Augusta, Cumberland and Westbrook are now the first municipalities in Maine to authorize the use of a loan program that helps finance energy upgrades in commercial real estate.
The Efficiency Maine Green Bank, a quasi-state agency, signed up the municipalities for its new Commercial Property Assessed Clean Energy loan program, or C-PACE.
The bank also recently added the first registered capital providers to the new C-PACE program.
The program provides access to loans for commercial property owners interested in undertaking energy efficiency and clean energy improvements on their buildings. The investment is recovered through savings on the consumers’ energy bills.
“This provides a very attractive pathway for businesses to finance energy improvements, such as upgrading to heat pump systems for heating and cooling in their buildings,” said Michael Stoddard, executive director of Efficiency Maine. “We strongly encourage more of Maine’s municipalities to adopt this ordinance so their local businesses can also take advantage of this initiative.”
The program stems from 2021 state legislation that allowed the Efficiency Maine Trust to establish the C-PACE program. Ordinances authorizing the program’s use were passed in Cumberland on July 10, in Augusta on July 20, and in Westbrook on Aug. 21.
Keith Luke, economic development director for Augusta, noted that energy costs have been rising and energy efficiency investments can be prohibitively expensive for commercial property owners.
“By using the C-PACE program, commercial property owners can access financing at typically lower rates and over a longer term than with conventional business loans,” Luke said.
Capital idea
Three capital providers have registered for the program, including Nuveen Green Capital in Darien, Conn., and Counterpointe Sustainable Real Estate in Greenwich, Conn.
Mike Doty, Nuveen’s senior originations director, said he expects that expansion of the cost-efficient financing mechanism in Maine will lead to more sustainability measures in commercial real estate projects.
A C-PACE mechanism uses a loan from a capital provider to pay for the upfront costs associated with energy efficiency or renewable energy improvements. The loan is secured by a property tax assessment with an associated lien on the subject property, allowing financing for a longer term and the ability to transfer the repayment obligations to a subsequent owner of the property.
The consumer-friendly terms of C-PACE financing are intended to enable more extensive building retrofits beyond what may be possible with traditional financing.
Before the Efficiency Maine C-PACE program can accept loan applications, Maine law requires that interested municipalities and capital providers must opt in to participate in the program.
In the meantime, developers, contractors and commercial property owners interested in pursuing a C-PACE project can review the program documents and reach out to their municipalities to inquire about the status of a C-PACE ordinance in their towns.
According to the U.S. Department of Energy, the Commercial Property Assessed Clean Energy loan program is a fast-growing financing structure that has attracted much industry and legislative attention due to its potential to overcome common financing barriers.
A Property Assessed Clean Energy loan program was introduced for the residential sector in 2007. Commercial PACE programs began to appear in 2009.
Efficiency Maine’s C-PACE Program is part of the Efficiency Maine Green Bank, which offers a suite of financing initiatives to support energy projects to help Maine’s homes and businesses lower their energy bills and reduce their carbon emissions. These financing initiatives are designed to drive private capital into market gaps for energy efficiency and clean energy equipment and services.
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