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BLOG / 10.17.19 /

Are the commercial properties in your municipality keeping PACE with energy efficiency?

New York State General Municipal Law Article 5-L granted authority to municipalities to offer Property Assessed Clean Energy (PACE) financing for property owners to fund energy efficiency and renewable energy projects on existing residential and commercial structures through a property owner’s voluntary agreement to have a special assessment or special tax charge placed on their annual property tax bill.  PACE financing on these types of clean energy improvements are repaid over time without requiring the property owner to make a large, upfront investment.

Energize NY Open C-PACE is operated by the Energy Improvement Corporation (EIC) and provides a low cost, long-term alternative to traditional loans to fund clean energy projects in commercially owned buildings.  Open C-PACE is not a bank loan and differs from traditional financing; in some instances, financing is available for up to 100% of the project cost and unlike a traditional mortgage, automatically transfers to a new owner once the property is sold.

Okay, so how does it work?

Any New York State municipality with tax lien authority may join with the EIC and enable Energize NY Open C-PACE through two steps:

1. A municipality passes legislation enabling it to make funds available to finance clean energy projects and obtain repayment through a Benefit Assessment Lien. The Benefit Assessment Lien is the special assessment or special tax charge placed on the property owner’s annual property tax bill.
2. After the Open C-PACE legislation has been passed, the municipality enters into an EIC Municipal Agreement granting EIC, through Energize NY, the power to act on the municipality’s behalf to implement, administer and monitor the Open C-PACE program.

What happens next?  The onus is on the property owners within the municipality to reach out to capital providers participating in the Open C-PACE program to determine what financing programs are available to them.

Upon consent from the property owner’s existing mortgage holder, if any, Energize NY will qualify the project in accordance with the PACE Legislation and the New York State Energy Research and Development Authority (NYSERDA) C-Pace Guidelines.[1]  If the project qualifies, Energize NY enters into a finance agreement with the property owner and the capital provider.

Energize NY verifies the installation and performance of the project and records the Benefit Assessment Lien against the project property.  The Benefit Assessment Lien is subordinate to municipal taxes and senior to any other lien on the property.  All billing and collecting of the finance payments are handled by Energize NY directly with the owner of the benefited property. In the case of default, the municipality may foreclose on the property or the capital provider will have the right to foreclose.

With an eye toward vibrant “greener” communities, local municipalities, property owners and developers should consider low-cost tools under the Open C-PACE program to bolster their renewable energy projects.

[1] Municipal Sustainable Energy Loan Program – Commercial Property Assessed Clean Energy (PACE) Guidance Document Prepared by: New York State Energy Research and Development Authority (NYSERDA) Albany, NY, June 1, 2018