San Diego opens property assessed clean energy financing
Commercial property owners in the City of San Diego can now take advantage of a new type financing for energy efficiency, renewable energy and water-saving improvements to their existing buildings. CCSE is assisting the city in community outreach for property assessed clean energy ( PACE) financing programs that provide funds for 100 percent of project costs, including up-front costs, for energy upgrades such as solar panels and improved heating and cooling systems.
PACE financing enables the property owner to repay the loan over time through a voluntary tax assessment included on their property tax bill. Most any commercial property is eligible, including retail, office buildings, industrial, agricultural and certain multifamily buildings.
PACE tax assessments attach to the property, not the owner, and could provide repayment terms up to 20 years, longer than typical commercial loans. If the property is sold, the financial obligation for the improvements remains with the property and transfers to the buyer because the new owner continues receiving the benefits of the energy-saving measures.
“ PACE financing allow property owners to undertake deeper investments that yield greater energy cost savings while making them cash-flow positive,” said Jeremy Hutman, a program manager for CCSE’s Building Performance team. “The business can enjoy the financial benefits of a reduced energy bill as soon as their project is completed.”
According to Hutman, San Diego has created an open market for PACE financing that allows multiple PACE providers, or programs, to operate with city approval. This gives property owners more options and creates competition between PACE providers. This flexible approach also gives property owners the ability to choose their own project financer and their own contractor to complete the project.
Currently, there is only one PACE program operating in San Diego, although several others could be approved by the city and become available in early 2013. The program currently in full operation is CaliforniaFIRST, currently a commercial-only PACE program. Other providers that may provide PACE early next year include Fig Tree, Ygrene and Renovate America.
CaliforniaFIRST gives commercial property owners the flexibility to custom-tailor clean energy projects, choose their own financer and negotiate their own terms and interest rates. CaliforniaFIRST is offered by the California Statewide Communities Development Authority (CSCDA), which is a statewide joint powers authority sponsored by the League of California Cities and the California State Association of Counties. Renewable Funding is the CaliforniaFIRST program administrator.
Investment in building performance upgrades is an intelligent business decision, Hutman said. He pointed out that building performance upgrades lower operating costs, improve occupant comfort, hedge against utility price increases, help the environment and could ultimately boost property values.
"We believe that providing the mechanism to allow for long-term repayment of financing through the property tax bill is an ideal example of a public-private partnership that benefits all parties,” said Hutman. “Property owners and tenants benefit from lower utility bills and increased comfort, while helping local contractors get back to work doing projects that improve our environment and our economy.”
For more information about PACE financing and available programs, contact CCSE at 858-244-1177.