In 2018, Pennsylvania became one of more than 30 states to adopt the Commercial Property Assessed Clean Energy program (C-PACE).This financing mechanism has already facilitated millions of dollars of investment in clean energy and energy efficiency projects, with millions ore in the pipeline.
However, the original Act did not include multifamily commercial construction. Stakeholders have since made clear that using C-PACE loans for multifamily commercial construction presents major opportunities for property owners, for energy efficiency companies, and above all for Pennsylvania residents. Due to the public health risk posed by airborne transmission of COVID-19, this bill further expands the use of C-PACE financing to include ventilation projects that reduce exposure to indoor airborne contaminants, hastening the return of workers to offices, diners to restaurants, and students to schools. Including resiliency improvements allows property owners to make buildings more durable, increasing preparedness for floods, storms, and power supply disruptions.
Expanded legislation, expanded opportunity
Expanding the list of C-PACE eligible projects unlocks private capital, which is especially vital during the COVID crisis and ensuing economic disruption. New multifamily buildings have historically been one of the fastest-growing commercial real estate sectors, but demand is oustripping supply — representing untapped opportunity for the EE industry to serve the need for affordable, efficient housing. Nationwide data from PACE Nation indicate that approximately 20% of the $2B of C-PACE loans have been for mixed-use and multifamily projects. Expanding Act 30 will offer Pennsylvania the same breadth of economic opportunity enjoyed by other C-PACE states. These funding options for commercial multifamily projects will allow the EE industry to meet the growing demand for new senior living facilities, dormitories, and other facilities currently excluded from C-PACE eligibility.
More project financing options means more opportunities for the energy efficiency industry to do what we do best — help consumers save on energy costs while making indoor environments safer and more comfortable.
Why it's good for Pennsylvania
Jobs: The EE industry is the fastest-growing jobs creator in the energy sector, so more C-PACE projects will mean more employment opportunities for this workforce. EE jobs are by and large local jobs, and therefore resistant to outsourcing. This means that investment will stay in the community and continue to provide economic benefits. According to 2019 data, the average C-PACE project creates approximately seven jobs, and every $1 million of C-PACE investment will generate about 12 job-years.
Economic boost: C-PACE spurs investment in new and revitalized infrastructure, resulting in a timely boost to our economy. Over half a billion dollars have already been invested nationally through C-PACE loans — with potential to double in the near future. In its first full year of existence in PA, four C-PACE projects were implemented for a total of $18 million in investments of private capital to enhance the energy and water efficiency of the properties. The pipeline of projects statewide stands at $225 million.
Reducing the housing shortage: Thousands of Pennsylvanians currently reside in multifamily housing; as one of the fastest-growing commercial real estate sectors, that number will continue to grow. Still, Pennsylvania suffers from an affordable housing shortage: according to the National Low Income Housing Coalition, Pennsylvania lacks more than 250,000 affordable rental units it would need to meet the needs of low-income renters. Allowing C-PACE loans to fund projects in multifamily buildings will lead to more affordable housing, either as new construction or retrofits to existing buildings.
Lower energy costs and safer indoor environments: Residents of existing multifamily buildings will also benefit when C-PACE loans cover retrofit projects that improve air quality and reduce utility bills. 28% of renter households in Pennsylvania are considered to have extremely low income and would experience significant financial relief from lower utility bills. In fact, in 2017 ACEEE estimated that energy efficiency measures in multifamily housing could save $3.4 billion annually.
The pandemic has brought into stark relief the importance of indoor air quality and adequate ventilation to prevent transmission of airborne particles. Expansion of C-PACE will help property owners make vital upgrades to ventilation systems to improve indoor air quality and reduce Coronavirus transmission. This improved ventilation will make it safer for people to get back to work and school faster.
Resilience and energy conservation: Resiliency improvements financed by C-PACE will make buildings more durable in the face of disasters like floods and storms, and better prepared to withstand disruptions to the power grid. Expanding C-PACE will facilitate new construction and retrofits that save energy and reduce demand on the grid, while also reducing carbon emissions. Nationally, as of 2019, C-PACE saved 7,929,319,000 kWh of energy and kept 2,850,000 metric tons of carbon out of the atmosphere. Every $1MM of C-PACE financing deployed equates to an estimated carbon impact of removing about 1,000 cars from the road.