The city just made it easier for developers and landlords to secure financing for green technologies in their buildings. Will it be enough?
It is no secret that the Commercial Property Assessed Clean Energy program, or C-PACE, got off to a dreadful start, with only a handful of projects getting the low-interest financing.
The city last week finalized new guidance — to complement that issued by the state in June — that clears some hurdles for developers and owners looking to finance green building upgrades.
The most important changes have to do with which buildings have to abide by a savings-to-investment ratio, dubbed SIR, to qualify for the loans, and how that ratio is calculated when it is required.
Renovations that fully electrify a building are now considered pre-qualified for C-PACE, and do not need to meet the ratio. However, under the city’s program, some projects must still show dollar-for-dollar that money spent on an upgrade is earned back through savings resulting from the work. This has automatically disqualified some buildings.
The new guidance also gives a break to owners looking to undertake other energy-efficiency improvements, in that they can include fewer costs when calculating the ratio.
During an interview last week, Joe Chavez, who joined the Mayor’s Office of Climate & Environmental Justice last year and has been overseeing the rollout of C-PACE, is hopeful the changes will boost interest in the financing option because more projects will be eligible. It might not be immediate, but he is optimistic that more projects will take advantage of the program next year.
Mansoor Ghori, the CEO and founder of PETROS Pace, which financed the first such deal in 2021, said the changes are a “great step forward.”
“Is it an ideal program? Not quite yet,” he said, noting that some projects will still need to abide by STIR and that New York’s program caps loans at 30 percent of a project’s cost. Other states limit loans to 30 to 35 percent of the capital stack, a much larger number.
Chavez said the city is looking to see if more changes should be made to get more buy-in from co-ops. Owners may have an easier time paying for upgrades to comply with Local Law 97, but even with dramatic changes to the program, the C-PACE has its limits.
“There will never be one silver-bullet financial solution, just because of the diversity of buildings that are covered by this law,” Chavez said. “PACE may not work for all building types, but I think it serves a special place in commercial buildings. With the challenges we’ve seen currently in the financial landscape for commercial office buildings, I think PACE can actually be really helpful.”
What we’re thinking about: The New York City chapter of the Democratic Socialists of America is launching a campaign dubbed “House the Future.” It will promote social housing initiatives, including a bill introduced last year to create a Social Housing Authority, a successor program to the state’s Urban Development Corporation. Will the legislation pass in the next legislative session? What do you think of efforts to create the next generation of public housing? Send a note to kathryn@therealdeal.com.
A thing we’ve learned: Hobart, New York, is a “book village.” It is home to seven (!) bookstores.
Elsewhere in New York…
— Hate crimes in New York increased 13 percent last year from 2022, Gothamist reports. Some 1,083 were reported, with 477 characterized as anti-Jewish, 183 as anti-Black and 130 as anti-gay male, according to a new report by state Comptroller Thomas DiNapoli.
— The Adams administration on Wednesday announced that the oldest permitted sidewalk shed in the city is coming down. Workers began taking down the shed in front of the Office of Chief Medical Examiner at 520 First Avenue in Kips Bay, which has been in place for more than 15 years.
— Orange you glad, Clementine? A rare orange lobster was spared after being spotted in a Southampton supermarket, Patch reports. A staff member of the Southampton Animal Shelter Foundation saw the crustacean and alerted Humane Long Island. Stop & Shop Management agreed to donate the lobster, dubbed “Clementine,” for rehabilitation and release back into the wild.
Closing Time
Residential: The priciest residential sale Wednesday was $9.6 million for a condo unit at 45 Greene Street. The Soho pad is 2,900 square feet and was listed by Serhant’s Chase Landow and Andy Klaric.
Commercial: The largest commercial sale of the day was $21 million for a loft building at 80 White Street in Tribeca. White Street Partners purchased the six-story site.
New to the Market: The highest price for a residential property hitting the market was $39.5 million for 111 Murray Street. The Tribeca condo is a new construction unit and spans 7,500 square feet. Douglas Elliman’s Raphael De Niro and James Flowers have the listing.
Breaking Ground: The largest new building application filed was for a 16,374-square-foot, five-story residential building at 1981 Ellis Avenue in the Bronx. Leandro Dickson of LND Design + Build is the applicant of record. — Joseph Jungermann