The Value of C-PACE for Commercial Building Owners
Commercial property-assessed clean energy (CPACE) is a financing structure in which building owners borrow money for energy efficiency, renewable energy, or other projects and make repayments via an assessment on their property tax bill. The financing arrangement stays with the property even after it has been sold, allowing for longer term investment in its construction. CPACE may be funded by private investors or government programs, but it is only available in states with enabling legislation and active programs.
“On average, for every dollar you put into energy efficiency, you get two and a half dollars back in savings.” - Ed Gulick, HPA Vice President
As Chair of the Clean Energy Taskforce of the Northern Plains Resource Council (NPRC), High Plains Architects Vice President Ed Gulick has been involved with C-PACE since 2016. The Clean Energy Taskforce was looking for a mechanism for making energy efficiency, water efficiency, and renewable energy more accessible to Montana building owners. It took three separate legislative sessions before the NPRC coalition of small business owners, banks, developers, and contractors were successful in getting it passed.
Why HPA Supports C-PACE
High Plains Architects (HPA) recognizes the value and benefit of the C-PACE program. Via this unique finance structure, building owners will see substantial energy and water savings that will have a positive impact on energy and water costs. This is especially true when rehabilitating older buildings. We know that giving new life to old buildings creates stronger towns, preserves the sense of place, and is good for the environment.
The savings on energy costs from C-PACE means it’s more manageable for property owners to maintain these old buildings. In this way, C-PACE is a path to taking concrete action on global warming. Energy efficiency is one major piece of the puzzle on how we can realistically take effective action on this issue.
C-PACE helps address barriers to energy efficiency uptake
Image courtesy of https://betterbuildingssolutioncenter.energy.gov/
How does C-PACE help address barriers to energy efficiency uptake by building owners? This financing structure achieves this in several ways:
C-PACE allows property owners to avoid needing to have the upfront cash usually needed to invest,
In most cases, C-PACE is a better option than getting a commercial loan,
C-PACE is an assessment on your property taxes not a loan,
If your business relocates, the new building owner takes over the cost (via paying the property taxes) so you won’t lose your investment,
C-PACE adds flexibility to financing energy efficiency upgrades and these are building improvements that save on costs as well as energy use.
Criticisms to PACE/C-PACE
While we support C-PACE and are excited for the benefits of this program, there are some detractors. However, something that becomes apparent when listening to the critics is that PACE is being conflated with C-PACE; PACE is for residential properties while C-PACE is for commercial properties, and there are different financing mechanisms for the different programs. We want to make clear that this article is singularly about the value of C-PACE to commercial building owners.
The critics of PACE have some valid points about the ways the program can be misused by unscrupulous companies and confusing for homeowners. What the critics are pointing out as “bad” is really due to bad actors, not necessarily bad policy.
An article in SLATE magazine addresses this and comedian John Oliver’s commentary on PACE. However, the misgivings brought up in the SLATE article or on John Oliver’s show have nothing to do with C-PACE or with commercial property owners. Energy efficiency is important for all building types, but it’s often easier to see big energy savings in commercial buildings than residential simply due to scale.
Right now, PACE is only implemented in three states. As for C-PACE, it’s already in 37 other states, and Montana is rolling the program out in 2022. We have the benefit of learning from the other states’ mistakes in the roll out of C-PACE.
C-PACE and Montana
The Montana Facility Finance Authority will be administering the C-PACE program, and the program design has been completed. MFFA is starting the implementation process by working with the financial industry and county commissioners and treasurers to educate them. Each county in Montana will need to adopt the program. We are excited for the eventual implementation of C-PACE and it’s benefit to our clients and to the environment.
