New York Passes New Construction C-PACE Bill

On Wednesday September 23rd 2020, New York passed an important C-PACE (Commercial Property Assessed Clean Energy) bill that allows commercial property owners to access C-PACE financing for new construction projects. The bill is set to revolutionize New York as one of the key players in the C-PACE Industry.

Why Is The Bill Important?

As an industry leader in property and commercial development, it is groundbreaking that New York has passed a bill allowing commercial business owners to tap into financing that supports new construction projects designed to reduce CO2 emissions. Prior to the bill, investors were only able to access C-PACE funding for existing buildings. The future of all business models will in some way incorporate renewable energy, so this bill makes it easier for investors to drive their early development decisions using environment, social and governance factors (ESG). The passing of this bill will likely catapult New York into a front-runner position due to the density of the city.

What is C-PACE Financing?

It is a financing structure in which building owners borrow money to fully fund energy efficiency, renewable energy, or other related projects and make repayments via an assessment on their property tax bill; commonly, repayments are made through returning a portion of the energy savings realized from the project.

The financing arrangement remains with the property even if it is sold, which promotes long-term investments in building performance, according to the U.S. Department of Energy. Also; another huge benefit of using C-PACE financing is that it fully funds qualifying projects, which allows for positive cash flows from day one.

What Does It Mean For Origination Volumes?

Panelists are predicting that origination volumes will surge with the new bill due to incoming COVID regulations and the 2019 passing of Local Law 96 and 97. Origination volumes are starting to be driven by ESG factors, which go hand-in-hand with C-PACE funding.

COVID19

As COVID19 continues to affect day-to-day lives and force alternative working environments, the C-PACE bill is going to become very important moving forwards. With C-PACE financing, investors will be able to get ahead of the curve when it comes to addressing newly mandated COVID protocols. For example, efficient ventilation will be vital to creating comfortable work environments with reliable air flow. Another solution being widely discussed is technology that makes visiting a bathroom an entirely hands-free experience. Both of the above can be achieved using C-PACE funding.

Local Law 96 and 97

Local Law 96 is a piece of legislature passed in 2019 that established a PACE based funding program to help buildings comply with the Climate Mobilization Act. Similarly, Local Law 97 is also a driving force behind promoting the integration of renewable energy, as it aims to achieve a 40% reduction in buildings’ CO2 emissions by 2030 and comprises of two compliance periods. Both these laws will likely drive origination volumes up in New York as they incentivize green developments and unlock funding, which reduces strain on investors.

How Does The Bill Affect Residential Owners?

Residential owners will be able to take a step back from traditional credit based lending through residential PACE programs. The benefits of PACE programs are that they provide more reliable, easy funding, than unsecured consumer lending and solar loans. Residential owners can enter into PACE financing knowing exactly where they stand and benefit from cutting out the middle man.

EnergyLink and C-PACE Funding

EnergyLink has ample experience carrying out all aspects of C-PACE funding. Many C-PACE developers will only handle the agreement of financial terms with PACE and not the auditing of your facility, the engineering and design work, or the construction phase of the project. EnergyLink handles all of these processes, so you’re only having to talk with one company to get your energy project done. Dealing with less intermediaries saves your company time and money and creates a more streamline energy project.

Use PACE financing for your next energy project

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