Manatt Partners with University of California on Forum to Explore Financing of Large-Scale Energy Efficiency Real Estate Improvements

Manatt Partners with University of California on Forum to Explore Financing of Large-Scale Energy Efficiency Real Estate Improvements.

The need to finance energy-efficiency improvements to existing commercial and multifamily buildings throughout California has become a priority for the state's public utilities commission. To meet that state priority, leaders in real estate, energy, finance, technology and government participated in a Manatt sponsored forum, "Where Is the Money? Unlocking Capital for Real Estate Energy Efficiency Improvements," on October 5, 2012, at The Ritz-Carlton in San Francisco.

Presented by Manatt, Phelps & Phillips, LLP; the University of California Berkeley's Fisher Center for Real Estate & Urban Economics of the Haas School of Business; University of California, Berkeley, School of Law's Center for Law, Business and the Economy; and the Philomathia Foundation, the invitation-only forum included a keynote address on federal policy from U.S. Senator Ron Wyden (D-Ore.), a member of the Senate Committee on Energy and Natural Resources.

"As the recovery slowly gains steam and businesses take on the challenges of the new economy, it has never been more important to minimizing energy consumption," said Clayton Gantz, a partner with Manatt and panel moderator. "Technology to accomplish more with less is critical, but equally important are viable financing options. This is an area where government, real estate and finance are coming together to craft creative solutions and mechanisms to bring about an energy efficiency market transformation. Manatt was a proud partner with the University of California and the Philomathia Foundation, bringing this impressive group together to discuss and debate how to move the process forward."

In addition to Gantz, Manatt partners Hale Boggs, Craig Moyer and Michael Polentz served as panel moderators.

The forum occurred during a unique period in which stakeholders have been invited to submit formal comments to California's investor-owned utilities and the California Public Utilities Commission (CPUC) about ways to finance energy improvements over the next two years. The final CPUC decision, due before the end of the year, is expected to allocate nearly $200 million of ratepayer funds to a set of financing strategies for energy improvements to existing buildings in California.

Currently, a number of impediments challenge the scaled deployment of capital to energy efficiency, including the need for data and underwriting techniques to include energy considerations in risk and asset management decisions, a liquid secondary market for existing and proposed energy efficiency financing products, and technology innovations to measure and benchmark energy efficiency risk.

"All real estate market constituents will benefit from improved energy efficiency," said Nancy Wallace, professor at the Haas School of Business and co-chair of the Fisher Center for Real Estate and Urban Economics at Haas. "Developing methods to assess and manage energy risk in commercial real estate remains critical to the development of needed capital markets to achieve energy efficiency benefits. California has long been on the leading edge of these issues. The ideas that came out of this event will help guide not just our state, but also the nation on issues concerning energy efficiency financing."

The full-day forum included panels on devising prudent and sustainable approaches to accessing capital, including ways to evaluate energy cost in asset management and portfolio risk decisions; comparing benefits of financing energy efficiency through the first-lien market with other financing innovations and methods for bringing capital to building owners; addressing the current and emerging technologies and methodologies to facilitate energy risk management and building energy assessment; and exploring developments in the nascent venture, secondary and bond markets in energy-efficient investing.

"California needs to find ways to achieve wide-scale improvement in the energy footprint of commercial and multifamily residential real estate," said Ken Taymor, the executive director of the Berkeley Center for Law, Business and the Economy at Berkeley Law. "Building connections between the government, real estate, technology and finance industries - and intertwining the expertise and unique perspectives of each - is the first step in eliminating costly waste and employing efficient, long-lasting energy solutions."

The forum attracted more than 100 participants. In addition to Wyden, the program featured John Chiang, California state controller; Caroline Blakely, vice president for multifamily risk at Fannie Mae; Richard Kauffman, senior advisor to U.S. Secretary of Energy Dr. Steven Chu; and Jeanne Clinton, special advisor to the governor for energy efficiency at the California Public Utilities Commission; as well as representatives of the largest real estate and financing interests in the state.

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