of the owner of the property that is the subject of the Project. VM. PERSONNEL All personnel involved in the provision of the Services will be under the supervision of A2E2 and shall be fully qualified and shall be authorized or permitted under the state and local law to perform such Services. A2E2 shall remain responsible for the satisfactory completion of all Services in accordance with the terms and conditions of this Agreement. 2 IX. DISCRIMINATION PROHIBITED A. In all hiring or employment made possible by or resulting from this Agreement, there shall not be any discrimination against.any employee or applicant for employment because of real or perceived race, ethnicity, religion, sex, age, physical handicap, sexual orientation, gender identity, gender expression, marital status, familial status, national origin, socioeconomic background or veteran status. B. No person shall, on the grounds of real or perceived race, ethnicity, religion, sex, age, physical handicap, sexual orientation, gender identity, gender expression, marital status, familial status, national origin, socioeconomic background or veteran status, be excluded from participation in, be denied the benefits of, or be subject to discrimination under any program or activity made possible by or resulting from this Agreement. C. No otherwise qualified person shall, on the grounds of handicap or mental disability, be excluded from participation in, be denied the benefits of, or be subject to discrimination under any program or activity made possible by or resulting from this Agreement. A2E2 shall comply with all requirements and regulations imposed by or pursuant to the Americans with Disabilities Act. X. COMPLIANCE WITH LAWS A2E2 shall comply with all federal, state, and local laws, ordinances, and regulations applicable to the work, including but not limited to the Title VII of the Civil Rights Act of 1964 and non- discrimination clauses incorporated herein. XI. ASSIGNMENT OR TRANSFER A2E2 shall not assign the whole or any part of this Agreement or any monies due or to become due hereunder without written consent of the City of Fayetteville or the DISTRICT. In the event A2E2 assigns all or part of any monies due or to become due under this Agreement, the instrument of assignment shall contain a clause substantially to the effect that it is agreed that the right of the assignee in and to any monies due or to become due to A2E2 shall be subject to prior liens of all persons, firms, and corporations for services rendered or materials supplied in connection with the performance of the Services. XH. SUBCONTRACTING A. Core administrative, program design, and marketing components of the PACE Program will be performed by A2E2 and will not be subcontracted without prior written approval of the DISTRICT. The DISTRICT acknowledges that on page 13 of the RFP Response A2E2 identified members of the Fayetteville PACE Administrative Team. The DISTRICT agrees that, when they are working for A2E2 in their capacity as a member of the Fayetteville PACE Administrative Team, the members of the Fayetteville PACE Administrative Team shall not be considered subcontractors of A2E2 requiring prior approval of DISTRICT. B. Subject to the terms, conditions, and restrictions of this Agreement, DISTRICT authorizes A2E2 to retain and use subcontractors as A2E2, in the good faith exercise of its judgment and discretion, determines are necessary to fully, effectively, and efficiently perform components of the Services other than core administrative, program design, and marketing. Such subcontractors include, without limitation, a subcontractor for web coding, and subcontractor_ s for web design and the design of marketing materials. C. To the maximum extent possible, A2E2 will use qualified local companies and providers as subcontractors. D. A2E2 shall remain responsible for the satisfactory completion of all Services in accordance with the terms and conditions of this Agreement, including those Services performed by any subcontractors to AM. E. The provisions of this Agreement flow down to all subcontractors. Any approved subcontracting of the work shall in no way relieve A2E2 of its primary responsibility for the quality and -performance of the Services. A2E2 shall be fully responsible to the DISTRICT for the acts and omissions of its subcontractors and of persons either directly or indirectly employed by them. A2E2 shall include in each subcontract appropriate provisions to require compliance by all subcontractors with the provisions of this Agreement. fees and expenses for any subcontracts entered into by A2E2 shall be the sole responsibility of AM. XUL CONFLICTS OF INTEREST A. INTEREST OF A2E2 As an inducement to the execution of the Agreement by the DISTRICT, A2E2 represents and agrees that it has not employed any person to solicit or procure the Agreement, and has not made and will not make any payment or any agreement for the payment of any compensation in connection with the procurement of the Agreement. As required in RFP 1410, attached hereto as Appendix II, A2E2 shall promptly notify the Purchasing Agent for the City of Fayetteville, in writing, of any potential conflicts of interest for any prospective business association, interest, or other circumstance which may influence or appear to influence A2E2's judgment or quality of the Services being provided. B. NO PREFERENCES No member, member of the governing board, manager, employee, officer, or agent of AM, of the DISTRICT, of the City of Fayetteville, or of the Fayetteville PACE Administrative Team, and no member of the Arkansas Advanced Energy Association, shall receive any special or preferential treatment under the PACE Program. C. INTEREST OF OTHER LOCAL PUBLIC OFFICIALS No member of the governing body of the City of Fayetteville and no other public official or employee of the City who exercises any functions or responsibilities in the review or approval of the carrying out of this Agreement shall have any personal interest, direct or indirect, in the Agreement. XIV. GOVERNING LAW, VENUE, AND ATTORNEYS' FEES The law of the State of Arkansas shall govern the validity, interpretation, enforcement, and any suit or action arising out of this Agreement unless preempted by federal law. Any suit or action to enforce or arising out of this Agreement shall be brought in any state court located in Washington County, Arkansas, or in the federal court located in the Western District of 4 Arkansas. Each party consents to personal jurisdiction and venue by such courts over such party. The parties hereby expressly and irrevocably waive any claim or defense in any such suit or action based on any alleged lack of jurisdiction, improper or inconvenient venue, or any similar basis. In any suit or action to enforce or arising out of this Agreement, the prevailing party shall be entitled to recover its attorneys' fees, expenses, and costs incurred in prosecuting or defending the suit or action. XV. NO WAIVER BY THE DISTRICT The failure of the DISTRICT in any instance to insist upon strict performance of any of the terms hereunder or to exercise any rights conferred herein shall not be construed as a waiver or relinquishment to any extent of the right to assert or rely upon any such terms or rights on any future occasion. XVI. NOTICE Any notices, consents, requests and demands required or permitted under the terms of the Agreement shall be in writing and shall be deemed to have been duly served, given or made when personally delivered or delivered by registered or certified mail, return receipt requested or by facsimile and addressed as follows: a. To the DISTRICT.• Peter Nierengarten Sustainability & Resilience Department Director City of Fayetteville, Arkansas 113 W. Mountain St. Fayetteville, AR 72701 b. To AZE.2: Steve Patterson Manager Arkansas Advanced Energy Equity, LLC 124 W. Capitol Ave., Ste. 1630 Little Rock, AR 72201 With copy to: Benjamin D. Brenner Mitchell, Williams, Selig, Gates & Woodyard P.L.L.C. 425 W. Capitol Avenue, Ste. 1800 Little Rock, AR 72201 or at such other address as either party may specify, in writing, from time to time. All notices shall be deemed to have been received on the date delivered in the case of personal delivery or on the second business day subsequent to the date of the U.S. Postal Service postmark after being deposited in the United States mail, postage prepaid, registered or certified (return receipt requested), or in the case of overnight courier service, one day after delivery to the overnight courier service, or in the case of facsimile notice, when sent and verification is received. r XVIL SUCCESSORS IN INTEREST The Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and by their respective successors and assigns. XVHI. INDEMNIFICATION A2E2 shall indemnify, and hold the City of Fayetteville, the DISTRICT, their employees, agents and officials harmless from any and all losses, damage, liability cost and expense (including reasonable attorneys' fees) to the extent caused by the negligent acts, errors or omissions of A2E2 (or any individual or entity for whom A2E2 shall bear legal liability for the acts or omissions thereof) in the performance of professional work pursuant to this Agreement. XIX. INSURANCE A2E2 shall maintain liability insurance with policy limits of $1,000,000. DISTRICT shall be named as an additional insured on such insurance policy. A2E2 shall obtain the insurance policy within sixty (60) days of the closing of the first Project. A2E2 shall maintain such insurance, or an equivalent policy, until the expiration or termination of this Agreement. XX. ATTACHMENTS This Agreement consists of the terms of this Agreement and the Appendices listed below. The following Appendices are each made a part of this Agreement and are hereby incorporated by reference into this Agreement as though fully set forth herein: Appendix I — Scope of Services Appendix 11— RFP 14-10 Appendix III — Response of A2E2 to RFP 14-10 (including Appendices and Exhibits submitted therewith) XXI. FREEDOM OF INFORMATION If a Freedom of Information Act request is presented to the City of Fayetteville or the DISTRICT then A2E2 will do everything possible to provide the documents in a prompt and timely manner as prescribed in the Arkansas Freedom of Information Act (A.C.A. 25-19-101 et.seq.). XXH. AUTHORIZATION A2E2 warrants and represents that it has the appropriate authorization to enter into this Agreement with the DISTRICT and that the individual executing this Agreement on behalf of A2E2 is authorized to do so. XX1H. DISCLOSURE OF PROJECT INFORMATION Each Project will be undertaken pursuant to a project -specific written agreement. Each project - specific agreement will contain provisions necessary to protect Project information that is proprietary, (including trade secrets), from use or disclosure without the written consent of the party claiming protection over the information. Notwithstanding the foregoing, A2E2 may use 6 and disclose such information in connection with the performance of this Agreement and the Services or as required by law. XXIV. ENTIRE AGREEMENT A. This Agreement represents the full and final agreement of the parties as to the subject matter of this Agreement. It is fully integrated and supersedes any and all prior discussions or negotiations, whether written or oral, pertaining to the subject matter of this Agreement. Neither party has been induced to enter into this Agreement by reason of any agreement or representation, whether oral or in writing, other than as contained herein. B. In the event of a conflict between the specific terms of this Agreement and the contents of either RFP 14-10 or the Response of A2E2 to RFP 14-10, the terms of this Agreement shall govern. XXV. EXECUTION IN COUNTERPARTS This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF the Parties have caused this instrument to be executed by their respective proper officials: Executed by A2E2 the 1.3 day of 0C A de r , 2014. Executed by the DISTRICT the./3 day of , 2014 ARKANSAS ADVANCED ENERGY EQUITY, LLC Steve Patterson Member FAYETTEVILLE ENERGY UvWROVEMENT DISTRICT NO. 1 WHIR,zM vitt,:.. , APPENDIX I SCOPE OF SERVICES As Program Administrator, Arkansas Advanced Energy Equity, LLC, will be responsible for the implementation and day-to-day operations of the PACE Program, as follows: A. Commercial Program 1. Acquisition and assessment of potential commercial energy efficiency projects. • Marketing and Outreach. A2E2 will seek participation of the broadest possible base of commercial Projects. The PACE Program will be marketed throughout the commercial community by utilizing, without limitation, trade alliances between energy auditors and consultants, energy service companies (ESCOs), home and commercial contractors and Realtors, utility energy efficiency contractor lists, and financial partners to secure program participants. A2E2 will use its best efforts to develop a broad base of participating contractors and lenders. • Conduct community outreach to property managers and owners. • Oversight of preliminary credit reviews within 48 hours of application to determine basic eligibility and potential scope of each project and analysis of energy efficiency needs. • Maintenance and provision of program application in different formats including hard copy and an online program web portal. 2. Loan application. • Determine the type and structure of financing appropriate for the prospective project. • Ensure that the design, construction documents and scope of work for each project are complete and ready for submission along with the full application to the lending institution. (Any fees associated with the Program will be capitalized with the Project financing. The Program Administrator will charge a 3% administrative fee to all Projects.) • Ensure timely closing of project loans which is anticipated to take anywhere from 30 to 45 days once the full application has been submitted with the supporting documentation. 3. Construction phase. • Consult with property owners and lender to determine if project financing has been approved. • If progress payments are to be made, ensure that progress inspections and verifications required for the actual construction, such as building permits are completed. 4. Project verification and quality control. • Verification of project completion with the property owners and lending institution. • Ensure all construction liens have been signed off on and that all funding has been completed. • Provide a sampling of project data for quality control. 8 Post improvement measurement and verification. • Providing property owners with Consent to Release Utility Data forms to allow the Program Administrator access to utility bills for the year prior to improvements through the completion of the improvements and the final payment of the loan. • If the Program Administrator determines that the subject property is not performing as projected, provide follow up with the property owner to identify potential causes. • Determining if deviations from projections are caused by external variables, such as weather or usage, if not, then analysis of the improvements will be necessary to verify that they were installed correctly and whether corrections may be warranted. • If the subject property is performing as projected with the improvements, sharing this information with the property owner. • Providing the DISTRICT with the Annual Report described in and required by the RFP by February 1 of the year following the report year. In addition to providing the Annual Report, A2E2 will provide DISTRICT with ongoing data regarding the PACE Program and the performance of the Projects. 6. Ongoing payments and default. • Ensure that the property owner is making payments per the terms of the loan agreement directly to the lending institution. • Confirm that assessment contracts are recorded with the office of the Washington County Circuit Clerk. B. Residential Program There is a limitation on availability for PACE financing for residential properties due to concerns raised by the Federal Housing Finance Agency (FHFA). Currently, only residential property owners who own their home without an existing mortgage can qualify for actual property assessed financing. A2E2 will design and structure the PACE Program to accommodate financing for energy efficiency, renewable energy, weatherization, and water conservation projects by owners of residential property that do not qualify for property assessed financing. This will be accomplished by, to the greatest extent practical, making alternative financing options available through the PACE Program, including home equity financing or energy efficiency mortgages (aka, "EEMs"). The residential. PACE Program will be modeled on the commercial PACE Program, and will include the following components: 1. Acquisition and assessment of potential residential energy efficiency Projects. A2E2 will seek participation of the broadest possible base of residential Projects, including those that qualify for both actual property -assessed financing, and those using traditional financing. Due to the FHFA concerns discussed above, A2E2 contemplates that the first phase of the residential PACE Program will be comprised largely of Projects that do not involve property -assessed financing. 2. Market outreach into the community. A2E2 will seek participation of the broadest possible base of residential Projects by marketing the PACE Program through community outreach and strategic partnerships utilizing trade alliances between energy auditors, home performance and/or energy efficiency contractors, and Realtors, as well as financial partners and utilities that would serve to direct applicants into the PACE Program. 3. Prequalification and initial screening. A2E2 will prequalify program applicants and make eligibility determinations by credit analysis and by determining if the property meets the required underwriting criteria. 4. Energy audits of potential project properties. • Providing property owners with list of energy auditors that are participating in the PACE Program for selection of a qualified energy auditor. If the property owner has been referred to the PACE Program by an energy auditor, they can submit that auditor's information on the application and that auditor will be the default vendor for the energy audit. S. Collecting required loan documents including but not limited to the loan application, scope of work, and audit documents from property owners, and forwarding the documents to the lending institution for loan approval. 6. Coordinating loan approval, including notification to the energy auditor and contractor of each loan and notification to commence work on the improvements. 7. Obtaining homeowner sign off on the work verification and, for property -assessed Projects, execution of the assessment contract, and forwarding these documents to the lending institution. A2E2 will also provide property owners with Consent to Release Utility Data forms allowing A2E2 access to utility bills for the year prior to improvements and through completion of the improvements and the final payment of the loan. 8. For property -assessed Projects, confirming that assessment contracts are recorded with the office of the Washington County Circuit Clerk. 9. Data collated and quality control. A sampling of Projects will be reviewed for quality assurance, with the samplings focused on making sure that as many contractors/auditors are reviewed as possible. As Projects are completed, the improvements and utility data will be collated to generate reports to track the PACE Program's proliferation and overall efficacy at increasing energy efficiency and carbon emission reduction. C. PACE Program Policies A2E2 shall develop the following "PACE Program Policies" for DISTRICT: • Participant Eligibility Requirements • Project Eligibility Requirements • Contractor Qualifications • Program Fee Schedule The PACE Program Policies shall be approved by DISTRICT. 10 D. Project Contractors: Qualifications, Training, and Engagement A2E2 will seek involvement of the broadest possible base of contractors in the PACE Program, with an emphasis on contractors located in the Fayetteville, Arkansas market. A2E2 will be responsible for: 1. Developing and maintaining a list of approved contractors under the PACE Program (the "Approved Contractors List"). A contractor must meet the Contractor Qualifications to be included on the Approved Contractors List. A2E2 will screen and process applications for inclusion on the Approved Contractors List. The Approved Contractors List will be made available online. Project owners may select Project contractors from the Approved Contractors List, in which case no further approval of the selected contractor will be required prior to the start of work on the Project. In the event that the owner of a Project wishes to use a contractor that is not on the approved list of contractors, A2E2 shall ensure that the contractor meets the Contractor Qualifications or, in the reasonable judgment and discretion of AM, shall determine that waiver of some or all of the Contractor Qualifications is appropriate. 2. Providing training to contractors (if needed). 3. Conducting outreach to the Arkansas contractor community to broaden awareness of the PACE Program and make available the opportunity for contractors to participate in Projects under the PACE Program by, among other activities: leveraging relationships of the Fayetteville PACE Administrative Team and through financial partners; organizing and publically promoting contractor seminars; utilizing existing contractor networks or developing new contractor networks, trade groups, and regional utility contractor lists; and through the member lists of Chambers of Commerce.