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November 2016 — Retail Properties Quarterly — Page 15
R etail property owners have a
new financing option avail-
able that provides an eco-
nomic incentive for installing
energy-efficient, renewable
energy and water conservation mea-
sures. This option is available through
Colorado’s Property Assessed Clean
Energy program and anyone looking
to develop, redevelop or reposition
retail property should take note.
Co-PACE permits commercial and
multifamily (five or more units) to
obtain long-term, off-balance-sheet
financing for the installation of these
measures. Co-PACE financing is pro-
vided by third-party lenders and is
repaid through a special assessment
as part of the property tax collec-
tion process. It is not traditional debt
but rather an obligation to pay the
special assessment for the Co-PACE
term.
Typical property assessed clean
energy qualified investments for
retail properties include interior/
exterior lighting upgrades, building
control systems, roofs, heating, ven-
tilating and air conditioning, water
conservation fixtures, windows,
escalator/elevator modernization and
solar. PACE allows up to 100 percent
financing of all eligible measures,
including all soft and hard costs so
there is zero upfront investment.
Eligible measures include any energy-
efficient, renewable energy and water
conservation measure that produces
an energy savings. Co-PACE is avail-
able for new construction for any
project that complies with the 2015
IBC as well.
There are three key features to
Co-PACE that are beneficial to retail
property owners. First is the extend-
ed term. Co-PACE is
long-term financing
for up to 20 years,
based upon aggre-
gate useful life of
the improvements.
Next, the Co-PACE
special assessment
transfers with the
sale of the property
to a new owner, as
do the benefit of
the energy efficient,
renewable and
conservation mea-
sures. For property
owners with potential disposition
plans on the horizon, this makes
Co-PACE particularly attractive since
there is no repayment of the Co-PACE
financing at closing. Lastly, in triple
net leases, tenants pay the Co-PACE
special assessment, which is offset by
tenant’s reduced utility and operation
costs. This means tenants are paying
to improve your property’s build-
ing systems and ultimately enhance
property values. The overall triple-net
charges should remain the same but
the amount tenants are saving in
utility costs are instead used to pay
the Co-PACE special assessment.
Retail market leaders like Simon
Property Group have discovered the
economic benefits of PACE, recently
completing over a dozen PACE proj-
ects in the U.S., with more planned.
The group’s success with PACE dem-
onstrates why PACE can benefit retail
property owners.
The commercial PACE market is
growing across the country with 33
states andWashington, D.C., enact-
ing PACE-enabling legislation and 16
states with active PACE programs. To
date, almost 800
commercial U.S.
PACE projects have
been completed, for
a total of approxi-
mately $300 mil-
lion.
The Co-PACE
program officially
launched with
its first closing
in August for an
energy-efficient
Co-PACE project in
Boulder. The Co-
PACE statute created the New Energy
Improvement District to administer
and run the Co-PACE program. For
a property owner to participate, the
county where the property is located
must “opt-in” to the program. So far,
Denver, Adams, Arapahoe, Boulder,
Broomfield, Eagle, Gunnison, Jeffer-
son and Pitkin counties have opted
into Co-PACE, with other counties in
discussions to do the same.
Across Colorado, jurisdictions like
Boulder and Denver are adopting
or planning to adopt mandatory
benchmarking measures for property
owners to meet stated community
sustainability goals. Denver soon
will adopt some form of its Energize
Denver initiative and as part of that
initiative all commercial properties
over 25,000 square feet will have
to go through an energy audit. If a
property scores below a certain level
then the property will be required
to make energy-efficiency upgrades
to score at a higher level. Property
owners can use Co-PACE to make
the improvements and offset some
of the expense that the program will
require. Any retail property owner
planning a renovation or capital
improvement project should consider
Co-PACE as an option to facilitate
positive economic returns and a
more efficient property.s
Grant Nelson
Principal, Republic
Investment Group,
Greenwood Village
Keirstin Beck
Principal, Integro
LLC, Boulder
Lending Market
For a property owner to participate, the
county where the property is located must
“opt-in” to the program. So far, Denver,
Adams, Arapahoe, Boulder, Broomfield,
Eagle, Gunnison, Jefferson and Pitkin
counties have opted into Co-PACE.
Since 1997, retail construction has been
the foundation of our growth. Thousands
of projects later, we can leverage our
consistent processes and lessons-
learned to optimize your project success.
Whether you are a developer, broker or
retailer, Catamount has the experience
to expertly coordinate the unique details
of successful retail construction, allowing
you to focus on your business success.
CONTACT CATAMOUNT CONSTRUCTORS
FOR YOUR NEXT RETAIL PROJECT
WE’RE EXPERTS AT BUILDING RETAIL. SO YOU
CAN FOCUS ON BUILDING YOUR BUSINESS.
SINCE 2005, CATAMOUNT
CONSTRUCTION HAS:
› Been awarded 545 retail
projects nationwide
› Completed 532 projects
valued at $884 million
› $28 million worth of projects
currently under construction
in California, Colorado,
Georgia, Virginia and Texas
SPECIALIZING IN:
› Automotive
› Big Box
› Financial
› Fitness
› Grocery
› Restaurant
› Tenant Improvement
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