New York City C-PACE Financing: PACE Funding Now Available for New Construction

Sumedha Bose
Builders Patch Staff

SUMMARY

New York City's C-PACE financing program, launched under the Climate Mobilization Act, offers long-term, fixed-rate financing for energy efficiency and renewable energy upgrades in commercial and multifamily buildings. By covering up to 100% of project costs with no upfront cash, the program supports compliance with Local Laws 96 and 97, helping property owners meet climate goals while enhancing building value and sustainability. This post dives into the details of this program.

In 2017, New York State launched the Property Assessed Clean Energy (PACE) financing program for the state. However, it wasn’t until Local Law 97 passed in New York City in 2019, with an ambitious goal to cut 40% emissions from buildings by 2030, that the need to enforce energy financing solutions became heightened.

Under the Climate Mobilization Act (CMA) of 2019, Local Laws 96 and 97 are notable legislations, that we’ll discuss in this article.

Local Law 97 - Overview

Local Law 97 is one of the key pieces of legislation in the CMA. It aims to drastically reduce greenhouse gas emissions from New York City’s largest buildings. The law, which kicks in this year, has placed carbon caps on buildings larger than 25,000 square feet, which would include more than 50,000 properties across NYC, according to the Urban Green Council’s factsheet on the law.

Local Law 96 - Overview

Local Law 96, which was passed in November 2019, after Local Law 97, was designed to establish state financing instruments that could help people pay for energy efficiency or renewable energy improvements. The law works in tandem with local law 97 and creates the legal and financial means to help the city realize its sustainability goals in the building sector.

What does NYC PACE financing stand for?

NYC Accelerator Property Assessed Clean Energy (PACE) is a novel financing instrument, geared towards improving the city’s sustainability in the built environment sector. The long-term, fixed-rate financing tool will help commercial and multifamily building owners finance existing and new projects that prioritize energy efficiency and renewable energy use. The tool can cover up to 100% of project costs without needing up-front cash from the owner.

The financing instrument places a special assessment or special tax charge on the property’s annual tax bill allowing owners to make improvements over time without having to make a large upfront investment.

Benefits of NYC Accelerator PACE Financing

Covers 100% of energy upgrade costs with no upfront cash requirements
Provides long-term fixed-rate financing - fully amortizing terms generally between 25-32 years.
Owners get to retain all tax credits and incentives
Can be transferred if the building is sold
Can finance other project costs needed for installation, like asbestos and lead mitigation of roof upgrades
Drives energy savings and increases property value
Ensures property is compliant with LL97, LL11, and more.

Who is offering PACE financing for New York City?

The New York City’s Mayor’s Office of Climate & Environmental Justice is offering PACE financing in partnership with the New York City Energy Efficiency Corporation (NYCEEC).

Who is eligible for the PACE Program?

Commercial, industrial, and multifamily building owners
Buildings owned by non-profit institutions like hospitals, universities, or museums are typically exempt from property taxes

What kind of improvement can you use PACE funding for?

As we mentioned, PACE funding can only be used for Energy Efficiency Improvements and/or Renewable Energy Systems. All improvements have to be deemed “Eligible Improvements” post an energy audit of the property. Below we have explained what these two types of improvements entail:

Energy Efficiency Improvement - This entails any improvement that is aimed at reducing energy consumption of the property. Some examples include window or door replacement, weatherstripping, air sealing, lighting, caulking, insulation, and heating and cooling system upgrades. The improvement can apply to either a component of new construction or retrofitting of an existing building.
Renewable Energy System - This type of improvement primarily refers to the installation of energy-generating systems that generate electric or thermal energy. The system has to use renewable energy technology reliant on solar thermal, solar photovoltaic, geothermal, wind, anaerobic digester gas-to-electricity systems, fuel cell technology, or any other types of technology approved by NYSERDA.

Summary of PACE Loan Requirements

Source: NYC Accelerator PACE Financing - Program Guidelines

What does the typical NYC PACE loan application process look like?

Here’s a more detailed breakdown of the PACE application process:

Phase 1: Intake The lender initiates a new project by completing the “Intake” fields in the Program App. It is to be noted that only designated lenders can give out PACE loans so you should refer to the PACE Lenders List to shortlist the lenders you would like to apply to.

Phase 2: Data Gathering During the data gathering phase, the lender is responsible for compiling all the required documentation. This includes detailed project documentation and adherence to the loan requirements outlined in the program guidelines.

Phase 3: Documentation In the final phase, all necessary agreements are executed, including the Collection Agreement. A Notice of the PACE loan is then recorded in the land records, which officially documents the property’s participation in the program.

You can find more details regarding this process in the NYC Accelerator PACE Financing program guidelines.

How can the PACE application process be made more streamlined?

Digital application intake form captures all necessary data points - We set up a digital intake form that is easily shareable via a link or embedded on the lender's website.
Streamlined due diligence process saves time and effort - Lenders can store, organize and share all their due diligence documents in a secure digital environment.
Collaborating with internal and external teams - Builders Patch offers a secure, collaborative platform tailored for lending teams, enhancing productivity and efficiency.

The Role of NYCEEC in PACE Financing

The New York City Energy Efficiency Corporation ( NYCEEC) is the designated administrator of NYC Accelerator PACE Financing for the City of New York. They help property owners navigate the application process, assess project eligibility, and structure financing.

Potential Impact of PACE Financing

The introduction of PACE financing in New York City is expected to drive significant investments in energy efficiency and climate resilience. This program is particularly beneficial for older buildings that require substantial retrofits to comply with Local Law 97 and other regulations.

By integrating this financing mechanism with recent environmental legislations, the city is providing property owners the tools needed to meet stringent climate goals while enhancing the resilience of New York's building stock.