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What the Jumbo Fed Cut Means for Renewables
Reductions in cost of capital also make more renewables project viable to finance. According to a model developed by the Center for Public Enterprise, a typical renewable energy project with a weighted average cost of capital of 7.75% will have a debt service coverage ratio (a project’s cash flow compared to its loan payments) of 1.16. Investors consider projects to be roughly viable at 1.25.
So at the cost of capital assumed by Lazard, many projects will not get funded because investors don’t see them as viable. If the weighted average cost of capital were to fall one percentage point to 6.75%, a project’s debt service coverage ratio would rise to 1.28, just above the viability threshold. If it fell by another percentage point, the debt ratio would hit a likely compelling 1.43.
“As rates fall, projects become increasingly financially viable,” Advait Arun, senior associate of energy finance at the Center for Public Enterprise and Heatmap contributor, told me matter-of-factly.
Heatmap, September 19, 2024
How Local Governments Could Make Use of Kamala Harris’ Housing Plan
“There are a lot of jurisdictions that are eager to support innovative construction techniques and financing tools but feel they don’t have the resources to commit to it,” says Paul E. Williams, executive director of the Center for Public Enterprise. “If there were federal support for them doing so they would more quickly jump on board and get these sorts of programs up and running.”
One example is the mixed-income development program in Montgomery County, Md. For decades the Housing Opportunities Commission in Montgomery County has been building housing projects with both market-rate and reduced-rate units, aiming to house people with a range of incomes. Recently the group established a $100 million housing production fund that allows it to directly finance, and own, mixed-income apartment complexes…
The New Republic, September 4, 2024
A Sigh of Interest Rate Relief for Renewables
Developers take out construction loans to build their projects and then pay those back with a term loan that covers the life of the project, explained Advait Arun, senior associate of energy finance at the Center for Public Enterprise (and also a Heatmap contributor). “If you’re a developer who’s going through the construction process right now, your construction loan is probably floating-rate, so the amount of of interest you’re paying on your construction loan will fall,” Arun said. After you’re done building, you get another loan to pay off the construction loan, and that loan can be smaller if your construction loan gets cheaper thanks to lower rates.
These longer-term loans are paid back from the project’s revenues over the life span of the project, which means that the developer or investor will not have to earn as much from selling the electricity to cover the cost of their debt.
Heatmap, August 23, 2024
Don’t Believe Recent Headlines. The IRA Worked.
The Center for Public Enterprise, or CPE, is part of a small ecosystem of groups looking to provide technical assistance for state-level public entities to take advantage of IRA funds. “There’s all this money flowing into CDFIs, state green banks, and community developers. Now all of them who are interested in building renewable energy capacity outside the private sector are coming to the realization that they face the same barriers as the private sector,” says Advait Arun, CPE’s senior associate for energy finance. “A lot of local lenders have never really touched energy, which involves its own kinds of risks and financial modeling and technical issues. Procurement is another issue. Centralizing all that knowledge and capacity is going to be really necessary.”
The New Republic, August 16, 2024
Drive for Energy Permitting Reform Fuels Tensions between Climate, Environmental Justice Advocates.
Chirag Lala, director of energy at the nonprofit Center for Public Enterprise, said he views the permitting reform issue as one of efficiency — making sure that community-level input flows upward in a way that lends itself to the best decision-making possible.
“The problem isn’t stakeholder engagement,” Lala said. “And I do think there are some groups engaged in the permitting reform debate who either explicitly or border on suggesting that stakeholder engagement is the problem. It’s very much not.”
Utility Dive, June 6, 2024
White House Plan to Limit Rent Increases Nationwide Reignites Debate.
Many in housing development research hope that this latest debate will lead to bipartisan conversations in Congress next year about ways to encourage, subsidize or directly finance more housing. “The piece of the puzzle that has yet to be addressed is financing constraints,” Mr. Williams of the Center for Public Enterprise said. A report by the center detailed how “a national housing construction fund” could help solve the housing crisis for renters overall and for prospective first-time home buyers, who have been hurt by the scarce sales inventory.
New York Times, July 19, 2024
Public Power Push Spreads to the Hudson Valley.
The proposal would allow the HVPA to buy out Central Hudson, through eminent domain if necessary, if it can demonstrate that the takeover would save customers money on their monthly bills. (An initial estimate by the Center for Public Enterprise think tank put the cost of a buyout at anywhere from $560 million to $1.2 billion or more, to be financed through tax-exempt bonds.) The new authority would be charged with keeping bills at six percent or less of customers’ monthly incomes.
New York Focus, May 16, 2024
What if Public Housing Were for Everyone?
Paul Williams, who leads the Center for Public Enterprise, a think tank supportive of social housing, said growing interest in the public developer model has even led to new conversations with the Department of Housing and Urban Development. “Public agencies are clearly hungry for tools that allow them to produce a lot more housing, and in the past year and a half we’ve gone from working with Montgomery County and Rhode Island to establishing a working group with a few dozen state and municipal housing agencies who come to our regular meetings,” he told Vox. “That’s gotten HUD’s attention, and we’re now talking with them about ways the federal government can support this kind of innovation.”
A New Bill Could Bring ‘Social Housing’ to New York.
“The failures of the old programs left a bad taste in people’s mouth,” said Paul Williams, the executive director of the Center for Public Enterprise, a nonprofit that advises governments on creating housing programs. “As these agencies have come up with creative tools that don’t face those issues, they’ve created this opportunity to spread a new kind of program.”
New York Times, February 6, 2024
The IRA Is Still Being Formed
Through the IRA, Congress committed substantial money to fostering federal-local clean energy partnerships: The Center for Public Enterprise, in a recent report, found that direct pay (the provision in the IRA that allows nonprofit utilities to receive federal grants) could make otherwise unattractive or break-even projects very enticing.
Democracy Journal, September 28, 2023
This Is Public Housing. Just Don’t Call It That.
“There is this common conception that the public sector just regulates the market,” said Paul Williams, executive director of the Center for Public Enterprise, a nonprofit in New York that encourages greater public investment in the economy. “But in Montgomery County they’ve realized they can play in the market, too, and bring more public benefit than the private sector is structurally capable of.”
New York Times, August 25, 2023
Can Public Banks Play in Tax Equity Markets?
The Center for Public Enterprise, a group that advocates for the public sector, sees an opening in the new two-track system of direct pay and transferability. Executive Director Paul Williams argues that green banks, a growing form of public finance that received its own cash infusion in the IRA, should be able to buy private companies’ tax credits and claim direct-pay reimbursements.
American Prospect, June 16, 2023
The Revolutionary Potential of the Inflation Reduction Act
There’s also an opportunity to rebuild the public sector. As Paul E. Williams, the executive director of the Center for Public Enterprise, told me, “Decades ago, state and local public agencies built all kinds of things: housing, transit, energy, infrastructure, utilities, but a lot of that capacity has gone away. Direct pay can create an engine for building capacity within the public sector itself, especially as they get the funding and get in the business of making things again.”
The Nation, April 28, 2023
A County in Maryland Came up With a New Way of Building Affordable Homes.
On this episode of the podcast, we speak with Zachary Marks, Senior Vice President of Real Estate at the Housing Opportunities of Commission of Montgomery County along with Paul Williams, the founder and executive director of the Center for Public Enterprise, about what the county is doing, and how the model can be applied elsewhere to create more affordable, abundant housing.
Bloomberg Odd Lots, December 15, 2023
Rhode Island Could be the First State to Tackle the Housing Crisis by Acting as a Developer.
It would also allow the state to take matters into its own hands by buying land and building housing — in other words, by acting as a developer.
“No state anywhere is doing that,” said Paul Williams, the founder and director of the Center for Public Enterprise, who praised the “unique and bold” approach to addressing the housing crisis.
Providence Journal, May 16, 2022