Facility managers are increasingly seeking sustainability solutions for buildings, emphasizing energy efficiency to enhance value. Green financing programs, such as power purchasing agreements (PPA), efficiency service agreements (EaaS and ESA), and property assessed clean energy (PACE) financing, offer opportunities to integrate green technologies like efficient lighting retrofits, solar panels, co-generation, efficient HVAC systems, and building automation.
C-PACE (commercial property assessed clean energy) stands out as a voluntary tax assessment repaid through property taxes, providing fixed low-rate capital over 25-30 years for equipment, with 100% project financing covering all costs. The financing, often competitive with institutional capital, overcomes barriers by allowing deferred repayment, accounting for property financials, and being based on property tax rather than owner credit.
Key points about C-PACE include ownership of equipment by the facility, no credit impact, deferred repayment, OPEX rather than CAPEX classification, and potential tenant pass-through, resulting in zero-cost equity. Facility managers across sectors, including public corporations and smaller companies, have leveraged C-PACE for lighting and control retrofits, HVAC upgrades, roofing, generators, seismic retrofits, and renewable projects.
Recent trends indicate facilities utilizing C-PACE for Net-Zero energy, aligning with corporate sustainability goals. The success of C-PACE has led to widespread adoption, with some states expanding its use to cover resiliency projects like wind, fire, flood, and seismic upgrades. The financing tool is gaining prominence as a major source of liquidity, lowering capital costs and supporting commercial real estate (CRE) investors in a market focused on adding value. C-PACE, with 100% financing, enables facility managers to gain corporate approval for projects previously denied due to low payback and high CAPEX costs, contributing to the recent surge in corporate C-PACE financing for facilities.
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