By Rob Holdsworth
The Commercial Property Assessed Clean Energy, or C-PACE, program is a unique public-private financing program designed to help commercial, industrial, nonprofit, multifamily and agricultural property owners, and real estate developers, fund large-scale energy-efficiency and renewable energy projects.
How Does C-PACE Work?
A property owner borrows money from a private lender to pay for a large-scale energy-efficiency project and makes the loan repayments using a portion of the project savings. The repayment is made in the form of a temporary assessment charge added to their property tax bill. Several types of energy conservation measures can be included in a C-PACE project, such as LED lighting, solar arrays, HVAC equipment, intelligent thermostats, building envelope solutions and more.
How Is C-PACE Different From Other Financing Options?
- 100% of the hard and soft costs of the project are funded upfront by the loan, meaning building owners will enjoy day-one savings on all C-PACE projects with no outlay of capital.
- C-PACE loans last for the rated useful life of the installed equipment (often more than 20 years) allowing the cost of the project to be spread out over a longer period vs. a traditional loan.
- In the event of a property sale, the tax assessment is automatically passed to the new owner, meaning the original borrower is not required to pay off the loan in advance of the sale.
Does Your Hotel Qualify for C-PACE?
C-PACE is open to owners of new/existing commercial, industrial, nonprofit, multifamily and agricultural properties in states that have an active program (Pennsylvania, Delaware, New York, Rhode Island, Connecticut, Maryland, Ohio, Virgina, Massachusetts and others).
C-PACE is designed for larger projects starting at $1 million. It incentivizes hotel owners to engage in large-scale green investments with longer-term paybacks because the longer financing term of a C-PACE loan, often 20 years or more, generates ongoing positive cash flow for the owner.
C-PACE is a valuable tool for hotels looking to adopt or improve the health of their buildings. The program mitigates risk for business owners while providing capital needed to make significant Mother Nature and guest-approved upgrades.
C-PACE has grown in popularity over the past few years, reaching a $670-million annual investment, equal to 150% growth over 2018. According to PACENation market data, 37 states and the District of Columbia have passed laws enabling C-PACE programs as of 2019. However, only 22 states plus DC have active C-PACE programs in operation. Approximately $1.5 billion in financing has been provided to more than 2,000-plus commercial buildings.
To get started on your next C-PACE funded project, reach out to a local approved contractor that will provide detailed engineering and project economics for a C-PACE-funded project.
Rob Holdsworth is the VP of Evolution Energy Partners. His experience covers a depth of executive leadership, energy engineering, senior level operations management, large-scale project management and Six Sigma deployment.
This is a contributed piece to Hotel Business, authored by an industry professional. The thoughts expressed are the perspective of the bylined individual.