Sustainable development is needed now more than ever. Cost concerns have held back many models for such development, but an emerging financing framework is poised to change that.
Tennessee state legislators and the Memphis City Council have already prepared a way forward for it — and there is every reason for communities in Shelby County and across the Mid-South to embrace a development financing model backed by a robust track record.
C-PACE, or C-PACER in Tennessee, is shorthand for “Commercial Property Assessed Clean Energy and Resilience.” In T.C.A. § 68-205-101, the state’s addition of “R” to the popular acronym emphasizes allowing resilience improvements.
The act provides an alternative path for commercial property owners and developers to improve the energy efficiency of their buildings with low-cost financing provided by private lenders, shielding them from rising energy prices in the medium to long term. Money lent out is then paid back with a voluntary assessment on property tax bills.
This program allows more renewable energy and resource efficiency to be unleashed in a balanced way. New construction, building retrofits and even gut rehabs of existing structures can take place with no upfront costs. Offices, mixed-use developments, hotels and apartment buildings are just a few of the kinds of properties qualifying for C-PACE financing.
The State of Tennessee and the City of Memphis — the first municipality in the state to do so — have both passed the necessary legislation to make C-PACER an accessible financing model to property owners and developers.
Other local governments that embrace this model would be securing themselves considerable efficiency for projects during financially lean periods when budgets will not go as far. There is a reliable return on investment, both in the short- and long-term, harnessing capital that businesses could otherwise use to invest in sustainable and responsible improvement projects.
Municipalities themselves only have to approve the financing model in legislation, instead of putting forward any taxpayer funds. As the US Department of Energy notes, while state and then local government approval is needed, C-PACE is not a federal program. Therefore, it does not require public money to operate. Arguably, this presents an easy and attractive sell for community members — the closest thing to a “win-win” as can be imagined for development.
Lives and businesses are tangibly improved through things like more efficient building fenestration, HVAC upgrades and even the implementation of solar power, which is typically regarded as too expensive to even consider upfront. The projects can be recovered as operating expenses, and obligations for payment are transferable upon sale of the property.
C-PACE has a strong track record of economic benefit. For commercial projects across the U.S., more than $3 billion in investments and 42,000 job years have been measured since 2009, 72% of which either went toward energy efficiency or renewables.
Projects, of course, need to include protections for low-income communities and businesses operating there. This must be paired with robust quality assurance standards for participating contractors and clear, easy-to-access information on loan conditions and repayment terms. But these are worthwhile steps, given the benefits.
To unleash the potential of this emerging, dynamic method of development, we urge every community in the Mid-South to join them.
This article originally appeared in The Daily Memphian.