Convincing Real Estate Companies of Energy Efficiency’s Benefits Key to Financing

by | Oct 28, 2015

financingThe key to financing energy efficient and renewable projects is convincing real estate companies that retrofits undertaken with these goals in mind increase the value of properties, according to participants in the 2015 Urban Land Meeting in San Francisco.

The panelists said that financing has “come a long way” during the past few years, but still trails Europe. A panelist said that banks are “getting a little bit more excited” about such financing projects. His company helped finance $45 million in energy-efficient improvements in more than 130 buildings.

Another panelist said that the full value of improved energy efficiency is not being recognized by appraisers, though he believes it eventually will be. A key for that panelist is to make it clear that improvements lower operating costs. Still another speaker suggested that the process must be streamlined and simplified to encourage people to take advantage of what is available in the marketplace.

Green Buildings Management points to a disincentive in Property Assessed Clean Energy (PACE) loans. The challenge is that PACE makes paying down the loan a line item on property tax bills. This lowers the rate on the loan. However, since it is a tax, the loan takes priority over paying the first mortgage if the property owner defaults. Quite naturally, this is looked at askance by mortgage lenders.

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