Aiming to reduce its approximately $3 billion annual aggregate spend on energy, the City of Chicago introduced its Chicago PACE program at the “Inaugural Chicago PACE Summit” on Wednesday, April 17, while the following day, New York City enacted its 80 x 50 legislation, known as the Building Energy and Emissions law. Accompanying the emissions law, the New York City Council passed commercial PACE enabling legislation.
“Hannon Armstrong Sustainable Real Estate is thrilled to see the rollout of the Chicago PACE program in Chicago and the enabling legislation pass as part of an aggressive plan in New York,” states Hannon Armstrong Sustainable Real Estate managing partner, Eric Alini. “Our firm stands ready to support the Chicago PACE program with hundreds of millions in private financing available to property owners and developers for energy saving projects throughout the city. Meanwhile, we are working with others to help inform the development of the New York City program.”
Bill Aguiar introduces Chicago PACE to commercial real estate, construction and energy services community members on April 17, 2019 at the Inaugural Chicago PACE Summit.
Innovative Sustainability Tool for Cities: Commercial PACE
Commercial PACE programs (C-PACE), like Chicago PACE and the iteration in development by New York City, make it possible for owners and developers of commercial properties to obtain low-cost, long-term financing for energy efficiency, sustainability and renewable energy infrastructure deployed in new or existing buildings. This City of Chicago’s program is based on legislation that classifies energy efficient and/or renewable upgrades as well as above-code new installations as a public benefit.
C-PACE can play a role in financing retrofits as well as large scale development projects.
“The restoration of the historic Uptown Theatre at Broadway and Lawrence will be accomplished, in significant part, using PACE financing,” stated Bill Aguiar, deputy commissioner of Chicago’s Department of Planning and Development. “Thanks to PACE financing, a Chicago landmark that is important to the Uptown neighborhood will be restored to its 1920s glory but with modern, 2019 energy improvements.”
A Closer Look at New York City’s Historic Building Emissions Law
In New York City, Thursday’s legislation created a New Office of Building Energy and Emissions Performance at Department of Buildings. The bill championed by Costa Constantinides, chair of the City Council’s Environmental Committee targets buildings 25,000 square feet or larger, of which there are about 50,000 and requires them to reduce their collective carbon output by 40% within a decade.
New York Times columnist William Neuman reported in his April 17, 2019 piece, “Big Buildings Hurt the Climate. New York City Hopes to Change That,” that Mark Chambers, director of the Mayor’s Office on Sustainability estimated the cumulative cost of required upgrades for building owners would exceed $4 billion. Chambers additionally suggested that costs would eventually be recouped through savings.
Enter C-PACE as part of the solution. In fact, the Urban Green Council cites PACE as one of the support components of the bill, along with mandated outreach through the city’s Retrofit Accelerator and training from organizations such as itself.
“This [PACE] will be an important tool for owners to reach their carbon reduction targets,” stated John Mandyck, Chief Executive Officer, Urban Green Council in his open letter on NYC’s Building Emissions Law.
“Having the nation’s largest and third largest cities make such strides in a single week make this an Earth Day of celebration. There’s a lot of work to do, but smart public policy is creating opportunity for investments that generate high quality assets – the output of PACE financing itself – and meaningful change to the buildings that produce more than 70% of our carbon output,” stated Eric Alini.
For those wishing to follow the emergence of the New York City PACE program and 80 x 50 legislation, please consider joining the Hannon Armstrong Sustainable Real Estate team at the following conferences:
- Commercial Real Estate Finance Council’s May 1 after work seminar, Sustainability and Resiliency for CRE – NYC Plan for Green. Moderated by Hannon Armstrong Sustainable Real Estate managing partner, Eric Alini.
- Urban Green’s June 18 conference, Retrofitting 50,000 Buildings in 10 Years, will tackle this issue head-on with a range of industry leaders. Moderated by Hannon Armstrong, SVP, Robert Johnson.
Eric Alini delivers the educational session on commercial PACE basics at the April 17, 2019 Inaugural Chicago PACE Summit.