After a slow rollout, C-PACE financing is finally becoming a reality in New York City.
Greenworks Lending, acquired by Nuveen earlier this year, announced Tuesday that it has closed on $28 million in C-PACE financing to 730 Third Avenue in Midtown Manhattan, which serves as the headquarters for Nuveen and TIAA. Nuveen Real Estate and Taconic Partners are leading a $120 million renovation of the 27-story office building.
The C-PACE financing will provide for energy efficient upgrades, including smart windows that automatically adjust in response to the sun. It will also fund lighting upgrades and roof insulation.
“We have committed to making our $133 billion global property portfolio operationally net zero carbon by 2040 and C-PACE is an innovative financing mechanism to help us achieve this goal,” said Brian Wallick, director of New York office investments at Nuveen Real Estate in a statement.
Commercial property-assessed clean energy, or C-PACE for short, provides upfront costs for energy efficiency and clean energy improvements to buildings. New York City’s C-PACE program went live in June, two years after the city enshrined it into law as part of a broader series of measures known as the Climate Mobilization Act.
Because it is recorded as a tax assessment, C-PACE financing requires legislation to be enacted by state and local governments.
Proponents of the program believe that C-PACE could play a key role in covering the costs of building improvements necessary for compliance with Local Law 97, another bill passed as part of the Climate Mobilization Act. It offers developers and landlords financing for energy efficient upgrades at cheaper rates than conventional loans.
Local Law 97 requires most commercial buildings larger than 25,000 square feet to reduce their carbon emissions by 40 percent by 2030 and 80 percent by 2050.
C-PACE is expected to help 730 Third Avenue avoid nearly $100,000 in annual fines under Local Law 97, according to Greenworks Lending.
This summer, Wafra Capital Partners and Nightingale Properties scored the first C-PACE deal in New York City history for its 1.2 million square-foot, 25-story office building at 111 Wall Street. Austin, Texas-based Petros PACE provided the $89 million in C-PACE financing.