With portions of Clark County experiencing a building boom, some commercial property owners and developers could soon get financial help in making their buildings more energy efficient.
During its Oct. 19 meeting, the Clark County Council adopted an ordinance establishing the Commercial Property Assessed Clean Energy and Resiliency program, better known as C-PACER.
“This is a program used in many other states with considerable success,” Lindsay Shafar, senior policy analyst, said at the meeting.
C-PACER provides low-cost loans to commercial property owners, which can include some agricultural and multifamily housing properties, for energy efficiency and earthquake resiliency improvements.
Clark County is the third county in the state to adopt C-PACER. Whatcom and Thurston counties have already approved C-PACER, and Pierce, Snohomish, King, Kitsap, Skagit and Spokane counties are in the process of creating similar programs.
“C-PACER is an avenue to comply with House Bill 1257, also known as the Clean Buildings law, which gives the Department of Commerce authority to develop and implement energy performance standards,” said Justin Wood, government affairs coordinator for the Building Industry Association.
Passed by the Legislature in 2019, the Clean Buildings Performance Standard set energy performance standards for larger existing commercial buildings. It also set performance standards for natural gas distribution companies. HB 1257 additionally provides financial incentives and technical assistance for property owners that meet those standards ahead of the deadlines.
“HB 1257 is the stick and the carrot that forced building owners’ hands when it comes to energy efficiency,” said Erik Makinson, founder of Resource Synergy, which provides sustainability consultancy to businesses.
Makinson described C-PACER as a “powerful and transformative financing mechanism.”
Appealing to lenders
Under the program, the property owner identifies a suite of upgrades for energy or water efficiency, or for fire or earthquake resiliency. The upgrades are packaged together into a single loan. Unlike a traditional mortgage, the loan is attached to the property, not the property owner, as a voluntary tax assessment. If the property is sold, the loan goes to the new building owner.
By attaching the loan to the property, Makinson said it makes the program more appealing to lenders.
“There have been over 2,000 C-PACER loans made nationwide. Not one of them has gone into default,” Makinson said.
In addition, property owners can schedule their payments at a lower rate than the energy savings realized from the improvements.
“They’re actually cash ahead, and they’ve mitigated any risks from legislation,” Makinson said.
Shafar said there are a lot of different types of projects that can qualify for the C-PACER program and noted that some property owners in Clark County have already expressed an interest in making upgrades.
County Councilor Gary Medvigy said during an earlier meeting, “We do have interests out in the community. I’ve heard from the port, I’ve heard from one manufacturing CEO that’s interested in this.”
Perhaps more importantly, C-PACER will help commercial property owners comply with new state regulations and avoid fines for noncompliance.
Deadlines set by HB 1257 are June 1, 2026, for buildings 220,000 square feet or larger; June 1, 2027, for buildings 90,001 to 220,000 square feet; and June 1, 2028, for buildings 50,000 to 90,000 square feet.
Wood noted that developers just building properties now are aware of the coming standards and are already wrapping those projects and costs into the initial development.
If building owners fail to meet the standard, the Department of Commerce can issue fines equal to $5,000 plus a penalty per square foot.
“The problem is if a building owner can’t afford to make the upgrades to avoid the fines, they can’t afford the fines either. It puts these commercial property owners in a very precarious position,” Makinson said.
C-PACER is the tool that allows property owners to make the necessary upgrades, comply with state laws and avoid any fines, he added, in a way that doesn’t break the bank. Also, because the C-PACER loan is placed on the building, rather than the owner, it doesn’t affect the debt equity ratio.
That means a building owner can borrow more money next year for other improvements.
“Not only can they avoid the risk, they can make more money in the process and make their properties more valuable,” Makinson said.