PACE Program Benefits
100% funding for energy saving projects.
Finance energy efficiency, renewable energy, and related costs.
Long-terms, with fixed interest.
Projects are financed over the useful life of the improvements with fully amortizing terms generally between 25-32 years.
Owner keeps all tax credits & incentives.
All tax credits and utility incentives stay with owners for the term of the assessment.
Designed to assist with Local Law compliance.
PACE reduces the financial hurdles to compliance with LL97, LL11 and more.
No personal guarantee.
Financing is non-recourse with no technical default provisions and underwriting tied to property financials.
Who can use NYC's PACE program?
As the New York City PACE program develops new construction guidelines pending), one thing is certain:
PACE financing will facilitate timely investment in energy efficient capital improvements to commercial & multifamily buildings (3 or more units).
While co-op properties are eligible for C-PACE financing, only condo are not eligible except for multiple units held by the same commercial entity.
Property owners of buildings with greater than 25,000 square feet are subject to comply with Local Law 97, which limits carbon emissions. For most, this is an expensive proposition.
NYC’s PACE policy supports owners making sustainable energy efficiency and renewable investments with long-term low-cost financing.
That’s good news, but there is more:
- First, the PACE programs are not new. Commercial property owners across the nation have long-used PACE funding to drive down operating expenses with energy efficient and renewable energy investments.
- Second, smaller commercial buildings not subject to Local Law 97 can also use the PACE program to make improvements that save energy, reduce operating costs, and reduce emissions.
PACE financing is expected to play a significant role for new construction.
Once guideless are issued and new construction is eligible in NYC, PACE can be utilized by developers to increase returns, to reduce the weighted average cost of capital, and to reduce value engineering decisions to enable the inclusion of more sustainable elements in the development.
Contractors, energy services providers and manufacturers will play a key role in helping New York City deliver on its aggressive sustainability goals.
Projects will benefit from C-PACE financing as most projects are cash flow positive the first year with no capital expenditure by owners.
In short, knowing the details of the PACE program can help professionals close more business and deliver more renewable and energy-efficiency projects throughout the city.
A PACE Program for New York City
The New York City Energy Efficiency Corporation (NYCEEC) and the Mayor's Office of Climate and Environmental Justice have recently published program guidelines. Contact us for full details, but here are the highlights:
First, your property needs to be in the five boroughs, though the State has a program too. Then you have to be current on your property taxes and be making capital improvements that save energy.
NYC PACE is designed to help commercial properties of all types,from multifamily to mixed use and beyond, but there are some things we need to check. Pre-screen your property by using the "get started" button above to tell us about your property. Note that most condo units are not considered commercial properties are not eligible.
Generally, if the improvement made to a building saves energy, the answer is it's eligible. The list of eligible measures is long and there are technical requirements, so whether you have a fully scoped project or are just starting to explore, use the ask a question button above for assistance with what you can achieve through the program and what is required.
The Funding Mechanism
PACE financing is provided by private capital providers (no public funds are deployed) through voluntary special tax assessments. Repayment is made through the property tax bill over a long period of time, generally matching the estimated useful life of the energy-saving equipment involved in a project. To learn more about funding amounts and general underwriting standards, please "get started" above.
Local Law No 96 established PACE, the City's sustainable energy loan program. The law is considered companion legislation to Local Law No 97 and is part of the Climate Mobilization Act. LL97 requires large existing buildings (over 25,000 sq ft) in New York City to reduce their carbon emissions by 40% by 2030 and 80% by 2050. While new to New York City, PACE is not new. In fact, many states have had active programs for a decade.