Lowering the cost of your capital can mean the difference between pursuing a project and forgoing an opportunity. Whether you are developing a new commercial property or updating a current one, new and innovative funding sources you can apply to your project are always welcome. PACE Equity’s funding is a new source of lower cost capital.
Complex Capital Stack Components & How PACE Equity Works with Them
Kevin Moyer, PACE Equity’s Chief Investment Officer, is moderating a panel at the PACENation Regional Ohio PACE Conference this month on the topic of complex capital stacks and using PACE Equity financing. We’ve pioneered the use of PACE in complex capital stacks. We’ve applied PACE Equity financing with up to seven other capital sources to fill a gap in funding, and successfully helped our clients generate better returns as a result.
PACE Equity financing works with multiple other funding sources, some of which include:
- Tax increment financing (TIF)
- Historic Tax credits
- New Market Tax credits
- Bank loans
- City/County/State Incentives
Equity, mezzanine and other options can cause your net return to deteriorate. Our clients avoid that by filling the gap with our funding. PACE Equity’s cost of capital is significantly lower, and can go up to 20-25 years. Our financing is nontraditional and is considered an addition to, not a replacement of, traditional loans.
David Oliverio, our greater Cincinnati area Market Leader, is speaking on a panel the PACENation Regional Ohio PACE Conference this month on the topic of PACE financing and its uses for new construction projects. He has over 30 years in corporate finance, real estate and commercial banking experience in Ohio, and brings his perspective to our process as we work with banks and other funding sources in Ohio to ensure a smooth process, no matter the stack components.
Ohio Complexities for PACE & How We Overcome Them
Ohio’s PACE program is set up differently than many other programs in the United States, making it more complex than other states to move projects forward. That being said, we are experienced experts in Ohio’s PACE program structure and our team has completed over 100 projects in Ohio.
Ohio’s program has three elements that add to its complexity:
1. Number of PACE Administrators (Districts)
Most states have only one or two administrators (also called districts) that cover the entire state. In Ohio, the administrating districts are called Energy Special Improvement Districts (ESIDs), and each city must create their own to move a project forward. To complicate matters more, a new city can only create an ESID or join/expand an existing ESID if the new city’s border is adjacent to one with an existing ESID.
Currently, there are twenty-two ESIDs in Ohio. The experts at PACE Equity are skilled at navigating the expansion of existing districts or creation of new ESIDs to help our clients’ projects move forward with this funding option whenever possible.
2. Funding Structured as a Bond
Ohio has opted to structure PACE funding as a bond. To get the money into developers’ and owners’ hands, PACE Equity purchases the bond from the ESID, so we become the entity funding the bond for the District.
3. Lengthy Approval Process
Ohio’s bond structure for funding leads to a third challenge: a lengthy legislative process for approval. Typically, we see documents approved within one to two weeks of submission; in Ohio, it’s typically around six weeks.
Our many years of commercial real estate development experience mean that we speak the language of both the banks and local governments across the United States.
Overcoming banks’ hesitations or objections is a specialty of David Oliverio. Establishing relationships with commercial lenders and gaining their approval to apply PACE Equity financing to the capital stack on behalf of our customers is a critical piece of project management, and David works with Ohio’s lenders to make it possible.
When it comes to moving approvals forward for establishing new PACE programs, expanding existing programs, or simply gaining the go-ahead for a project, Kevin Moyer is known throughout the country as a nationally-recognized thought leader in the development of PACE. He was instrumental in launching PACE in Ohio and set up many of the ESIDs which are utilized today, during his time at the Toledo-Lucas County Port Authority. In addition to being a principal in PACE Equity, he has been key in our success in utilizing this financing tool in new and innovative ways.
PACENation Regional Ohio PACE Conference
David Oliverio and Kevin Moyer are speaking on and moderating panels at the PACENation Regional Ohio PACE Conference this month. Whether it’s applying PACE Equity funding to new development projects or working with complex capital stacks for redevelopments, our team has the experience navigating local infrastructure restrictions to get project funded and help our clients generate positive returns as quickly as possible.