California PACE Financing Lender will Provide 100% Loan-to-Cost for Energy Related Building Upgrades

A real estate bridge lender has a new program for energy project financing called PACE (Property Assessed Clean Energy).

PACE provides financing for any capital improvement that improves the energy usage of a building. This can include HVAC upgrades, lighting upgrades, renewable energy such as solar and others.

The financing is repaid through a tax assessment that is placed on the building itself and is not guaranteed by the current owner. This means if the building is sold the financing and repayment through the tax assessment rolls over to the new owner and the seller has no ongoing liability. The funding amount is only limited by the value of the building.

Since the loan is repaid through the tax assessment on the building, if the tenants are on NNN leases the increased tax liability may be passed onto them. Essentially, this program can increase the value of the asset, reduce operating expenses, extend cap-ex budgets, with the cost possibly being paid for the by tenants.

While a tenant's consent may not be required, this will almost always make economic sense for them because the increase tax costs are offset by the decrease in utility and energy expense creating a net gain for the tenants.

If you have a building that is need of energy/HVAC related upgrades or you would like to explore a renewable energy system reach out to Nebo ASAP.