A program providing unique financing opportunities for commercial property owners wanting to make energy efficiency upgrades to their buildings may soon be available in Delta County.
Called Colorado Commercial Property Assessed Clean Energy, or C-PACE, the program provides "a financing tool that allows commercial and multifamily property owners to finance qualifying energy efficiency, water conservation, and other clean energy improvements on existing and newly constructed properties," according to the C-PACE website. Financing can cover up to 100 percent of the cost of approved projects, with repayment made to financers and investors through a special property tax assessment on the owner's property tax bill.
"Colorado is really starting to be aware that the program exists, and more people are taking advantage of it," said Marla Korpar with Paonia-based Solar Energy International. The program essentially creates a financing model that makes renewable energy projects and energy efficiency upgrades financially viable and attractive to owners.
PACE was created through federal legislation in 2008 and has now been adopted in 30 states. Since Colorado launched the program in December, 2015, eleven counties, including Pitkin, Eagle and Garfield, have opted into the program, with another 11, including Delta, Mesa and Ouray counties currently in discussion. The Delta County Board of County Commissioners will consider passage of a resolution to opt into the program at its Dec. 19 meeting.
Korpar is working to educate the BoCC on the program and has facilitated the conversation between the BoCC and C-PACE representatives. The program can be difficult to understand at first, but the BoCC is asking a lot of really good questions, said Korpar. They want to know how C-PACE will benefit Delta County communities and businesses. If approved, they will be watching closely to see that it's providing all the benefits it promises, she said. If it isn't working, an opt out mechanism is available.
C-PACE is an initiative of the state's New Energy Improvement District (NEID), statutorily created through passage of the New Energy Jobs Creation Act. It's essentially a private-public partnership in which the state is the governing authority. NEID allows property owners to place a voluntary assessment on their property taxes in a manner similar to the creation of a special taxing district, but specific to the property. To participate in the program, capital providers and building and installation contractors must be pre-approved through the state.
"Think of each project as a sewer district upgrade," said Paul Scharfenberger, director of finance and operations for the Colorado Energy Office and NEID board chair. Rather than creating a special taxing district, individual property owners tailor projects to fit their needs and pay lenders through a special assessment on their property taxes.
"It's a well-adopted type of financing," said Scharfenberger. Lenders can amortize funding up to 20 years. If the property sells, the assessment remains with the property and is disclosed to the buyer.
C-PACE financing is available only to property owners in participating counties. By opting in, the county agrees to collect payments through annual tax bills. Each year they will receive a list of participants and amounts due and remit a payment to NEID, which then pays the lenders/investors. Paying through a property tax assessment puts payments against the health and value of the building, rather than the financial background or credit rating of the individual, said Korpar.
Agricultural, industrial, businesses, nonprofits and government buildings can qualify for the program. Because funding is tied to the health and value of the building, rather than the financial background or credit rating of the individual, barriers that come with traditional lending are removed, said Korpar. With energy efficiency projects including adding insulation, new roofing and switching to LED lighting all within the scope of C-PACE, older buildings can benefit from retrofits and upgrade, and owner can begin to see the financial benefits, including an increase in the building's asset value, immediately.
If a conventional loan is made on the property, that lender must consent to being subordinate to the assessment. While that sounds contrary to lending practices, the majority of lenders grant the request, said Scharfenberger. It's attractive to them since the improvements put the property owner in a better financial position by saving them money and increasing the value of the property. The lender also wants a good relationship with its customer, and can finance the project if it is an approved lender.
Funding can cover up to 100 percent of projects, requires no out-of-pocket expenses, and can lead to lower energy costs, reduce demands on power systems, and generation of new clean energy. Connecticut's program, called "Energize Connecticut," has had $76 million in investments through its PACE program, said Korpar.
Delta County Economic Development, a nonprofit working to strengthen and diversify the county's economy, is supporting SEI's efforts to bring CPACE to Delta County and has researched the program, said Korpar. They also sought letters of support for a recent presentation to the BoCC, which was also attended by Scharfenberger.
SEI is excited that the county is considering adoption of the program, said Korpar, whose background is in environmental engineering. SEI's mission is to make renewable energy accessible and affordable. Since 1991 the nonprofit has provided renewable energy education and training to more than 45,000 students. If adopted by the county, SEI would offer contractor training to help businesses qualify for the program. Using local companies could lead to more jobs and allow companies to be more cost-competitive by eliminating the expense of long-distance travel.
"We're here as a resource," said Korpar. "We want to help Delta County businesses participate in this so that everyone is seeing the benefit locally."
With opportunities for micro-hydro, solar, wind, methane capture and geothermal power, Delta County is a resource-rich area for renewable energy. Because C-PACE is open to a wide range of projects, HVAC and plumbing companies could also participate. "I think there's a lot of potential for our community to get involved, especially if they realize the opportunity exists," said Korpar.
Based on letters of support there are several potential projects already being eyed for CPACE, said Korpar. If adopted by the county, she hopes property owners will look into the program. "It might be just a portion of a project, but it might end up having great savings to your energy bill."