Program Boosting Commercial Buildings’ Energy Efficiency Making Impact in Denver
The momentum seen nationally for a program designed to make commercial buildings more energy-efficient is evident in Denver, with a locally based financier announcing an ambitious new venture and a California-based company unveiling a makeover for the Petroleum Building downtown.
Mark Boyer, president and CEO of Denver-based Lever Energy Capital, said his company has the ability to originate up to $500 million in financing for the Commercial Property Assessed Clean Energy program, or C-PACE. Lever, the only Colorado company that finances projects through the program, is partnering with Crescent Real Estate, which has offices in Centennial and Fort Worth, Texas.
“We have a half billion in funding to put to work across the country, and we would love to put as much of that as possible to work in our own backyard, in Colorado,” Boyer said.
Sausalito, Calif.-based CleanFund, one of the country’s leading providers of long-term financing for energy efficiency and other upgrades to commercial properties, announced Tuesday that it is financing a $1.1 million replacement of the 62-year-old Petroleum Building’s central HVAC chiller system, with help from the Colorado C-PACE program.
The Property Assessed Clean Energy program began in 2009 in Berkeley, Calif., as a way, in part, to finance renewable energy systems on buildings, including houses. It uses capital from private providers to finance the upfront costs of installing renewable energy, upgrading buildings and making new buildings energy- and water-efficient from the start. The borrower repays the loan through a voluntary assessment on the property tax bill with repayment terms of up to 25 years.
Woolsey McKernon, CleanFund senior vice president and chief revenue officer, said the upgrade on the Petroleum Building is expected to make the building 12 percent more energy efficient and reduce annual carbon dioxide emissions by 1,384 tons, the equivalent of taking 296 gas-fueled cars off the road.
Air conditioning systems giant Trane will install the improvements at the 14-story, 197,176-square-foot building at 110 16th St.
The upgrade that will begin this month on the Petroleum Building is part of the “super exciting” trend of the revitalization of the country’s core downtown areas, McKernon said.
“From Akron all the way out here to the (San Francisco) Bay, we’re experiencing a resurgence in particular of old, iconic buildings being upgraded and C-PACE is a wonderful tool to make that all happen,” McKernon said.
CleanFund has more than 40 potential transactions in Colorado that would involve more than $100 million in financing.
In the case of the Petroleum Building, the name alone is exciting when talking about boosting energy efficiency, McKernon added.
“You would think there was an irony there, but there really isn’t,” said Tim Borst, the building’s co-owner.
The building has LEED Silver certification and the Petro Group, which owns the building, offsets 75 percent of its energy use through wind power, Borst said. At one time, about 80 percent of the Petroleum Building’s tenants were oil companies, but now there are just a couple of oil companies. One of the major tenants is a solar energy company, Borst said.
The C-PACE program requires much less capital outlay, Borst said. While the financing is a fixed rate, Borst said the interest rate tends to be higher.
“But when you look at the energy savings, it tends to offset the higher costs,” Borst added.
A majority of states, including Colorado, have passed legislation authorizing the funding program, according to the National Conference of State Legislatures. The C-PACE program has helped overcome one of the biggest challenges to improving energy efficiency, adding renewable energy systems or making buildings more hurricane or earthquake resistant — high up-front costs.
The energy footprint of buildings is huge, according to the U.S. Energy Information Administration. The commercial and residential sectors accounted for about 39 percent of the country’s energy consumption in 2017, and most of that was related to buildings, the agency said.
Interest in reducing that energy footprint is growing, Boyer said. About 43 percent of the $587 million in projects financed since C-PACE began were funded in 2017 alone, he said.
Ken Cope, founder and president of REthink Building Connections, said his company is working with Lever to turn a 17,000-square-foot industrial building in Denver’s RiNo Art District into a 24,000-square-foot co-working space for real estate professionals. The plan is to demolish part of the building and add “a lot of indoor and outdoor elements,” including a glass facade and rooftop deck with vegetation inside and outside, he added.
The building, expected to be finished in May 2019, will also include energy- and water-efficient features, Cope said, thanks to the C-PACE program.
“Every step of the way we’re going to be going from a really completely, non-energy-efficient building to some of the most energy-efficient standards we can achieve,” Cope said. “We’re going to keep some of the natural elements of the building. It has beautiful wood floors that we’re going to retain and refinish. We’ll put a whole lot more into insulation. We’ll completely replace the lighting and HVAC.”
Long-term financing can be tough to find, so the C-PACE program, which has competitive rates, is an important resource, he added. Many of the improvements can pay dividends in lower energy and water costs.
“I think some of it is the social responsibility question as well,” he added. “You have to ask yourself, ‘Is it worth it to me to deliver a healthier environment?’”
Source: The Denver Post