Commercial property owners and developers can take advantage of an expanding statewide loan program to help finance green upgrades for their projects.
The Commercial Property Assessment Clean Energy Financing Program, known as C-PACE, aims to promote economic development and business profitability while encouraging sustainability and clean energy in Virginia.
The nonprofit Virginia PACE Authority guides cities and counties in administering local programs to provide low-cost financing tools that provide up-front capital for energy efficiency, renewable energy and water management upgrades.
In the open market model, private lenders and capital providers backed by property appraisal liens offer 25- to 30-year loans to fill financing gaps, said Ellen Dixon, outreach and business development manager for PACE Virginia. When the property is sold, the buyer can assume the payments as long as the seller doesn't pay the remaining balance.
“The interest rate is decided between the private lender and the property owner, but we need to make sure all the paperwork is in order and approve the project,” Dixon said.
Abby Johnson, president and executive director of the Virginia PACE Authority, said the program results in improvements that provide environmental and economic benefits to projects and communities. Benefits include reduced energy costs and consumption, increased property values, increased local tax revenues and the creation of new jobs.
“Given the significant issues surrounding storm flooding and wind impacts in Hampton Roads, C-PACE will further benefit our region through resiliency funding,” Johnson said.
The list of eligible resilience-related improvements includes flood mitigation, inundation adaptation, natural or nature-based features and living shorelines, enhanced fire and wind resilience, microgrids, and energy storage.
Johnson emphasized that the program is low risk and low cost, and said it has great economic development potential for participating cities.
“In our state's model, the VPA handles all of the due diligence and processing of the C-PACE loan, so there's very little work required from the city,” she said. “It's another economic development tool in the toolbox that's been utilized very effectively across the country and in our state.”
Virginia Department of PACE
Abby Johnson, president and executive director of the Virginia PACE Authority (Courtesy of Virginia PACE Authority)
Johnson said several projects are in the early stages in Norfolk, Suffolk and Newport News, including mixed-use renovations and new hotel and apartment construction.
Johnson said this is a great tool for project sponsors, and that developers can use the program to replace expensive mezzanine debt or equity in their capital structures.
“And existing property owners can pay for improvements to their buildings without dipping into cash reserves or expensive lines of credit,” she said.
The program also allows retroactive funding for measures previously implemented, so long as it is within two years of application.
“For example, property owners can extract cash from air conditioning, solar power and lighting they installed last year, if those equipment were eligible at the time of applying for the program,” she said.
For more information about C-PACE and the application process, visit virginiapace.com
Sandra J. Pennecke, 757-652-5836, sandra.pennecke@pilotonline.com