Benefits of Using C-PACE for Property Owners
C-PACE, or Commercial Property Assessed Clean Energy, offers several benefits to property owners, making it an attractive financing option for energy efficiency and renewable energy projects. Here are some of the key advantages:
- No Down Payment Required
- C-PACE allows property owners to finance projects with no upfront costs. This means that owners can access necessary improvements without using their own capital, which can be better allocated to core business operations or other investments.
- Long-term Financing
- C-PACE financing can extend for 10 to 25 years, aligning with the useful life of the installed equipment. This long-term structure ensures manageable payments and maximizes savings generated by the project.
- Non-Recourse Financing
- Once the project is completed, the financing becomes non-recourse. This means that the property itself secures the loan, not the owner’s personal assets, reducing personal financial risk.
- Assessment on Property Tax Bill
- Repayment is made through a special assessment on the property tax bill. This allows owners to tie the cost of improvements to the property itself, rather than their personal credit.
- Transferable Assessments
- If the property is sold, the C-PACE assessment automatically transfers to the new owner, eliminating the need for prepayment. This can be a selling point for properties, as it passes on the financial benefits along with the property.
- Increased Property Value
- C-PACE financed improvements can increase property value by making buildings more energy-efficient and attractive to tenants. This enhanced appeal can lead to better rental rates and higher property valuations.
- Potential for Cash Flow Positivity
- Due to the long repayment term and the requirement that energy savings must exceed the assessment costs, C-PACE projects can be cash flow positive from day one. This means that savings from reduced energy bills often exceed the annual assessment amount, ensuring that owners benefit financially from these upgrades.
- Support for Sustainable Practices
- C-PACE supports the adoption of sustainable building practices by financing projects that reduce energy consumption and greenhouse gas emissions. This contributes to a greener image for the property, which can be a competitive advantage in the market.
- Win-Win for Tenants and Owners
- In triple net leases, tenants cover the C-PACE assessment as part of their property taxes, while also benefiting from improved facilities. This setup solves the “split incentive” problem where owners were hesitant to invest in energy-efficient upgrades because tenants enjoyed the benefits without sharing the costs.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-benefits-of-using-c-pace-for-property-owners/
