The Commercial Property Assessed Clean Energy (C-PACE) Program is new to Buffalo, created to address long standing problems: high redevelopment and energy efficiency costs.
The City of Buffalo passed a local law to establish the Open C-PACE Program on December 19, 2019, joining a group of government entities in 35 states to execute enabling legislation. According to the United States Department of Energy Efficiency and Renewable Energy, state and local C-PACE laws have helped finance $800 million in projects, with that amount expected to rise quickly.
How Does PACE Financing Work?
C-PACE Programs allow developers to finance upfront energy costs and improvements, paying them back over time via voluntary assessments on the property, rather than specifically on the owner. As the PACE assessment is explicitly a property debt, the repayment obligation can transfer with property sale. The incentive structure is designed to appeal to developers who are cautious to invest in energy improvements because they may not own the property long enough to achieve efficiency savings, which typically take years to be realized.
Buffalo’s C-PACE Program offers capital funding for clean energy projects through New York State’s Energy Improvement Corporation, a New York State non-profit, local development corporation that operates throughout the state, providing similar financial services.
Potential PACE Advantages to Developers
- Secures long-term financing to make more projects cash flow positive.
- Creates multi-year repayment plan, reducing upfront costs.
- Allows repayment obligation to transfer with property sale.
- Helps some property owners deduct payments from their income tax liability.
- Leads to energy efficiency savings over time.
C-PACE could potentially encourage more zero-energy building design, incorporate more clean energy industrial development and reduce carbon footprint emission in Buffalo and the rest of the nation. The program also provides a needed financial incentive to renovate and upgrade buildings in a still challenging development market. Buffalo-Niagara’s construction costs far exceeds the national average while rental rates trail other comparable regions. State regulatory burdens, high taxes and escalating labor costs continue to challenge Western New York’s competitiveness. The need for this type of financing highlights the barriers to sustained development in today’s economic climate. For Buffalo, C-PACE is as functional as it is aspirational.
Energy efficiency is becoming the expectation, rather than a novelty, in the national development community. PACE financing could assist local developers overcome existing financial challenges and continue upgrading Buffalo Niagara’s building-stock in the process.
Click here to learn more about C-PACE eligibility and guidelines.