Important Notice About Funding Available to Support Administrator Start Up Costs
The District Department of Environment is able to utilize between $500,000 and $700,000 in State Energy Program funds to support the start-up costs of a third-party administrator for the PACE Program. Given evolving developments about PACE between Federal lawmakers, FHFA, Fannie Mae and Freddie Mac, the use of funds may be applied for a third-party administer to either develop a PACE program or an alternate energy retrofit financing solution, if PACE turns out to not be viable. The Contractor will not be working at risk for the final amount of SEP funding approved. However, all Contractor fees above the approved SEP fund amount will be at risk.
Additional questions received and answered about the PACE RFP
Question 1:
Will the District disallow or look unfavorably on a response if one of the Contractor's team members, or a member of an Advisory Committee to the Contractor, is also on the service delivery side? In other words, is it an issue to be on both the planning and execution sides of a deal?
Response 1:
Having a service provider on the Administrative team potentially presents a conflict of interest in so far as the Administrator will be responsible for establishing the certifications and requirements for service providers and performing quality assurance and compliance of service providers against those standards. Should a member of the Bidder's team also be a potential service provider, you should clearly and completely delineate these relationships as well as articulate a plan to prevent any conflict of interest in the pre-qualification and oversight of that service provider throughout the PACE program. Please also state what percentage of the service delivery contracts you anticipate your firm to seek, provide your justification for such proposal, and describe how your company's goals for seeking service delivery contracts will be balanced with the city's goals for local business development.
Question 2:
If a real estate company was on the winning team to manage the program,
1. would that company's building owner and investor clients be conflicted from receiving proceeds under the PACE program in the following three alternative situations:
a. where the company advised those clients regarding the program, or
b. where the company only advised those clients regarding other matters for properties that would receive money under the program, or
c. where the company only advised those clients regarding other matters regarding properties not involved in the program?
2. would the company have a conflict of interest that was not curable with a firewall, such that it had to terminate its contracts with such building owner and investor clients in any of the three alternative situations described above, i.e.
a. where the company advised those clients regarding the program, or
b. where the company only advised those clients regarding other matters for properties that would receive money under the program, or
c. where the company only advised those clients regarding other matters regarding properties not involved in the program?
Response 2:
The District evaluates potential conflicts of interest on a case-by-case basis. A conflict of interest could arise if the real estate company is a member of the Administrator team and seeks PACE financing for its own assets or has existing third-party clients who are interested in applying for PACE financing. If a client of the real estate company independently applies for or uses another advisor to apply for PACE financing, a conflict of interest would not likely arise, as long as the real estate company is not unduly influencing or favoring their client's application.
In the case that a real estate company might have conflicts of interest as a member of the Bidder's team, you should:
1. Clearly describe the nature of the relationship (e.g. property and ownership structure or the relationship between the real estate company and its clients) to allow the review team to decisively conclude that there is a conflict of interest;
2. Estimate the percentage of the projected loan volume (in both number of loans and dollar amounts) might be conflicted by these relationships;
3. Explain what measures your team would take to prevent or mitigate conflicts of interest in the loan application and underwriting process (e.g. recuse themselves of advising their clients on the PACE application process and/or preparing application documents on their client's behalf, or limit their advice to that which the Administrator would provide to all applicants);
4. Identify any extenuating situations in which such conflict of interest would not be curable and what your firm's proposed remedy would be.
Termination provisions for failing to cure a conflict of interest shall be determined at the time that the District enters into a contract with the Administrator. Failing to cure a conflict of interest may require the Contractor to terminate their relationship with their client or permit the District to terminate the Contractor's contract with the District.
Question 3:
To the extent funding is available, either through the DOE or some other public source, will the District amend the RFP or otherwise commit to funding the start-up costs associated with setting up the PACE Administration program?
Response 3:
Yes. As soon as funds have been confirmed, the District will formally obligate these funds towards the Administration of the PACE Program. The appropriate process by which these funds are obligated depends on the timing of when the funds are confirmed. In addition, how the funds are spent/applied to offset costs will also be discussed and mutually agreed upon, taking into account that the funds must be spent in accordance with the terms of ARRA funding.