Ygrene – Is it a Smart Way to Finance Green Building Improvements?

Ygrene is one of the smartest ways to upgrade your commercial building’s energy efficiency. It isn’t “free money” but it’s close. Best of all, it’s NOT a loan.

Sound too good to be true? If you live in California, or 37 other states, then it’s for real and we’ll bet you’ll be surprised by some of the improvements that qualify.

Here’s an outline of what we cover in this article on how Ygrene affects your commercial property:

1. C-Pace – The Smart Way to Upgrade Your Property
2. How does YGrene help my business?
3. Five Advantages of Ygrene PACE Financing Over Traditional Loans
4. Five Disadvantages of Ygrene PACE Financing Over Traditional Loans
5. Is Ygrene PACE Financing a Loan?
6. Does Our Credit Score Affect Eligibility for PACE Financing?
7. It’s Quick and Easy.
8. What Projects Qualify for PACE Financing?
9. What Improvements Qualify for Ygrene/PACE?

C-Pace – The Smart Way to Upgrade Your Property

Hint: Don’t take out a loan.  Instead, use your equity to finance improvements.

Ygrene offers a unique type of financing through C-PACE (Commercial Property Assessed Clean Energy). It pays for upgrades that make buildings greener, more energy-efficient, or more climate-resilient (safer from natural disasters).

The good news is the program has already provided financing for over 94,000 green projects. Because it’s not government-run, it’s also fast and easy.

C-PACE funding makes energy-efficient improvements affordable for property owners. It pays the contractor in full, then the property owner pays the money back over time as a line item on their property taxes. Rather than taking out an improvement loan, the owner finances through a “Property Tax Assessment.”

How Does Ygrene Help My Business?

There are several ways the Ygrene program can help you make and save money.

• Increase in Property Revenue – Improvements will increase property value and allow you to increase leasing rates.
• Preserve Capitol for Positive Cash Flow – The easy, tax line-item payment system allows you to continue using your cash.
• Increased NOI – Your net operating income increases because you spend less on energy and less on maintenance while collecting more lease income.
• Preservation of Investment – You’ve invested in a building, and preserving it is important for future use and income.
• Business Continuity – With backup power generators and no interruption in your cash flow, your business will continue to operate smoothly through construction or improvement projects. Continuity is particularly useful in the Bay Area, where we have rolling blackouts during the summer to save energy and help prevent wildfires.

Five Advantages of Ygrene PACE Financing Over Traditional Loans

1. The project funds can be paid back over 20 or 30 years, and your first payment can be delayed for up to 12 months.
2. Interest rates for Ygrene’s C-PACE financing are fixed and lower than most commercial loans. Currently, they are running between 8 and 9%.
3. There are no prepayment penalties.
4. If you decide to sell your commercial property, the lien and repayment can often transfer to the new owner.
5. You can choose from a list of fully vetted contractors like Allied Construction Services

Five Disadvantages of PACE Financing Over Traditional Loans

1. Surprise Payments – While it’s often possible to include your loan payment in your monthly mortgage payment, you have a large yearly or half-yearly bill to pay if you don’t or can’t arrange that. If your company happens to have cash-flow problems at that time, you may have trouble paying.
2. Foreclosure Danger – If you are not able to keep up the payments, you could face foreclosure. Even if you are consistently making your mortgage payments, not paying your tax bill with the loan payment can make you vulnerable to foreclosure. A PACE loan is first in line to get paid on a creditor’s list when you are in financial difficulty.
3. Selling the Building – If you decide to sell your building, you may have to pay off the entire amount due. Mortgage companies like Fannie Mae, Freddie Mac, and the Federal Home Loan Banks will not grant loans for properties with a PACE lien. This makes selling your building much more difficult.
4. Contractor Conflict of Interest – Contractors sometimes get finder’s fees for referring customers for PACE funding. This creates a conflict and temptation for less-than-honest contractors to lose sight of their customer’s best interests and make false promises or statements. Be sure to choose a trustworthy contractor like ACS.
5. Costs Versus Benefits – Interest rates for PACE loans may be higher than rates you can get for business lines of credit. Some projects will save you substantial amounts of money on your energy bills and help offset the loan cost, but many projects will not come close to recouping the money.

Is Ygrene PACE Financing a Loan?

No. Property Assessment Clean Energy or PACE is NOT a loan.

The funds are advanced for the project, and the commercial property is assessed with the improvement. You pay back the advanced amount through your taxes.  The payments include the advanced amount with a low-interest rate, currently between 8 and 9%, and are based on the property’s value. While you pay the money back as a line item on your tax bill, the debt is tied to the property and will have to be paid or transferred to a new owner if the building is sold. PACE advancements are permitted under state laws in three states, California, Florida, and Missouri.

Does Our Credit Score Affect Eligibility for PACE Financing?

No. A company’s credit rating isn’t a factor in determining eligibility.

Approval depends on the building’s equity and your company’s ability to make the payments. If your property has a mortgage, PACE looks for consistent mortgage payments and available equity. A lien on the property secures the debt, and since the improvements tend to increase the property’s value, the advanced funds are more secure.

It’s Quick and Easy.

After filling out the application paperwork, final approval takes an average of 3 days, and it takes about 38 days for the funds to be available. Ygrene provides 100% of the project’s financing. They pay the contractor directly and make the final payment when you are completely satisfied with the work done.

You will need to use a Ygrene approved service provider such as ACS.  Allied Construction Services is an approved Ygrene PACE contractor.

What Projects Qualify for PACE Financing?

Qualifying properties include small and medium retail spaces, offices, multi-unit housing complexes, industrial units and complexes, and hospitality locations. California, Florida, and Missouri allow Ygrene, C-PACE financing, and each specifies which project types qualify.

The list below outlines the types of projects permitted in California:

Heating and Air Conditioning

• • Cooling Towers
  • Controllers

Solar

• • Solar Panels
  • Inverters
  • Solar Pool Heating

Roofing

• • Green Roof Installations – TPO and PVC roofs save a lot of energy, as do acrylic and silicone roof coatings.

Windows & Doors

• • Skylights
  • Glass Doors

Alternative Energy

• • Wind Turbines
  • Fuel Cell Power Systems
  • Electric Charging Stations

Seismic

• • Foundation Strengthening

What Improvements Qualify for Ygrene/PACE?

Here are some projects Ygrene will finance that might surprise you.

Cooling Tower – is an open-topped, tall concrete tower used for cooling water, condensing steam, and cooling waste heat before it vents into the atmosphere. Less heat released into the air means an increase in the rate of ozone formation and global warming.

Fuel Cell Power Systems –  A fuel cell power system can power anything from a laptop to an entire utility power station. The cells use hydrogen energy to produce clean, efficient electricity and the only by-products are heat, water, fuel, and electricity. Unlike other power sources like hydropower, fuel cell power systems don’t require large landmasses.

Electric Vehicles Charging Stations – Electric vehicles mean less fossil fuel.  Having charging stations available for company vehicles is economical, and allowing employees to use the stations for their personal vehicles will encourage more people to invest in electric cars.

Wind Turbines – Wind Turbines cut the use of fossil fuels and provide clean electricity by harnessing the wind. You don’t necessarily need to invest in a huge turbine.  Smaller models called microturbines can be used for today’s microgenerators.

Heating and Air Conditioner Controllers – Programmable controllers allow you to change the temperature on a schedule and manage energy use more efficiently.  Allowing the heat or air conditioning to run at full power when no one is in the building is extremely costly.

LED Lighting – Switching from incandescent light bulbs to LED saves money and protects the environment by using less electricity.  Incandescent bulbs consume six times the electricity of LED bulbs.  LED’s also last 50 times longer, which saves maintenance costs. If your tenants complain about LED bulbs being too bright, try reducing the wattage or changing the shade or light cover.

Solar PV Systems and Solar Inverters – A photovoltaic system (PV) uses solar panels to convert the sun’s rays into electricity. The inverter converts the energy from direct to alternating current. This renewable energy cuts fossil fuel use and carbon emissions. Solar roofing is one of the hottest areas of growth in roofing.

Solar Water and Pool Heating– Solar panels, provide clean electricity for water heating and mean fewer carbon emissions.

Green Roofing – Roof coatings, also known as roof restorations, keep trash out of the dump and save big on energy. They are most often acrylic or silicone roof coatings.

Energy Efficient Doors and Windows – Air moving in and out of a building through inefficient windows and doors dramatically increases energy usage. By replacing windows and doors, not only do you save substantially on your utility bills, but you also use less energy which means cleaner air.

Foundation Stabilization – Floods, soil erosion, and violent winds damage a building’s foundation. Stabilization efforts protect your investment and prevent further damage. There are several ways to strengthen the building’s foundation depending on the original construction and whether damage has already occurred. Underpinning increases the depth of the foundation and repairs cracks.  Jacketing reinforces columns with concrete jackets. Mudjacking injects concrete into holes in small expanses of concrete.

High Impact Windows and Doors – Replacing outdated windows and doors with hurricane-resistant models will keep everyone safer during violent storms. The windows consist of two sheets of glass with a shatter-proof membrane between them. If debris hits, the glass might shatter, but the pieces down fly around, and water still can’t get through because of the membrane. With the increase in damaging weather events because of global warming, any preventive measures will also save money and save the environmental impacts of industrial waste added to our landfills.

The Smart Choice for Protecting Your Investment

Choosing Ygrene C-PACE financing is smart because it helps your bottom line, and protects the environment without affecting your cash flow.  As a property owner, you want attractive, energy-efficient, and profitable buildings. You can have all of it by investing in improvements that save energy.

A good place to start is with the type of roof you choose.  We do a lot of acrylic or silicone roof coatings because they make so much financial sense.  In addition to keeping garbage out of landfills, they last as long as a new roof but cost less.

Additionally, all of our TPO and PVC roofs come in a variety of colors including an energy-efficient, highly reflective white.

Got Questions? Feel free to contact ACS at (925) 724-2324.