New CPACE Toolkit for New Construction to Help Finance Energy and Water Efficiency

Upfront costs can be a hurdle for owners and developers looking to implement energy, water, or resilience improvements in new building construction, adaptive reuse, or major renovation. Working with partners and allies in the Better Buildings Challenge, DOE has developed the Commercial PACE for New Construction Toolkit to help building owners and developers better understand how property assessed clean energy (PACE) can enable these measures in new construction projects.

Building performance improvements are often eliminated during design and construction due to the additional cost. Commercial PACE, or CPACE, can help overcome this challenge by providing long-term financing that slots into a project’s capital stack to replace or minimize more expensive forms of gap financing such as mezzanine debt. (See figure below)

Capital Stack Graphic

Commercial PACE is a financing structure in which building owners borrow money for energy, water, or resilience projects and make repayments via an assessment on their property tax bill.

The toolkit features:

  • Case studies from Better Buildings Financial Allies Greenworks Lending and Lever Energy Real Estate that highlight major renovation projects in the commercial real estate and hospitality sectors.
  • An overview fact sheet explaining the advantages and limitations of PACE for new construction, a breakdown of how PACE slots into the capital stack, and available market data.

 

The use of commercial PACE continues to grow across the country, with approximately $1.1 billion in funds deployed through 2019; 14% of that funding has supported new construction projects. Greenworks Lending and Lever Real Estate Capital are part of a growing number of Financial Allies that offer commercial PACE financing.

View the Toolkit on the Better Buildings Solution Center at https://betterbuildingssolutioncenter.energy.gov/toolkits/commercial-pace-new-construction.