C-PACE and Adaptive Reuse Go Hand-in-Hand in the City of Baltimore
The City of Baltimore is a growing market for C-PACE financing. In the past six months, interest in the program has accelerated and the known C-PACE pipeline in the city has more than tripled. This is an encouraging trend that is expected to carry into 2019 and beyond as property owners in the city increasingly realize that C-PACE is a good fit for their financing needs. This surge in interest is aided by the strong support for the C-PACE program by local city officials.
Baltimore is particularly well-suited to benefit from C-PACE financing for adaptive reuse. Using C-PACE for adaptive reuse not only improves the energy efficiency of the property but doubles its benefits by encouraging the adaptation of existing properties in lieu of new construction. The sustainability of this choice is well-aligned with the C-PACE mission to make buildings more sustainable in their energy consumption. Adaptive reuse in Baltimore saves iconic, historic buildings from decay and neglect.
One such example is the conversion of four run-down, abandoned properties in the city. The owner renovated these buildings in 2016 into mixed-use spaces for retail and multi-family residence. Thanks to the City of Baltimore’s amendment to C-PACE Council Bill 18-195 this year, the owner was able to apply for retroactive C-PACE financing to cover part of the cost of these projects. C-PACE was able to finance high efficiency windows, LED lighting, HVAC improvements, and more. This project was financed by Greenworks Lending, who also financed the first C-PACE deal in the City of Baltimore. Andrew Zech, Head of Business Development for Greenworks Lending, says, “With a physical presence in Maryland, Greenworks Lending is proud to support the redevelopment of the state’s largest city. Some of our most exciting projects are the adaptive reuse of historic buildings. The City of Baltimore has a trove of such projects and we look forward to continuing to advance economic development and energy efficiency in the region.”
Simon Property Group Implements Largest PACE Deal in MD-PACE
Hanover, MD (September 26, 2018) — Anne Arundel County may already claim the seat of the Maryland state government in Annapolis, but it can now lay claim to the site of the largest C-PACE deal in the state, as well. The well-known Arundel Mills Mall used C-PACE financing to implement comprehensive energy efficiency improvements throughout the building. With the closure of this deal, Maryland has surpassed $12 million in C-PACE financing.
The project was funded by Petros PACE Finance, LLC. Petros has been involved in the PACE market since 2010. Based in Texas, this is their first deal to close in Maryland. CEO of Petros PACE Mansoor Ghori says, “We are pleased to have closed our first transaction in Maryland, which was also the first PACE transaction to close in Anne Arundel County. We look forward to working with potential partners in the state.”
Maryland Commercial PACE Announces First C-PACE Project in Kent County
Green Energy Upgrades for ‘Main St.’ Business & Commercial Properties Can Drive Down Operating Expenses
Chestertown MD (October 18, 2017) — Maryland PACE, a statewide partnership anchored by The Maryland Clean Energy Center to promote the finance of energy saving projects for commercial properties, announced today that the first C-PACE (Commercial Property Assessed Clean Energy) financed project in Kent County has been approved. State-wide, the approval marks the third in the nascent program’s history and the first for a ‘main street’ retail business.
The Finishing Touch, a custom frame and print boutique in downtown Chestertown, owned by Robert Ramsey, will utilize the commercial PACE (C-PACE) program to finance $134,438 in energy savings improvements including new windows and a full HVAC system upgrade.
The program is not a grant as private capital is provided, in this instance by Greenworks Lending, a specialty C-PACE lender. Rather than a traditional working capital loan or cash-out from a commercial mortgage refinance, Ramsey will repay his investment in reduced operating expenses via a special tax assessment with a term of 20 years.
“One of the key advantages of the MD-PACE program is that it allows the commercial property owner to match the financing term to the useful life of the investment,” said Gerard Neely, MD-PACE program manager. “For The Finishing Touch and Robert Ramsey, this gives them the ability make a long-term investment in energy savings, comfort and efficiency while realizing positive cash flow from the onset.”
The project at 309 and 311 High St. in Chestertown will replace air conditioners and windows that date back to 1978. Pinder and Blue Heron Contracting, top providers of energy efficiency projects on the Eastern Shore, will develop and install the upgrades. The HVAC upgrades are projected to save $6,420/year in energy expenses while more than 1,000 sq.ft. of low R-value glass will be replaced, improving the building’s overall energy efficiency year-round.
“We are so pleased to see the MDPACE program at work, especially since with this project, it is being used to finance a project on the main street in a classic Maryland small town,” said Kathy Magruder, Executive Director of the Maryland Clean Energy Center. “This financing model makes it so much more workable for a variety of small and large-scale businesses to fund energy measures and free up their own operating capital in a very advantageous way.”
“This project is a perfect fit for the MD C-PACE program. The property is in a Maryland designated Arts & Entertainment District, a Historical District, and on a Maryland Main Street. Mr. Ramsey, a Downtown Chestertown business owner for almost 40 years, will be able to upgrade his commercial property and take immediate advantage of decreased operating costs, while increasing energy efficiency”, said Kent County Commissioner William Short. “The work is being done by local contractors and adds to the enthusiasm of the project. Kent County has been hard at work identifying, implementing, and promoting incentives for businesses to grow, locate, and prosper here. The expertise and professionalism provided by the Maryland Commercial PACE team have been a great asset to economic development in our community.”
MD C-PACE is an innovative and affordable way for commercial, industrial and nonprofit building owners to pay for green energy upgrades. The program provides 100% up front financing that is repaid over long terms (often 20+ years) via a property-tax surcharge. The structure allows owners to replace end-of-life equipment with no upfront capital outlay and to see immediate net operating income (NOI) improvement when upgrading a wide variety of equipment including HVAC, lighting, roof, envelope, solar, and cogeneration.
Maryland passed policy enabling C-PACE in May 2014 and Kent County passed an ordinance establishing its program in September 2016. Kent County became one of the first counties on the Eastern Shore to enable C-PACE financing for its business community. To see a list of current jurisdictions that have enabled PACE in Maryland, please click here.
About MD-PACE: MD-PACE is a statewide partnership between PACE Financial Servicing and the Maryland Clean Energy Center to build a statewide commercial Property Assessed Clean Energy (C-PACE) program.