As most commercial real estate professionals know, occupancy is a major concern for office property managers and owners. After all, high vacancy rates drag down rents, along with the building’s net operating income.
A new state program can help. It’s called Commercial Property Assessed Clean Energy, and it can boost a property’s competitiveness by improving tenant comfort, lowering energy costs and advancing sustainability.
What is Colorado C-PACE?
A program of the New Energy Improvement District, Colorado C-PACE makes it possible for commercial building owners and real estate developers to obtain affordable, long-term financing for energy efficiency, renewable energy and water conservation improvements. Anything that saves energy, creates energy or saves water is eligible, as long as it will be permanently affixed to the property.
How does C-PACE benefit property owners?
C-PACE funds up to 100 percent of a project’s costs – both hard and soft costs may be included – so there are no upfront, out-of-pocket costs. The terms are commensurate with the weighted average estimated useful life of the improvements, which can span up to 25 years, making it highly affordable. The financing is secured with an assessment on the property – similar to a sewer assessment, except that it’s voluntary – so the owner is not required to sign a personal guarantee, and the assessment, which is billed and repaid along with the property taxes, may be transferred to a new owner in the event of a sale. This latter benefit is particularly attractive to investors, who often won’t hold on to the property long enough to realize a return on investment from the energy cost savings.
Read more about how C-PACE benefits property owners, who’s using C-PACE, and helpful tips when applying for this innovative financing in the Colorado Real Estate Journal.