Enhanced value of C-PACE for new construction in Connecticut
Last Friday, March 25th, the CT Green Bank Board of Directors adopted changes to technical guidelines that will further bolster the use case for C-PACE for the Connecticut Real Estate Development community. The changes make significant strides in aligning goals of rate payer funded programs and C-PACE. These changes recognize the significant progress the state has made in energy efficiency code adoption, and provide a meaningful and executable path for building owners to make better efficiency choices at every stage of development.
Key changes include:
- Reduction of minimum energy performance to qualify for a meaningful C-PACE proceeds.
- The addition of a measure-based approach to add an additional 50% to C-PACE proceeds.
- Buildings designed to net zero will be eligible for 75% more proceeds than they were previously.
The addition of pathways to achieve greater proceeds could not come at a better time for the development community. As interest rates rise, the value proposition for long-term, fixed-rate construction financing with a limited guarantee structure will become even more attractive, benefiting from both rate and structure. C-PACE serves as a cost-effective replacement for mezzanine debt and preferred equity, allowing owners the ability to finance developments up to 90% combined loan to cost.
While not all buildings will be able to design to net zero, all buildings should be able to achieve funding of up to 30% of development cost less the cost of land acquisition. For buildings designed to the new energy code that goes into effect this October, a building that exceeds code by 5% will qualify for funding of 20% of development cost.
To get to 25% a developer can design 10% better than code or be 5% better and implement 2 bonus technologies. To get to 30%, a developer can beat code by 5% and implement 4 bonus technologies.
These bonus technologies include:
- Electric vehicle charging stations (Level 2 or better)
- Battery storage systems sized appropriately for the project (behind the meter)
- High-efficiency heat pumps (air, ground, or water source, better than code & facility-wide)
- Networked lighting controls (facility-wide)
- Hard wired smart plug load controls (facility-wide)
- Heat pump water heaters (facility-wide)
- Passive window shading system, sized appropriately for the project
- Fuel cell, sized appropriately for the project, in combined heat and power mode
- Solar PV, sized appropriately for the project
Many buildings will be implementing some subset of these measures already, and given the strong incentive environment in Connecticut around solar and battery storage, implementing 4 bonus technologies will have a strong financial use case outside of C-PACE.
Nuveen Green Capital is the nation’s leader in C-PACE financing and is excited to help clients deploy technologies in their buildings that create greener, healthier, and more cost-effective buildings for our community. Visit our get started page to contact us and learn more.