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Learn About Clean Energy From the Connecticut Green Bank

Commercial and industrial property owners who invest in green energy improvements in their buildings have a distinct competitive advantage, according to the Connecticut Green Bank. The Connecticut Green Bank (formerly the Clean Energy Finance and Investment Authority, or CEFIA), administers the C-PACE program, which provides Connecticut’s commercial property owners the ability to finance energy-efficiency and clean-energy improvements that allow them to realize an increased asset value and immediate cash flow. Using money saved on energy bills, building owners repay C-PACE financing through a benefit property tax assessment typically spanning 20 years, making it easier to finance multiple improvements.

“When building owners leverage green improvements properly, their properties typically outperform other properties in terms of asset value, related to operating expenses, rent premiums and occupancy,” said Genevieve Sherman, Director, Commercial and Industrial Programs (C-PACE) for the Connecticut Green Bank.

“C-PACE customer case histories demonstrate that by significantly reducing utility costs, upgrades like high-efficiency lighting, heating, ventilation and air conditioning (HVAC) systems, and solar energy systems drive up net operating income (NOI) and create new cash flows that are capitalized into asset value.”

Sherman noted that it was critical, however, to capture this value in appraisals, which are an essential piece of information used by capital providers to underwrite clean energy investments. With C-PACE, for example, the underlying property is the security for the financing, so the cost of the energy improvements must be weighed against the property’s value. As energy upgrades become a
part of the property, it is important to evaluate what additional value they provide. To meet this need, the Connecticut Green Bank
-- the nation’s first full-scale green bank, providing attractive financing to businesses and homeowners for energy upgrades -- is educating businesses, lenders, and the appraisal industry about the importance of green building appraisals and how to conduct them.

The Connecticut Green Bank recently hosted an appraisal workshop titled, “Appraising Commercial Buildings for Renewable Energy
& Energy Efficiency.” The event provided commercial and industrial building owners, lenders, and appraisers with practical information on how buildings are valued once renewable energy and energy-efficient upgrades have been made. Building owners learned about tactics
that would enhance the value of their properties. The Connecticut Green Bank will be hosting additional workshops in 2015.

“Appraisers need to understand energy-efficient building features and appropriate methodologies to measure reduction in energy-related operating expenses,” said John Brenan, Director of Appraisal Issues for the Appraisal Foundation, workshop keynote speaker. “They should be familiar with the market dynamics shaping the economics of energy upgrades for commercial building owners, including financing tools like C-PACE. These are critical for appraisers to measure market reaction and, as a result, incremental value.”                                    

In Connecticut, the growing success of Connecticut Green Bank’s C-PACE program over the past two years, is encouraging smart building owners to invest in energy improvements that increase asset value. The key is for commercial and industrial real estate appraisers to optimally reflect the value owners are adding to Connecticut’s building inventory.

“Depending on the nature of the improvements and the depth of cost savings, energy upgrades can markedly raise value from the baseline ‘as is’ valuation, with some properties seeing increases as high as $2.5 million,” Sherman said.

Bridgeport, Connecticut-based MDL Realty recently used C-PACE financing to retrofit its new facility, including the installation of light-emitting diode (LED) lighting, solar panels, and a biodiesel generator. "The “as complete” appraisal that Connecticut Green Bank required demonstrated a 9 percent increase in appraised value from the “as is” appraisal, which brought the project within the Green Bank’s underwriting criteria for C-PACE and allowed Connecticut Green Bank to finance the transaction," said President of MDL Realty,
L.J. Blaiotta. 

Last summer, to meet its rapidly-increasing appraisal needs, the Connecticut Green Bank issued a request for qualifications (RFQ) aimed at creating a qualified group of professional commercial and industrial appraisers. Today, the Connecticut Green Bank has ready access to a small group qualified appraisers. However, it seeks to qualify additional appraisers as the number of projects requiring such expertise is increasing rapidly over time, with significant growth anticipated.

The Connecticut Green Bank, the nation’s leader in clean energy financing for commercial and industrial real estate, has approved more than $65 million in C-PACE financing for over 90 projects since the program began in January 2013. C-PACE enables commercial, industrial and multi-family property owners and nonprofits to access long-term, low-interest financing for energy upgrades to their buildings with no money down, allowing them to realize immediate cash flow from energy savings.

Using money saved on energy bills, building owners repay C-PACE financing through a benefit assessment charge on their tax bill. “Spanning up to 20 years, the assessment makes it easy to finance multiple improvements and realize deep savings.” Sherman said. Energy-efficiency upgrades through C-PACE regularly reduce property owners’ utility bills by 20 to 40 percent, with solar energy projects producing more than 50 percent energy cost savings on average, with many projects offering savings over 90 percent.

About C-PACE
Commercial Property Assessed Clean Energy (C-PACE) provides Connecticut’s commercial property owners the ability to finance energy-efficiency and clean-energy improvements with no money down, allowing them to realize immediate cash flow from energy savings and increased asset value. Using money saved on energy bills, building owners repay C-PACE financing through a benefit property tax assessment typically spanning 20 years, making it easier to finance multiple improvements. Estimated energy reductions for C-PACE projects are validated to ensure savings exceed assessment charges over the term of the benefit assessment. Administered by the Connecticut Green Bank (formerly CEFIA), C-PACE promotes economic development, energy cost savings and competitive advantages for Connecticut businesses, nonprofit organizations and municipalities. Please visit www.c-pace.com, connect at: https://www.linkedin.com/company/c-pace, or follow us at: https://twitter.com/ctcpace.

About the Connecticut Green Bank
The Connecticut Green Bank (formerly the Clean Energy Finance and Investment Authority) was established by the Connecticut General Assembly on July 1, 2011 as a part of Public Act 11-80.  As the nation’s first full-scale green bank, it is leading the clean energy finance movement by leveraging public and private funds to scale-up renewable energy deployment and energy efficiency projects across Connecticut. The Green Bank’s success in accelerating private investment in clean energy is helping Connecticut create jobs, increase economic prosperity, promote energy security and address climate change. For more information about the Connecticut Green Bank, please visit www.ctgreenbank.com.                                                          

 

 

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