Columbus setting the PACE nationally for commercial energy efficiency and sustainability financing

Nov 25, 2019 | News, Newsletter

Colin Kalvas
Bricker & Eckler LLP

 

In under three years of operating its commercial PACE (property assessed clean energy) financing district, the greater Columbus region has become a national leader in energy efficiency and sustainability financing. With nearly $100 million invested, the region boasts the largest total investment of any region in the state. As of mid-2019, central Ohio also had the largest total commercial PACE investment of any single metropolitan region in the nation.

In early 2016, the Columbus Regional Energy Special Improvement District was formed through the cooperation of the City of Columbus, the Columbus-Franklin County Finance Authority, the Mid-Ohio Regional Planning Commission and a commercial building owner. Since then the District has grown to cover Columbus, Bexley, Dublin, Grove City, Hilliard, Perry Township, Whitehall and Worthington.

The District facilitates PACE financing transactions for commercial and industrial building owners in greater Columbus. PACE financing uses voluntary special assessments to finance the costs of qualifying improvements, including improvements that reduce energy consumption, like efficient HVAC systems, windows, and lighting and alternative energy improvements, like solar panels. 

In a PACE transaction, the property owner receives up-front capital to pay the costs of the qualifying improvements. In exchange, special assessments are levied on the property and paid to the capital provider as repayment for the up-front investment.

In many cases, PACE presents a winning solution for all stakeholders. Property owners like the typically low fixed interest rates, ability to transfer the assessments with the building at a sale and the possibility of passing assessment costs through to tenants or users. Tenants like the improved building environment and lower utility bills. PACE capital providers like the strong security that comes with assessment financing. Additionally, senior lenders like the investment in their collateral, the more diversified capital stack and the fact that PACE assessments cannot be accelerated.

For its leadership in PACE financing and other sustainability pursuits, the City of Columbus was named as a winner of the American Cities Climate Challenge by Bloomberg Philanthropies. The win comes with a grant and access to resources from partners like the NRDC with the goal of helping the City accelerate and deepen its already strong track record on energy efficiency and sustainability initiatives.

The national PACE community has also recognized region’s nation-leading performance in commercial PACE financing. PACENation, a national trade association providing education, advocacy and resources on PACE financing, has selected Columbus as the site of its 2020 Annual Summit being held March 30 through April 1, 2020. That is in part in recognition of central Ohio’s strong commercial PACE financing program.

The Finance Authority has been the most frequent central Ohio PACE capital provider, having financed 16 projects for more than $16.3 million in investment. Greenworks Lending LLC out of Darian, Connecticut has provided the largest amount of PACE financing, with over $23 million of investment in eight transactions. 

Other capital providers active in the central Ohio PACE market include: Petros PACE Finance, LLC out of Austin, Texas, Cuyahoga River Capital LLC out of Cleveland, Ohio, PACE Equity, LLC out of Milwaukee, Wisconsin, CleanFund Commercial PACE Capital, Inc. out of Sausalito, California, ORIX Public Finance LLC out of Dallas, Texas and CenterBank out of Cincinnati, Ohio. 

About the author:  Colin Kalvas is a public finance and economic development attorney at Bricker & Eckler. He can be reached at ckalvas@bricker.com or at 614.227.4998.

 

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