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PACE Equity: Funding a New Low-Carbon Industrial Warehouse

F Street Group required additional funding for the distribution warehouse but did not want to relinquish equity in the project. The senior construction lender required additional equity to be added to the project, which led the team to evaluate other financing options. 

To maintain ownership and find the necessary capital at a lower cost than mezzanine or debt funds, F Street returned to PACE Equity for PACE funding. PACE Equity provided lower rate funding through its CIRRUS Low Carbon program which helped increase the building’s energy efficiency through recommended design plan changes. F Street Group benefitted from the financial wins associated with CIRRUS Low Carbon while maintaining full ownership in the project. PACE Equity made up 15% of the funding for this project, providing $4.5M in private capital. 

After reviewing the initial drawings for the project, PACE Equity identified the need for further efficiency upgrades to meet the specifications. Specifically, 25% of warehouse heaters needed to be upgraded to high-efficiency models, an air barrier continuity study was needed, and rooftop units with programmable thermostats were added to the design plan.

With this information, F Street Group elected to install high lumen per watt high bay fixtures (150 lumens per watt) and a minimum of 100 lumens per watt pole and wall pack area lighting. In anticipation of where tenant office spaces are predicted to be built, they installed fixed windows. The new construction industrial building also has a high-efficiency roof and walls, reduced thermal bridging, and air barrier continuity verification by a third party. There is dedicated space on the rooftop for possible future solar installation. There are also high-efficiency rooftop units and unit heaters, as well as installed programmable/occupancy thermostats. 

PACE Equity’s CIRRUS Low Carbon funding allowed F Street Group to receive upfront capital for the project at a lower rate. The repayment of the capital is made through a long-term special tax assessment on the property. The Low Carbon Center of Excellence, which includes members of PACE Equity’s Energy Engineering team, researched and prioritized cost-effective options for upgrades to lighting, HVAC, walls, windows, etc. that the project needed to qualify for CIRRUS Low Carbon design specifications. 

After the team determined the lowest incremental costs for F Street Group to qualify for CIRRUS Low Carbon funding, they presented this information to F Street Group in the form of a business case. This business case walked them through which parts of the project did not meet CIRRUS Low Carbon standards and provided an estimate for the upgrade costs. After the business case was presented and F Street Group decided to move forward, they were considered "confirmed" for CIRRUS Low Carbon.

List of Technologies Applied

•    High Lumen per Watt High Bay Fixtures (150 lumens per watt)
•    Minimum 100 lumens per watt Pole and Wall Pack Area Lighting 
•    Fixed windows 
•    High Efficiency Roof and Walls
•    Reduced Thermal Bridging
•    Air Barrier Continuity Verification by a Third Party
•    High Efficiency Rooftop Units and Unit Heaters
•    Programmable/occupancy thermostats
•    Dedicated rooftop space for possible future solar installation

PACE Equity – For over a decade, PACE Equity has funded C-PACE projects in innovative ways. 

F Street Group –Launched in 2008, F Street Group operates unique verticals and manages brands within real estate lending, development & acquisition, and investments in emerging technology markets. 

The CIRRUS Low Carbon Design Specification was developed in partnership with the non-profit New Buildings Institute (NBI). CIRRUS Low Carbon rewards buildings that meet or exceed the ASHRAE 90.1-2019  + 5% baseline requirements for efficiency of building envelope, HVAC, water heating and fixtures, interior and exterior lighting, and solar readiness. Optional efficiency items can include high performance fenestration, electric vehicle readiness, renewable energy, low embodied carbon materials, and other optional measures. Compliance with the specification is verified at the design phase.

PACE Equity’s CIRRUS Low Carbon funding and energy efficient design for this project resulted in a more than 26,700 MT reduction in CO₂ over the weighted average life (WAL) of the efficiency measures, yearly electricity savings of 564,070 kWh, yearly natural gas savings of 18,314 Therms, a reduction in site energy use intensity of 10 kBtu/sq.ft., and a reduction in source energy use intensity of 19.5 kBtu/sq.ft. The efficiency-focused design plan and resulting reductions in energy consumption will ensure tenants have lower utility costs and a lower carbon footprint. 

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