(Darien, CT) – Today, Greenworks Lending, the nation’s largest provider of Commercial Property Assessed Clean Energy (C-PACE) financing, lauded the work of the New York State Legislature in passing bill A.7805/S.6523, that allows C-PACE financing for clean energy measures on privately held new construction properties. This action will unlock an attractive source of financing for developers across the state to bring C-PACE financing into their capital stacks.
In partnership with the C-PACE Alliance, a network of industry stakeholders committed to advancing C-PACE, Greenworks convened a coalition of C-PACE capital providers that worked together to effectively educate legislators, engage stakeholder groups, and advance the bill through the Senate and Assembly.
C-PACE is a public-private partnership that makes it possible for commercial property owners to obtain low-cost, long-term financing for energy efficiency and renewable energy projects. The program, which is active in 23 states and the District of Columbia, starts with a state-level government policy that classifies clean energy upgrades as a public benefit – similar to how sidewalks, sewers, water systems, and other local public projects work. These upgrades can be financed with no money down and then repaid as a special benefit assessment charge over a term that matches the useful life of improvements and/or new construction infrastructure. The program reduces property owners’ annual costs while also facilitating sustainability efforts. These investments in turn improve the local community by revitalizing buildings and advancing a clean energy economy. In its previous form in New York, the municipal law denied these benefits to new construction. The latest and most efficient equipment is often value-engineered out to keep up-front costs of a new construction project low with the resulting effect of higher energy costs, emissions, and pollution being passed on to the community.
C-PACE has emerged as an attractive financing option for developers of new real estate across the country, providing an alternative solution to more expensive equity or mezzanine financing. The use of C-PACE in new construction can dramatically improve a sponsor’s return on equity.
C-PACE legislation was originally passed in 2009 in New York and allowed for C-PACE to solely finance projects on existing buildings. The amendment passed yesterday by the New York State Legislature opens the market for C-PACE on new construction in New York. The state’s C-PACE program is administered by Energy Improvement Corporation (EIC) and was launched in 2019.
“Greenworks Lending is actively supporting energy efficiency retrofits and solar installations in New York; we are thrilled to see the state legislature unlock C-PACE financing for new construction which will help our clients to fund high performance buildings throughout the state,” said Genevieve Sherman, Head of New Markets and Partnerships at Greenworks Lending.
In the wake of COVID-19’s impact on New York’s economy, the legislation is of particular importance as C-PACE financing for new construction offers a pathway for immediate private investment into building projects in communities without requiring public funding or tax payer dollars. It will also benefit construction workers, building professionals, and engineering firms, enabling them to get back to work.
Bill A.7805/S.6523 is expected to be enacted in the coming weeks after being signed by Governor Cuomo. Once enacted, New York’s C-PACE program will be on par with the majority of the country’s active C-PACE programs in extending the benefits of C-PACE to new construction.