DBRS, Inc. (DBRS Morningstar) finalized its provisional ratings on the following classes of notes issued by GoodGreen 2019-2 (the Issuer):
-- $271,600,000 Class A Notes at AAA (sf)
-- $8,400,000 Class B Notes at AA (sf)
The ratings are based on a review by DBRS Morningstar of the following analytical considerations:
-- Transaction capital structure, current ratings and form and sufficiency of available credit enhancement.
-- Credit enhancement in the form of a subordinated note, a liquidity reserve and excess spread.
-- Credit enhancement levels sufficient to support the DBRS Morningstar-expected delinquency and loss severity assumptions under various stress scenarios.
-- The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms under which they have invested. For this transaction, the ratings address the timely payment of interest on a semi-annual basis and the payment of principal by the Scheduled Maturity.
-- The capabilities of Ygrene Energy Fund Inc. (Ygrene or the Company) with regard to originations and underwriting.
-- DBRS Morningstar performed an operational review of Ygrene and considers the Company to be an acceptable originator of Property Assessed Clean Energy (PACE) Assessments.
-- The legal structure and presence of legal opinions that address the true sale of the assets to the Depositor (GoodGreen Funding 2019-2 LLC), the non-consolidation of the Depositor with Ygrene, that the Issuer has a valid first-priority security interest in the PACE Asset Portfolio and consistency with DBRS Morningstar’s “Legal Criteria for U.S. Structured Finance.”
-- Review of legal considerations specific to PACE.
-- Each of the Golden State Finance Authority and the County of Yolo, California, had validation judgments issued by the California Superior Court that confirm that the PACE special tax liens and PACE Special Taxes are valid and enforceable obligations that conform to all federal and state laws. In addition, the judgments ruled that the PACE Assessments do not constitute a taking of private property without due process of law in violation of the fifth and 14th Amendments to the U.S. Constitution or the California Constitution.
-- The Green Corridor Property Assessed Clean Energy District had a validation judgment issued by the Circuit Court of the Second Judicial Circuit in and for Leon County, Florida, confirming that the PACE Assessments are valid and enforceable obligations that conform to all federal and state laws. The judgment also ruled that the PACE Assessments do not constitute a taking of private property without due process of law in violation of the fifth and 14th Amendments to the U.S. Constitution or the Florida Constitution.
-- Missouri law does not require a judicial validation proceeding to be brought to validate PACE programs in the state. Missouri PACE legislation contains another provision, known as the statute of repose, which requires challenges to PACE programs to be brought within a limited period of time. Similar to a validation proceeding, the effect of the statute of repose is to bar challenges from any person after the specified time period has elapsed. DBRS Morningstar has been advised that the statute of repose has expired with respect to the Missouri Clean Energy District PACE program and no claims have been raised.
All figures are in U.S. dollars unless otherwise noted.
The principal methodologies are Rating U.S. Property Assessed Clean Energy (PACE) Securitizations and Rating U.S. Structured Finance Transactions, which can be found on dbrs.com under Methodologies & Criteria.
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.
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