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.”
Passage of C-PACE Legislation in Pennsylvania and Delaware
In the Mid-Atlantic
Pennsylvania and Delaware have both begun to build C-PACE programs in the past several months, with Pennsylvania’s governor signing C-PACE enabling legislation in June (Act No. 30) and Delaware’s governor following close behind in September (Senate Bill 113).
The Pennsylvania legislation was passed through the Commonwealth’s House and Senate with broad bipartisan support. Individual jurisdictions will still need to opt into the program at a county or other municipal level before the program can be considered live. The Sustainable Energy Fund, an existing agency that facilitates clean energy and energy efficiency grants and incentives, will sponsor and administer and statewide program. The City of Philadelphia is expected to administer an independent program.
The case of Delaware largely mirrors that of Pennsylvania. It, too, is now in a program design and county opt-in phase, led by the state administrator, Delaware’s Sustainable Energy Utility. The three counties in the state have already indicated their interest in participating in the program and therefore, we can expect to see C-PACE in action in Delaware within the next several months. As Delaware is Maryland’s immediate neighbor, the MD-PACE program expects that its registered contractors and capital providers will soon uncover an attractive commercial real estate market in Delaware.
The MD-PACE program commends the Commonwealth of Pennsylvania and the State of Delaware on taking the steps to implement a Commercial Property Assessed Clean Energy program in their respective jurisdictions. The passage of C-PACE legislation in Pennsylvania and Delaware lays the groundwork for the Mid-Atlantic to be a powerhouse of C-PACE transactions in the country. Alongside Pennsylvania and Delaware, New Jersey has a C-PACE program under development. Maryland and DC have fully fledged programs with multiple completed transactions and Virginia is in the implementation phase, with individual counties now opting into the program (Arlington County has opted in thus far). To the west, Kentucky and Ohio also have functioning C-PACE programs.