On November 7, Brian Jones attended a half-day C-PACE informational workshop in Salt Lake City. If you’re unfamiliar with the program, the Property Assessed Clean Energy (PACE) program is a national initiative that provides long-term financing vehicles for energy efficiency projects in both the commercial (C-PACE) and residential (R-PACE) building marketplaces; both new construction and retrofits of existing properties are covered by the program. PACE is designed to pay for new heating and cooling systems, lighting improvements, solar panels, water pumps, insulation, controls, and more for almost any property – homes, commercial, industrial, non-profit, and agricultural. While the program is national, individual states are required to pass their own enabling legislation and to set up districts to handle administrative functions. PACE-enabling legislation is currently active in 36 states plus D.C., and PACE programs are now active (launched and operating) in 20 states plus D.C.
C-PACE is a voluntary program that enables commercial building owners to finance up to 100 percent of eligible energy-efficiency, renewable-energy, and water-efficiency improvements. The program covers upgrades to improve energy efficiency in existing buildings as well as new construction that incorporates equipment that exceeds local building code efficiency requirements. The nonrecourse, fixed-rate financing is secured by an assessment, or lien, that is recorded on the property, similar to a sewer assessment, except that it’s a voluntary program. The loan is repaid through the local property-tax collection process. Finance terms are driven by the useful life of the equipment and extend up to 20 to 25 years. Most C-PACE projects are designed so the energy-cost savings that result from the building improvements exceed the C-PACE payments, enabling a cash flow-positive project.
With 100 percent financing, no upfront costs, and no personal guarantees, C-PACE is ideal for funding capital-intensive improvements. Once a C-PACE project is completed, the building owner has a lower utility bill and, assuming the project has been designed to be cash-flow positive, a healthier net operating income. The building, which serves as collateral, is also more efficient, more comfortable and more valuable than before the upgrades. If and when the building is sold, the buyer has the option of retaining the assessment-repayment obligation or negotiating with the seller for it to be paid off at closing.
For more information on any aspect of PACE, please visit the website for your state’s local PACE program.