New Bill Lets NYC Co-Ops Delay Payment For Energy Upgrades
The NYC local government is nudging co-ops and other commercial building owners to pick up the PACE in order to comply with Local Laws 92,94, and 97 and avoid fines (read more to see what we did there).
In the stagnant state of the present, it’s now more appropriate than ever to realize a clear vision of the future. In 2019, NYC made groundbreaking strides, passing a number of bills; collectively referred to as the Climate Mobilization Act (CMA).
In January 2019, Urbanstrong’s Alan Burchell provided extensive technical testimony to city council in support of several pieces of legislation that were ultimately passed as part of the Climate Mobilization Act, or ‘New York’s Green New Deal.’
The CMA’s goal? To dramatically reduce how much energy buildings waste and in turn completely clean up the city by 2050.
Ambitious pledge considering the responsibility will fall on co-ops and other building owners. But thankfully now absolutely reachable with the help from NYC’s new angel investor, C-PACE. C-PACE is the most affordable way for NYC co-ops to improve their buildings and comply with the new local laws.
Why so serious?
It was a truly great day. In contrast, most of the news coverage of the bill’s passing was focused on building owners’s concerns. They were worried about all the upgrades they would now be forced to make under Local Laws 92/94 and 97, whether they could afford to or not. In our opinion, one law didn’t get nearly enough coverage.
On the same day, City council also passed Local Law 96. It gives building owners the ability to afford all these upgrades and more. Local Law 96 finally allows C-PACE financing in NYC for co-ops and other commercial buildings. And Urbanstrong is now helping these owners make the most of this opportunity.
(Note: a version of PACE is available to single-family homes in some parts of the country. But this post will focus solely on “C”-PACE, which is effectively PACE financing for co-ops and other commercial buildings.)
What is C-PACE Financing?
C-PACE stands for Commercial Property Assessed Clean Energy. It is an innovative voluntary financing solution that finally makes energy and water conservation upgrades accessible and affordable for co-ops and other commercial building owners. The program has been in place for years across 20 states, including New York. But it’s only just now been voted in as an option for NYC. C-PACE is a public-private-partnership enabled by state law and county/municipal ordinance. By design it helps commercial building owners comply with Local Laws, including 92/94 and 97. Now co-ops can afford to make the required improvements to their buildings by not putting any money down. This way they can invest in their property to reduce operating costs for no money down so they immediately see day-one savings. C-PACE is the most affordable way to improve your building and comply with these local laws. Period.
Why is C-PACE so wonderful for Co-ops and other building owners?
Where to begin? Opposition to renewable energy and energy efficiency upgrades is usually focused on their expense. The up-front investment is too much and the payback period too long. C-PACE was created to squash these arguments. C-PACE is similar to many other loans in that it provides 100% up-front financing for projects. This way, the owners get the upgrades performed for no money down.
How do owners repay the C-PACE loan?
Approval of the loan is not based on the building owner’s credit rating. Instead, approval is based on how much the upgrade(s) will lower the building’s energy consumption. (And don’t worry, our engineers will do all these calculations for you.) In fact, the payments of the loan are structured to always be less than the dollar savings anticipated for that same period. For instance, let’s say a co-op will save an estimated $6,000 with a solar-green roof in the first year. Their loan payment might then be only $4,000 for that same year. This way, for that first year, they put no money down and saved $2,000. This happens every year until the loan is paid off so they’re never down any money. Their board will be cashflow positive every year from day one. No surprise balloon payments along the way. No catch.
What if I want to sell my building before the C-PACE loan is paid off?
Where things get interesting, and uniquely attractive, is that C-PACE loans are repaid through an assessment placed on the building property by the municipality. Payments are made as a line item on the property taxes, just like your sewer bill. Therefore, the loan stays with the building and is simply passed along during a change of ownership. This is an improvement over traditional solar loans where developers or property owners are reluctant to make upgrades with long payback periods. They’re usually concerned they won’t recoup their investment before the time comes to sell their property. With a C-PACE loan, this doesn’t matter. Developers and owners can now go for the top-of-the-line model and get all the bells and whistles for every piece of equipment…because the retrofits will pay for themselves every year.
With PACE financing, retrofits pay for themselves every year.
Can C-PACE loans be used to comply with NYC Local Laws 92/94 and 97?
Yes to all of the above! Essentially any upgrade that improves the energy efficiency of a building is eligible for financing with a C-PACE loan. For New Yorkers, this includes retrofits like the Sustainable Roofing Zone (Solar PV or Green roof) of Local Law 92/94. It also includes upgrades building owners will have to make to comply with Local Law 97. This law sets new energy efficiency performance standards. And there will be steep fines for building owners who fail to comply. Therefore, you’re going to have to make these upgrades eventually anyway. So why pay for them yourself if you don’t have to? Save your money for other things and let these retrofits pay for themselves. Set it and forget it. Spend no money, yet avoid the fines. In other words, comply AND enjoy reduced energy bills, all using somebody else’s money.
Save your money for other things … let your city-mandated retrofits pay for themselves.
The best approach for co-ops
The best approach for co-ops is to plan ahead and consolidate. Determine which upgrades your building will have to make anyway in the coming years because of Local Laws 92/94/97.
Then decide which upgrades to you prefer to make. (You may enjoy a rooftop garden amenity area over rooftop solar.) And then talk to us about getting them ALL paid for at once under one single C-PACE loan. The result will be less paperwork. Fewer headaches. A better deal. Cheaper monthly utility bills. And loads of extra cash to spend on other things more fun than a boiler upgrade. (Unless you’re the couple in this picture who look quite happy with their new boiler!)
Which improvements are eligible?
Finally, C-PACE makes it possible for co-ops and commercial properties to obtain low-cost, long-term financing for building upgrades. These upgrades include those related to energy efficiency, water conservation and renewable energy projects. The loan covers all the soft costs like design and surveys, materials and equipment, and installation. Eligible upgrades are effectively anything that improves the water or energy efficiency of a building. Consequently, this list includes, but is not limited to:
Solar Panels
Green Roofs
CHP Plants
LED/ Efficient Lighting
Solar Thermal
Energy Storage / Battery
HVAC Systems
Boilers, Chillers, Furnaces
Variable Speed Drives
Ductwork and Air Sealing
Automated Building Controls
Building Envelope
Resiliency
Micro-Wind
Fuel Cells
Geothermal
Building Envelope & Windows
Insulation
Resiliency
Associated Soft and Hard Costs
Can we use our own contractor?
Urbanstrong would be happy to provide financing for your energy upgrade projects, whether you use us or your own contractor. And still with the same transparent and rapid approval process. Just drop us a line to discuss how best we can help.
How do we get started? What’s the first step?
Let Urbanstrong and our lending partners (who have closed over $150 million in C-PACE deals) help you with financing for your energy retrofits. We do all the legwork for you including the engineering review, energy engineering, paperwork, and loan approvals. Boring and tedious to some but thrilling to us!
Get in touch here, drop us an email at info@urbanstrong.com, or call us at 914.893.2782 to start the discussion today. Above all, we’re happy to help and look forward to hearing from you.
