The former Brookfield Building in downtown Kansas City, now almost 90 years old, is now newly renovated and highly efficient thanks in part to Commercial Property Assessed Clean Energy (C-PACE) financing. PACE Sage Capital structured the C-PACE deal and CleanFund Commercial PACE Capital provided the $2.4 million in capital for what is now the Hotel Indigo Kansas City Downtown. The $2.4 million helped close the deal on the $36 million mixed-use project that includes the 118-room boutique hotel and 27 apartments. (See article.)
The owners saw C-PACE as a perfect solution for financing high-efficiency new heating, ventilation and air-conditioning systems, new LED lighting, electrical, water heater and control system improvements. The investments are expected to result in 33 percent in energy savings over time.
Green Lodging News has reported on PACE projects in the past (type in “pace” on the search engine on our website). According to Josh Smith, Senior Transaction Counsel for CleanFund Commercial PACE Capital, C-PACE financing has been adopted in 33 states and the District of Columbia and allows property owners to repay investments for building upgrades and new construction on their property tax bills. “Sometimes we have seen legislation not drafted to succeed,” Smith says. In fact, only 15 states have active programs.
Many Loan Benefits
Up to 20 percent of a hotel project can be financed using C-PACE. Commercial property owners can install modern energy and water technology with no up-front cost and benefit from lower interest rates and long loan terms. The interest rate does not change over time and it gets paid off as the tax bill is paid. The financing stays with the building when it is sold. Utility cost savings must exceed the cost of the improvement over their useful life, and financing can’t exceed 10 percent of the fair value of the property.
According to John Kaufman, who wrote about PACE for Green Lodging News several years ago, qualifying for a PACE loan is much less arduous than for conventional loans secured by the credit worthiness of an individual or business. In fact, personal or business credit ratings have no impact on funding eligibility or interest rates for PACE financing programs.
The decision by the owner of the Hotel Indigo to renovate the tired Brookfield Building using C-PACE financing is beneficial to the Kansas City community in multiple ways. It helps make the downtown more vibrant, the building has become a shining example of green efficiency, and 30 to 40 permanent jobs were created (80 to 110 construction jobs).
The next time you are looking to supplement financing for your hotel project, consider C-PACE.
Have a C-PACE success story to share? Write to firstname.lastname@example.org.
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