Philadelphia C-PACE completed its second year of operation with five projects receiving C-PACE financing. Details on the projects, outlook for C-PACE in Pennsylvania and more can be viewed here.
Thanks to those of you who shared comments on the proposed Philadelphia C-PACE Program Guidelines. They will be updated shortly and posted in the Program Resources page.
As Philadelphia’s C-PACE Program Administrator, the Philadelphia Energy Authority regularly updates our C-PACE Program Guidelines. PEA is offering C-PACE stakeholders an opportunity to provide comments on the changes before they are finalized.
Three documents are available for review:
- Redlined version of the Program Guidelines against the version which is currently in effect.
- Clean version of the proposed Program Guidelines
- Slide deck of major changes made to Philadelphia’s Program Guidelines since the original version published in October 2019.
The deadline for submission is January 18, 2022.
A Google Form has been created to submit comments.
Please submit only one response per organization.
Philadelphia C-PACE Program
December 9, 2021
In response to the COVID-19 pandemic and the resulting protracted impact on the capital markets for commercial real estate, the Philadelphia Energy Authority, the Philadelphia C-PACE Program Administrator, will allow up to a 6-month extension of the deadline for Retroactive C-PACE Financings for projects completed on or before December 1, 2020.
Per Section 11 of the Philadelphia C-PACE Program Guidelines, retroactive financings must close within 730 days of the project’s construction completion date or when the project received its certificate of occupancy.
With this extension, projects that received their Certificate of Occupancy or equivalent on or before December 1, 2020 have been granted an extension of up to an additional six months (183 days) of retroactive eligibility or until December 1, 2022, to complete C-PACE Financing, whichever date is sooner. Several examples follow:
Certificate of Occupancy or Equivalent
|Final Date for C-PACE Financing Closing|
|August 1, 2019||+913 days = January 30, 2022|
|December 31, 2019||+913 days = July 1, 2022|
|June 30, 2020||+884 days = December 1, 2022|
|August 15, 2020||+838 days = December 1, 2022|
|December 1, 2020||+730 days = December 1, 2022|
All retroactive project applications must continue to adhere to the requirements in the Philadelphia C-PACE Program Guidelines.
UPDATE January 12, 2022: HB 1760 was referred to House Appropriations on January 12. Before being referred, the bill was amended to ensure that the language of the bill was identical to its Senate counterpart SB 635, a procedural step that helps prime the bill for passage.
UPDATE December 15, 2021: On its last day in session in 2021, SB 635 was passed by the Senate by a vote of 42-8! The House and Senate are now adjourned until the new year. When they return in late January, HB 1760 will first need to be passed out of Appropriations before it’s ready for a full House vote.
UPDATE December 13, 2021: HB 1760 was voted unanimously out of the House Commerce Committee!
Adopted in 2018, Pennsylvania’s Commercial Property-Assessed Clean Energy (C-PACE) financing allows commercial property owners to borrow money for energy efficiency, renewable energy, and water conservation projects. Repayments are made via a special assessment similar to a property tax assessment.
In the program’s first two years, C-PACE brought $72 million of private capital to the Commonwealth to make its buildings more efficient, more comfortable, and less expensive to operate.
Given the success of the C-PACE program to date, Philadelphia Energy Authority (PEA) and many other organizations are supporting proposed legislation to expand C-PACE-eligible projects in Pennsylvania.
The legislation would expand eligibility for C-PACE funding to include:
- Multifamily commercial buildings of 5+ units
- Indoor air quality improvements (such as COVID-19 mitigation)
- Resiliency improvements
Legislation to expand the scope of C-PACE-eligible projects has been introduced in both the Pennsylvania House of Representatives and Senate. To expand the benefits of C-PACE financing to Pennsylvania’s businesses, clean energy workforce, and residents, we need your help.
For more background on the expansion legislation, please visit Keystone Energy Efficiency Alliance’s C-PACE website.
The Philadelphia Energy Authority and CounterpointeSRE (Counterpointe Sustainable Real Estate) announced the closing of $25.57 million in Commercial Property Assessed Clean Energy (C-PACE) financing for the Class A office building, 100 S. Independence Mall West. It is the largest C-PACE financing in Philadelphia and Pennsylvania.
Philadelphia City Councilmember Mark Squilla (District 1) is “thrilled to see C-PACE being used in Center City Philadelphia for energy efficiency improvements to this large commercial office building. $25.57 million invested in energy and water conservation for this iconic building is a big deal. This is by far the largest C-PACE financing in Philadelphia and Pennsylvania. This deal shows that C-PACE is a great solution for building owners to significantly reduce energy consumption thereby lowering operating costs, improving property value and combating climate change.”
Philadelphia City Council President Darrell Clarke noted that “using C-PACE to finance energy efficiency improvements for this iconic building, overlooking our historic Independence Mall, provides an excellent example of how commercial office building owners are using this important new financing tool to improve the value of their properties. It is also about job creation, fighting climate change, and improving the health of our residents. C-PACE is the mechanism that allowed Keystone Property Group to make this very significant investment in our city.”
Through C-PACE financing, occupants of 100 Independence Mall West’s 400,000+ square feet will benefit from improved energy infrastructure via upgrades to interior and exterior lighting, HVAC, building envelope and low flow water fixtures.
“This project is a great example of how clean energy financing enables important capital improvements and creates economic development. At the Philadelphia Energy Authority, we use energy as a tool for positive local impact, and this project exemplifies that. Congratulations to Keystone Property Group.” said Matt Stern, Senior Director of Commercial Programs at the Philadelphia Energy Authority, which administers the Philadelphia C-PACE program.
The Philadelphia C-PACE Program approved eligible improvements that will provide an estimated reduction of 852,000 pounds of CO2 equivalent per year and 10,000 fewer metric tons of CO2 equivalent over the next 26 years.
“We are pleased to complete a second transaction with the Philadelphia C-PACE team this year,” stated Michele Pitale, M.D., Managing Director at CounterpointeSRE. “100 Independence Mall West is important because it will serve as an example of how sophisticated commercial real estate investment firms can use PACE to improve a building’s performance and cash flows in large metropolitan areas where programs are also new such as New York, Chicago, Boston and Seattle,” Dr. Pitale continued.
100 Independence Mall West was originally designed by Pietro Belluschi and completed in 1965. The nine-story property was formerly known as the Rohm and Haas Building and is listed on the National Register of Historic Places and is itself located within walking distance to several Philadelphia landmarks including the Liberty Bell and Independence Hall.
About Philadelphia C-PACE
Commercial Property-Assessed Clean Energy (C-PACE) financing allows commercial property owners to borrow money for energy efficiency, renewable energy, and water conservation projects. Repayments are made via a special assessment similar to a property tax assessment. Key features include: 100% of project costs can be financed; repayment terms are up to 30 years; the special assessment stays with the property in the event of a sale. For more information, visit www.philadelphiacpace.org.
About Counterpointe Sustainable Real Estate
Counterpointe Sustainable Real Estate (CounterpointeSRE) is the leading commercial real estate finance provider specializing in sustainable infrastructure improvements through PACE financing. Since 2013, Counterpointe and its affiliates have financed commercial real estate construction and upgrades that have reduced annual electricity consumption by greater than 51,000 MWh per year and reduced water consumption by 23 million gallons per year.
About Philadelphia Energy Authority
The Philadelphia Energy Authority (PEA) is an independent municipal authority created in 2010 to advance energy affordability and sustainability. PEA has facilitated over $167 million in clean energy projects in Philadelphia since launching the Philadelphia Energy Campaign in 2016, creating more than 1,700 jobs. As Program Administrator, PEA reviews and approves applications, manages the billing and lien processes, engages in market education, and supports the growth of the Philadelphia C-PACE program. For details, visit www.PhiladelphiaCPACE.org.
View the 100 Independence Mall case study and disclosure here.
The largest C-PACE financing in Philadelphia and Pennsylvania
The Navy Yard Building 57 (“Building 57”), home to Rhoads Industries, located at 1900 Kitty Hawk Avenue, Philadelphia, PA 19112, utilized $15 Million of Commercial Property Assessed Clean Energy (C-PACE) capital to finance the high efficiency interior and exterior improvements incorporated into the renovation of approximately 270,000 square feet of the building.
Building 57 is a historic, heavy industrial manufacturing and testing facility located in the Philadelphia Navy Yard. Originally built in 1919 and listed on the National Register of Historic Places, Building 57 has been instrumental in the constructing, rehabilitating and modernizing of U.S. Navy Vessels. When Rhoads Industries Inc. (“Rhoads”) acquired Building 57 in 2014, it required substantial rehabilitation to become a state-of-the-art manufacturing and testing facility.
The energy efficiency renovations of A & B Bays of Building 57 is being financed with private capital from CCG PACE Funding, enabled by the City of Philadelphia’s C-PACE program. The program is part of the City’s plan to significantly reduce the energy usage of its buildings by making it easier for property owners to pay for energy efficiency, water conservation, and renewable energy projects.
Proceeds from the C-PACE loan funded the installation of energy efficiency measures, including high efficiency HVAC, interior LED lighting and controllers, building envelope (roof and wall) systems, and eligible design and soft costs. The energy efficiency and natural gas conservation improvements to Building 57 will help the property save approximately 19,870 metric tons of CO2-e emissions over the life of the project, a 36% reduction in emissions above Philadelphia’s energy code.
“Funding through the C-PACE program has given us the opportunity to outfit our facility in anticipation of our customers’ needs,” says Mike Rhoads, Vice President and fourth generation owner of Rhoads Industries. “This construction provides the capacity of an additional 140,000 square feet of heavy manufacturing space, while at the same time mitigating the drain on the City’s and Navy Yard’s energy infrastructure.”
Kenyatta Johnson, the Councilmember who represents the Navy Yard, is “excited about C-PACE as a tool for financing energy efficiency investments and supporting the general growth we are seeing in the Navy Yard. This development is creating family-sustaining jobs which are essential to a sustainable future.”
Philadelphia City Councilmember Derek S. Green (At Large) noted that “this project is a great example of the role we anticipated C-PACE would play in bringing private sector investment to our city to help businesses save money, fight climate change, improve public health and create additional jobs. Rhoads Industries has invested $15MM in energy efficiency and as a result will be using a third less energy than the City’s energy code requires, and the code is relatively rigorous.”
“As the largest project to date in Pennsylvania, the Rhoads project illustrates how C-PACE can attract private capital and drive economic development in Philadelphia,” said Matt Stern, Senior Director of Commercial Programs at the Philadelphia Energy Authority, which administers the Philadelphia C-PACE program. “This project creates jobs, cuts energy costs, and fights climate change. Rhoads Industries’ leadership on energy efficiency serves as an important model for other industrial facilities.”
“Rhoads Industries, the Philadelphia City Council, the Philadelphia Energy Authority, and the many stakeholders participating in the C-PACE financing of Building 57 should be recognized as being among the early innovators in Philadelphia and Pennsylvania to utilize the long-term, low-cost fixed rate financing that C-PACE provides. Following the Building 57 example, countless other commercial properties located throughout the region are eligible to utilize C-PACE to fund energy efficient improvements that would help to ensure their long-term financial viability while reducing their carbon footprint and creating new jobs. These win-win outcomes are exactly what the C-PACE Program was designed for” observed Paul Hoffman, Managing Director of CCG PACE Funding.
About CCG PACE Funding
CCG PACE Funding, LLC provides long-term, flexible financing to owners of large-scale commercial properties located throughout the United States that intend to utilize C-PACE financing for energy efficiency, water conservation, renewable energy, seismic and wind improvements as part of their capital stacks. The firm’s C-PACE financings are individually customized to meet the needs of each stakeholder. CCG PACE Funding is affiliated with CityScape Capital Group, LLC, an entity that has over 25 years of experience funding more than $1.6 Billion of debt and equity into highly structured transactions located throughout the country involving historic, new markets, energy and low-income housing tax credits. For additional information, please visit www.ccgpace.com.
About Philadelphia Energy Authority
The Philadelphia Energy Authority (PEA) is an independent municipal authority created in 2010 to advance energy affordability and sustainability for the City. PEA has facilitated over $167 million in clean energy projects in Philadelphia since launching the Philadelphia Energy Campaign in 2016, creating more than 1,300 jobs. As Program Administrator, PEA reviews and approves applications, manages the billing and lien processes, engages in market education and supports the growth of the Philadelphia C-PACE program. For details, visit www.PhiladelphiaCPACE.org.
About Rhoads Industries, Inc.
Rhoads Industries, Inc. is a 125-year-old, privately held, industrial fabrication shop founded in Philadelphia that offers a total solution for industrial services and support to commercial and government customers, including the Department of Defense. Rhoads offers a diverse range of technical certifications to provide industrial services for a broad variety of heavy steel and metal fabrication projects, as well as complex precision assemblies, equipment installations and a range of maritime related services. Rhoads has become the resource for industrial maintenance, custom fabrication, and industrial installation/piping for industry leaders based on a reputation for quick response, on time delivery, ingenuity, safety, reliable performance and quality workmanship.
Rhoads is implementing a business plan with the objective of building and equipping a state-of-the-art facility to serve as the preeminent industrial enterprise in the Philadelphia Navy Yard. With the acquisition and rehabilitation of Building 57, Rhoads has created a new East Coast Water Front operation. Rhoads has also secured a competitive position in its traditional metal fabrication and industrial services business, while expanding into the shipbuilding/ship repair and maritime services industry within the Delaware Valley and beyond. For more information, please refer to www.rhoadsinc.com.
The Philadelphia Energy Authority completed its 5th C-PACE financing in Philadelphia. The Kirkbride Center, a historic health services center in West Philadelphia, obtained $4.33MM in C-PACE financing for upgrades to its boiler and chiller plants.
Philadelphia Energy Authority, by Lennal Kalawa and Lisa Shulock
Commercial Property Assessed Clean Energy (C-PACE) is a financing tool that facilitates the placement of private capital – with favorable terms and conditions – in order to improve the energy and water performance of commercial buildings. Nationwide, this tool has primarily been used to fund building retrofits and new construction projects. In Pennsylvania, commercial property owners can also take advantage of C-PACE for retroactive financing for projects completed within the past 24 months.
Commercial properties that have recently had qualifying energy and water efficiency work done can use C-PACE to shore up a property’s reserves, improve cash flow, provide liquidity, and even potentially reduce other lenders’ exposure in the capital stack. For example, The Philadelphia Met recently used retroactive C-PACE financing to strengthen its financial position. The owner of The Met borrowed $6,000,000 in C-PACE financing from Enhanced Capital to finance energy efficiency upgrades in the recently renovated Philadelphia landmark.
While not strictly retroactive, for properties nearing completion, C-PACE can also offer funds for cost overruns or to replace lender pullback. The terms and conditions of C-PACE will likely out-perform other forms of financing available to building owners and developers in these scenarios. For example, Shift Capital, the developer of J-Centrel, added $1,500,000 in C-PACE financing to its capital stack while the project was in construction, leveraging its deep investments in energy and water efficiency.
To learn more about whether C-PACE financing – retroactive or otherwise – is right for your project, contact Philadelphia C-PACE at CPACE@philaenergy.org.
Philadelphia C-PACE’s 2020 first year of operation Year in Review can be found here.
Philadelphia Energy Authority – November 10, 2020
By Lennal Kalawa and Lisa Shulock
Philadelphia Energy Authority held a webinar about energy efficiency and COVID-19 mitigation in commercial buildings. The session covered operational adjustments and capital improvements to protect occupants’ health and manage energy use in commercial buildings.
Lisa Shulock from the Philadelphia Energy Authority moderated the panel and she was joined by Dan Kerr, President of Burns Mechanical, a high-performance building service company, Marcelo Rouco, Chairman, Founder and Chief Executive Officer of Ecosave, a supplier of energy efficiency services, and Sam Elbarouki, Senior Vice President, C-PACE Business Development, from Dividend Finance, a C-PACE capital provider.
Shulock kicked off the discussion and provided a high-level description of C-PACE, a financing tool that provides long-term funding for energy efficiency, renewable energy, and water conservation projects. C-PACE financing may be of interest to commercial building owners who want to upgrade their energy systems to achieve high energy performance while also making their buildings more “COVID-safe.”
Kerr shared some tips as to what he has learned as an engineer during the COVID pandemic. He stated that the most important health and safety precaution is for individuals to practice social distancing, wear masks, and practice other personal actions to protect themselves and others. Building operators can also help to keep their occupants safe, but there isn’t one technology or gadget that can be purchased or turned on. Building operators should first make sure their buildings are operating optimally. Kerr noted that approximately 80% of commercial buildings are not operating the way they should. The pandemic is showing that owners who have deferred maintenance have more work to do to get their buildings to safe operating levels. It is now generally accepted that both ventilation and filtration approaches on their own or in combination can reduce the risk of airborne transmission of the novel Corona virus. Achieving the ASHRAE ventilation standard (62.1-2019), maintaining relative humidity between 40-60% and upgrading when possible to MERV 13 rated filters or higher are probably the most important areas to focus on related to HVAC systems operation. Kerr said that Burns has also installed disinfecting UVGI spectrum lights for several of their clients in the HVAC equipment because cooling and heating coils and other equipment inside air handling equipment can become contaminated.
Marcelo Rouco from Ecosave spoke about the reasons you would want to consider implementing energy-saving measures at the same time you are addressing COVID mitigation. He stated that COVID mitigation often increases energy consumption, however, by looking at other energy reduction measures in the building, building owners can achieve the goal of saving energy as well as having COVID mitigation measures in place.
Some of the benefits of a combined approach include:
- Maintaining building health standard while reducing energy consumption
- There is a cost reduction when COVID mitigation and energy efficiency are combined
- COVID mitigation can be funded by C-PACE as long as it is combined with other energy-saving methods.
Sam Elbarouki from Dividend finance, a C-PACE capital provider explained how they help finance building upgrades and new construction. C-PACE can provide financing for up to 100% of the cost of energy efficiency upgrades and there is a lower cost of capital than many alternatives. C-PACE is able to integrate with other economic development initiatives such as Opportunity Zones, Tax Increment Financing (TIFs), Historic Tax Credits (HTCs), and utility incentives.
Capital providers can finance roof replacement, windows and doors, lighting upgrades, HVAC systems, energy storage, solar systems and more. The minimum project size is $100,000 in Philadelphia and $10,000 in other Pennsylvania counties with a repayment term of up to 30 years with a fixed interest rate, generally in the range of 5-7%. There is also the option of retroactively using C-PACE financing with a two-year look back.
Shulock wrapped up the webinar by discussing the first Pennsylvania C-PACE projects. Information on the projects can be found here.
Additional reading and resources: