RES/CON 2017 Principal March 7 th , 2017 1 At HR&A, we empower - - PowerPoint PPT Presentation

RES/CON 2017

Phillip Kash, Principal March 7th, 2017

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At HR&A, we empower urban communities to address pressing challenges by leveraging urban assets to create value.

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Capacity Building Strategic Planning and Policy Implementation

HR&A’s Resilience Practice uses three unique approaches

Minot, ND State of Virginia New Orleans, LA New York State State of Louisiana New York City State of Connecticut State of California Nashville, TN Shelby County, TN State of New Jersey Springfield, MA State of Iowa Boston, MA Tulsa, OK El Paso, TX Los Angeles, CA Atlanta, GA Austin, TX International Project Locations: Nairobi, Kenya Cape Town, South Africa Bangkok, Thailand Surat, India Paris, France

We work on resilience projects across the country and the world.

Most resilience projects have a funding gap.

FUNDING SOURCES Sewage Authority Bond GAP

Total Development Cost

The traditional approach is to focus on “innovative” financing.

FUNDING SOURCES Sewage Authority Bond GAP

Total Development Cost

FINANCING TOOLS

Green Bond EPA Grant PPP

But, funding comes from the benefits generated by the project.

FUNDING SOURCES Sewage Authority Bond GAP

Total Development Cost

FINANCING TOOLS BENEFITS

Property value increases, higher sales tax proceeds, etc. Utility savings, decreased wear and tear, etc. Reduced property repair costs, business down time, etc. Access to open space, reduced crime, etc. Sales proceeds, rent payments, etc.

Direct Revenues Indirect Revenues Efficiency Gains Avoided Losses Non-Monetary Benefits

Green Bond EPA Grant PPP

Identify and organize benefits that can be converted to funding.

Property value increases, higher sales tax proceeds, etc. Utility savings, decreased wear and tear, etc. Reduced property repair costs, business down time, etc. Access to open space, reduced crime, etc. Sales proceeds, rent payments, etc.

Direct Revenues Indirect Revenues Efficiency Gains Avoided Losses Non-Monetary Benefits

Ease of Financing

FUNDING SOURCES FINANCING TOOLS BENEFITS

Match benefits with the appropriate financing tools.

TIF District Ground Lease Performance Agreement Resilience Bond Tax Credit

FUNDING SOURCES FINANCING TOOLS BENEFITS

Property value increases, higher sales tax proceeds, etc. Utility savings, decreased wear and tear, etc. Reduced property repair costs, business down time, etc. Access to open space, reduced crime, etc. Sales proceeds, rent payments, etc.

Direct Revenues Indirect Revenues Efficiency Gains Avoided Losses Non-Monetary Benefits

Not all financing tools are worth pursuing.

Qualities

• Large
• Measurable
• Predictable
• Proven
• Capable

FUNDING SOURCES FINANCING TOOLS BENEFITS

TIF District Ground Lease Performance Agreement Resilience Bond Tax Credit

Property value increases, higher sales tax proceeds, etc. Utility savings, decreased wear and tear, etc. Reduced property repair costs, business down time, etc. Access to open space, reduced crime, etc. Sales proceeds, rent payments, etc.

Direct Revenues Indirect Revenues Efficiency Gains Avoided Losses Non-Monetary Benefits

Revise the project to increase the benefits that can be financed.

Sewage Authority Bond GAP

Total Development Cost

FUNDING SOURCES FINANCING TOOLS BENEFITS

TIF District Performance Agreement Tax Credit

Property value increases, higher sales tax proceeds, etc. Utility savings, decreased wear and tear, etc. Reduced property repair costs, business down time, etc. Sales proceeds, rent payments, etc.

Direct Revenues Indirect Revenues Efficiency Gains Avoided Losses Non-Monetary Benefits

RES/CON 2017

Phillip Kash, Principal March 7th, 2017

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David Lessinger City of New Orleans Office of Resilience & Sustainability

Funding Resilience

March 7, 2017 Res/Con – New Orleans, LA

Streets & Corridors Open Spaces Home & Property Improvements Vacant Lots Parks & Playgrounds

Gentilly Resilience District: Urban Water Activities

Reduced risk of flooding and subsidence Neighborhood beautification & economic development Recreation & health Environmental awareness

Pursuing the Resilience Dividend

• Train and prepare unemployed individuals

to build NDRC-funded projects

• Develop increasingly vital skills in water

infrastructure development and management

Workforce Development

• Budgeting for resilience in mind: using the funding you already have
• Institutionalizing resilience thinking across the bureaucracy
• Cross-departmental and agency coordination to reduce duplicative

efforts and drive efficiencies

Investing in resilience without additional funds

nola.gov/resilience @resilientnola

David Lessinger dalessinger@nola.gov

Monetizing the Benefits of Hydroelectric Power Springfield, Massachusetts

Monetizing Resilience Benefits

• As communities look to implement successful forward looking

resilient projects in their community must consider key factors:

• Utilizing current assets in a community to create projects which revitalize

antiquated infrastructure with forward resilience retrofits.

• Identifying projects with a dual impact including a possible revenue stream to fund

long term maintenance and/or future resilient projects.

• Defining the benefits of projects at the onset, and identifying how to monetize

benefits to achieve long term resilience success.

Watershops Pond Dam

Water Shops Armory Dam c. 1880 Overview of Spillway, Catwalk, Slide Gates and Intake Structures from Roof of Downstream Mill c. 2015

Watershops Pond Dam

• $4.7 million in CDBG-NDR funding will restore hydroelectric

power to the Watershops Pond Dam.

• The restored hydropower will have the potential to

generate 707,000 kWh during an average year and will be capable of functioning independent of the grid.

• Electricity produced by the hydropower project will offset

the current electricity demand of the Brookings School, located about 800 feet to the north of the project site.

• The use of the energy will create an annual avoided

energy costs – the product of the total cost of energy per kilowatt hour and the amount consumed onsite.

• This results in a municipality savings which can be used to

invest in future resilience based projects.

Estimated Savings

Average Annual Energy Production (kWh) 707,000 Average Energy Consumed On-Site (kWh) 424,200 Average Energy Sold to Utility (kWh) 282,800 Avoided Cost of Energy $84,800 Income from Sale of Energy $17,000

• Est. Annual Value of Energy

$101,800

Estimated Savings

By selecting a project which creates an annual cost savings at the municipality level, the City has the opportunity continue resilient investments by:

• Investing the savings into additional resilient activities that will

directly benefit the vulnerable populations.

• Investing the savings to cover the long-term O&M of the dam itself,

thereby ensuring it continues to generate benefits and the funding/savings needed to sustain itself.

Hydroelectric Power Restored Hydroelectric Power Generated Brookings School daily energy offset Uninterrupted power for Brooking School Emergency Shelter Monetized Annual Avoided Energy Cost Savings Cost Savings invested in Resilience Projects

MyStrongHome: A specialized mitigation finance company

March 7, 2017

Insurance Finance

MyStrongHome is a new type of company that combines insurance, specialty finance and mitigation construction to manage climate risk

Construction

MSH builds resilience to hurricanes & extreme weather, particularly for the Southeast and Gulf

Insurance rates are painfully high in many coastal communities. Cost-effective mitigation measures exist but are unused due to costs, friction in the process and uncertain payback. More and more people, and property, are at risk from hurricanes and extreme weather.

• “One stop shop” retrofit provided AT LOW OR NO COST

to homeowner > reduces losses 36%-70%

• Construction certified by the Insurance Institute for

Business and Home Safety (IBHS) through the FORTIFIED program

MyStrongHome fortifies houses against hurricanes

• MSH partners with insurance partner/s to insure

mitigated homes

• Insurance re-priced for lower risk of mitigated homes

Mitigation reduces loss & insurance costs

• After amortization, savings passed to customer
• MSH registered as premium finance company with

power of attorney to collect new premium + construction payment in order to ‘twin’ obligations

Insurance savings used to repay MSH for the mitigation upgrades

Our business model

Basic MyStrongHome financing Model

The roof system matters—vulnerability to water incursion impacts insurance rates; a FORTIFIED Bronze can reduce homeowners insurance rates significantly. MSH simply uses that savings to pay for the retrofit 1. Customer registers at MyStrongHome.net 2. MyStrongHome has a network of tested contractors in its three startup states: LA, SC, and AL 3. Contractors perform initial assessment, insurance agents quotes new insurance to customer, if the #s work, the financing, insurance, and construction loan close 4. Contractor completes work in 1-2 days 5. Contractor submits documentation of construction meeting FORTIFIED standards to third party inspector 6. Third party inspector submits completed application to IBHS 7. New insurance coverage commences

The FORTFIED Process via MyStrongHome

• Hired leading actuarial & catastrophe modeling firms to analyze

approach in 19 counties across FL, AL, MS, LA, TX, and SC.

• Identified pockets of homes where payback <= 7 years; minimal

storm surge risk (or areas that are insurable against floods); and adequate density.

• Across the 19 counties surveyed, the % eligible Households ranges

from 1% to 96%

• In total, 1.6M homes considered viable IF insurance markets are

accurately priced

• Additional markets in NE & tornado-prone areas

Size of addressable market

40-home pilot highly successful

• Goal was to refine service offering, improve understanding of
• perational requirements and cost.
• Retrofitted 40 homes in SC, AL & LA, of varying sizes, ages, and

roof geometries.

• Pilot also provided an opportunity to:

– Build relationships with local contractors, community, members and regulators. – Understand consumer behavior and preferences. – Identify opportunities to innovate, reduce costs, improve quality and efficiency.

• Earned local media coverage & generated organic

consumer interest

• Seeking innovative solutions to lower the costs required to

meet the FORTIFIED standard

• Considering other potential insurance partners
• Seeking partnerships within states we service
• State government mitigation programs
• SC Safe Home
• Strengthen AL Homes
• State of Louisiana
• Fine-tuning our IT operations, ensuring rapid registration

and closing process—www.mystronghome.net

Shifting into the “soft launch” phase

• Closing Financing

Thank You!

Ramsey Green MyStrongHome www.mystronghome.net 504-722-8602 ramsey.green@mystronghome.net

Fortified ID: FEH36549020150000183 Designation expires on: 03/31/2020

Fred Malik, FORTIFIED Program Manager

9734 N Bayou Rd 03/06/2015 Lillian, Alabama United States of America 36549

The Basics of FORTIFIED Silver

• Silver
• Reach all of the FORTIFIED Bronze requirements
• Protect building openings (windows, entry doors, and

garage doors from windborne debris

• Further strengthen gable ends
• Strengthen the anchorage of attached structures, such

as porches and carports

We engage in a 3-way relationship with homeowners & insurance partner

Homeowner MSH provides IBHS Fortified mitigation worth ~$8K HO pays new premium + cost of mitigation over 5- 7 years, then reaps full benefit

• f lower

premiums MSH remits mitigated premium to SageSure SageSure insures HO

Construction Premium finance Agency

Sample offer to homeowner

MyStrongHome financing options for Homeowner xyz

Option 0: your current plan (no action taken

• n mitigation)

Option 1: A new Fortified Bronze roof with no down payment Option 2: A new Fortified Bronze roof with down payment Option 3: A new Fortified Bronze roof with down payment & accelerated paydown Total value of home improvements (see attached list of measures) $0 $8,500 $8,500 $8,500 Total insurance discount 0% 40% 40% 40% Years until you see value of mitigation savings N/A 7 years 7 years 5 years Down payment 0% $0 $1,200 $1,200 Your insurance premium for the current year $3,800 $2,280 $2,280 $2,280 Annual roof payment $0 $1,633 $1,402 $1,828 Total payment for the current year* $3,800 $3,913 $3,682 $4,108 *It is not possible to predict what insurance premiums will be in the future. For MyStrongHome customers, SageSure commits not to raise rates for at least the first 3 years. After that, rates could rise or decline slightly. Rates are likely to be more stable for MyStrongHome customers than for the overall market. If customers choose to end their relationship with SageSure before construction has been repaid, they will be responsible for entire outstanding balance of loan with no prepayment penalty.