A man installs a heat pump in a room at Sarah's House in Holden in this 2014 file photo. Maine is set to introduce a new financing program to make green energy improvements such as heat pumps and solar panels more affordable for commercial building owners. Credit: Ashley L/ Conti / BDN

Maine is set to introduce a financing program by February to make green energy improvements more affordable and accessible for commercial property owners.

The state, which has one of the oldest building infrastructures in the country, is finalizing regulations for the Commercial Property Assessed Clean Energy loan program. Cities and towns will then have to adopt ordinances for the program to be available to local commercial property owners. Those interested in the financing tool can learn more at a panel discussion in Portland next week.

Last year, Maine lawmakers passed legislation to enable the use of the financing tool for commercial property owners who want to borrow money to make their buildings more energy efficient, such as by trading their oil furnace for heat pumps.

Unlike bank loans, there is no down payment, and the borrowed amount can be repaid over time through property tax bills. The program will give borrowers longer to pay back the loan, and, because the loan will be attached to the property, repayment obligations can be transferred to a new owner.

James Neal is senior program manager for finance initiatives at Efficiency Maine Trust. Credit: Courtesy of Efficiency Maine Trust

To qualify, the loan must be for a commercial property, such as a local business, hotel or a multifamily building, and the proposed property upgrades must be limited to energy savings. Improvements could come from installing rooftop solar panels, a renewable energy-sourced heating system or insulation.

“It needs to have a savings-to-investment ratio of greater than one,” said James Neal, senior program manager for financial initiatives at the quasi-state agency Efficiency Maine Trust, which will administrate the C-PACE program. Energy savings upgrades can help reduce operating costs for owners, he said.

C-PACE programs have been enabled through legislation in more than 30 states, according to the U.S. Department of Energy. In Connecticut, the first state to launch C-PACE financing, projects have warded off approximately 927,000 tons of carbon dioxide emissions, equivalent to taking 185,000 cars off the road, according to the Maine Real Estate and Development Association.

“Many commercial properties aren’t up to date in terms of energy efficiency, such as heating and cooling, insulation, thermal barriers, air handling,” said Paul Peck, the founder of LWS Development, a Portland-based real estate development company.

The C-PACE program will only be available to property owners in municipalities that have adopted an ordinance and signed a municipality participation agreement.

“We are working on the model ordinance in parallel to the rulemaking, so it should be available for these municipalities to adopt in a similar time period,” Neal said.

A property owner would then have to use a registered capital provider or bank to access the loan. Some property owners may have to seek permission from their mortgage holders, Neal said.

C-PACE loans are fully amortized, allow property owners to fund an entire project without a down payment, have no balloon payment due at the end and typically require repayment within 15 to 30 years, according to the Maine Real Estate and Development Association. In comparison, bank loans might require repayment in five to 10 years.  

In addition to municipalities’ voluntary participation, the program will also depend on whether the primary lender who holds the mortgage on a property will want to work with the owner to finance upgrades through the C-PACE program. And banks have expressed hesitation.

The Maine Bankers Association testified against the legislation authorizing C-PACE financing last year, arguing that the program will create added risk for banks given that a C-PACE loan will have priority over the bank if a borrower defaults.

But in an email on Wednesday, the association expressed more support for the program.

“Maine banks are proud to support clean energy projects across our state,” said Josh Steirman, director of government relations for the Maine Bankers Association. The association will continue to work with stakeholders and Efficiency Maine to “develop and refine tools that support green innovation,” he said.

The Maine Real Estate and Development Association will host a panel discussion at 7:30 a.m., Thursday, Dec. 8, at the Holiday Inn By the Bay in Portland to discuss the C-PACE program. Panelists will include Neal from Efficiency Maine; Michael Doty, the director of energy efficiency lending at Nuveen Green Capital, a national C-PACE loan provider; and Mark Stasium, director of commercial real estate lending at Camden National Bank. The discussion will be moderated by Peck, the founder of LWS Development.

Mehr Sher is a Report for America corps member. Additional support for this reporting is provided by the Unity Foundation and donations by BDN readers.

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Mehr Sher

Mehr Sher reports on the Maine environment. She is a Report for America corps member. Additional support for her reporting is provided by the Unity Foundation and donations by BDN readers.