Improvements to State’s Commercial Property Assessed Clean Energy (C-PACE) program provide developers, capital providers, and borrowers easier access to financing
Hartford, CT (April 12, 2022) – Changes to the guidelines for Connecticut’s Commercial Property Assessed Clean Energy (C-PACE) program will create enhanced opportunities for developers of new construction, repositioning, and gut rehabilitation projects to take advantage of this innovative financing tool. Developers and borrowers can access up to 35 percent of the total eligible construction costs (TECC) in C-PACE financing based on the building’s designed energy performance. Typically, C-PACE financing offers a lower cost capital than other types of debt and equity comprising the capital stack on these projects, generally allowing for an overall lower weighted cost of capital. The changes were approved on March 25 by the Board of Directors of the program administrator and lender Connecticut Green Bank.
Key enhancements to the technical standards and approval process for C-PACE financing for new construction, repositioning, and gut rehabilitation projects:
- The minimum energy performance threshold to access C-PACE financing has been lowered.
- Projects must be designed above code (5 percent above IECC 2021 or 10 percent above IECC 2018 and prior) to receive C-PACE financing up to 20 percent of TECC.
- An additional, more rigorous option has also been added to promote even higher energy performance above code and access to greater C-PACE financing. Construction either 10 percent above IECC 2021 or 20 percent above IECC 2018 & prior unlocks up to 25 percent of the TECC in C-PACE financing.
- Developers have the option of accessing an additional 5 percent in TECC financing by incorporating two bonus technologies into the project design or an additional 10 percent for adding four bonus technologies.
- Developers can also design projects to be all-electric and to achieve net zero to access 35 percent of TECC in financing.
- In order to demonstrate the level of energy performance above code, projects will use a whole building energy model approach. In addition, eligible Multifamily properties will also have the option to use the HERS Index as a pathway to demonstrate the project meets minimum energy performance levels. Since many new multifamily properties are using HERS Index to access incentives through the Residential New Construction Program run by the Connecticut utilities, this change should allow greater access to financing for these projects.
“We believe these revisions to our approval process for new construction projects will encourage developers to design projects to higher energy performance goals and provide greater access to C-PACE financing,” said Mackey Dykes, Vice President of Financing Programs of the Green Bank.
The bonus technologies were chosen to promote emerging clean energy technologies, resilience, state policy goals, and energy transition goals. These technologies include electric vehicle charging stations, battery storage systems, high-efficiency heat pumps and heat pump water heaters, fuel cells, and solar photovoltaic systems. Since originally launching as a pilot in 2018, six new construction projects have closed for a total of more than $27 million in C-PACE financing. These projects included three multifamily properties, two hotels and one office building, highlighting the fact that C-PACE can work for buildings of all types. The revisions to the program are expected to decrease barriers and enable more projects to use C-PACE financing.
The Green Bank will also continue to offer C-PACE financing for energy efficiency and solar projects on existing buildings based on its existing processes, a popular option for building energy retrofits that will help more than 350 Connecticut businesses and nonprofits save over $300 million in energy costs.
For more information about how C-PACE financing can support new construction, repositioning, and gut rehabilitation projects, please contact the Green Bank at www.cpace.com/contact.