GlobeSt.com | June 15, 2018
SAUSALITO, CA—Two financings have facilitated the use of Commercial Property Assessed Clean Energy/C-PACE financing to lower costs on office buildings’ operations while aligning the terms of the solar improvements to create long-term benefit and payback. Northern California owner-operator Seagate Properties used 30-year C-PACE financing by Cleanfund Commercial PACE Capital Inc. to install a 49.6 kW solar PV array on Seagate’s San Rafael headquarters, while also making related improvements to heating and cooling systems. Its other C-PACE implementation was for another office building in Sausalito using a 76 kW solar PV array.
“It’s a real plus to be able to amortize the financing (of building improvements) over 30 years, making it much easier to maximize the cash flow benefits,” according to Seagate’s Mark Polite. “And it’s cheaper than other forms of capital.”
Polite says property owners know the importance of up-to-date roofing, HVAC, lighting and any other systems related to energy efficiency for increasing NOI and asset value.
“But instead of having to source capital upfront, the main advantage of CleanFund’s C-PACE financing is having easy access to long-term financing that stays with the property,” said Polite.
The Seagate Properties deals are the latest use of this innovative financing tool, as it has gained momentum across the US in most everyone property type, and applies to rehab improvements as well as new construction, says Chris Robbins, managing director of CleanFund.
“Commercial PACE is becoming a more standard piece of the capital stack because it’s an easy and affordable platform for owners and developers to finance the upfront costs in energy, environmental and resiliency improvements at better rates and terms,” Robbins tells GlobeSt.com. “C-PACE financing is a powerful public-private tool for property owners and the communities in which they operate to create jobs, economic growth and lowered carbon emissions. In California, it’s also used for seismic improvements, providing a significantly better option for owners, including apartment investors still complying with soft-story retrofit requirements in San Francisco.”
With C-PACE transactions topping $640 million nationally according to PACENation data, the leadership role of Northern California is evident: The nation’s largest deal, a $40 million implementation by Seton Hospital in Daly City, an $8 million C-PACE package for R&D facilities in Silicon Valley for Verseon, a Sonoma County mixed-use project utilizing $1.6 million in C-PACE, a San Francisco Chinatown/North Beach office-retail property’s $1.8 million financing and the iconic Pier 1 office redevelopment on San Francisco’s waterfront that financed $1.4 million in improvements, GlobeSt.com learns.
PACE was introduced in California in 2008 as a form of voluntary parcel tax assessment financing to fund qualifying improvements that reduce energy and water usage, and provide seismic and other resiliency benefits to the built environment. C-PACE financing, which has been adopted in 33 states and the District of Columbia, allows property owners to repay qualified investments for building upgrades and new construction as a line item on ordinary property tax bills.
Robbins will join David Sudeck of JMBM and Samson Lov of Koss Resources in a live call-in webinar on the ins and outs of C-PACE on June 21 at 10:00 a.m. Pacific time.
Lisa Brown Editor, GlobeSt.com
Link to full article in at GlobeSt.com