Sonoma County real estate owner taps C-PACE financing for Guayaki Yerba Mate solar installation
Installing renewable energy is often expensive, but North Bay business and property owners are taking advantage of a little known program that eases the financial burden.
Guayakí Yerba Mate, a drink maker based in Sebastopol, along with the owner of its building, Highway Partners LLC, recently took advantage of Sonoma County's property assessed clean energy program, or PACE, which allows property owners to finance permanent energy or water improvements, using county cash to finance the initial improvements. The debt is then repaid through a property tax lien over several years.
According to Sonoma County, the rooftop solar system is expected to satisfy up to 95% of Guayakí's electric demand and is adding 60 kilowatt of renewable power to the regional electric grid.
Most PACE funded improvements happen on residential property, but using commercial PACE, or C-PACE, funding is an attractive option for building owners and tenants in some cases, but is not necessarily the best option for every business, according to Woolsey McKernon, managing director at CleanFund, a private provider of PACE funding based in Sausalito. Building owners have to consider where the initial money is coming from to finance the improvements that have to be paid back and factor in issues including how long they intend to stay invested in a property.
Using PACE financing can be attractive to property owners since they can often pay back the loans over a longer period, sometimes up to 30 years, and potentially pass on some of the cost of the improvements on to tenants, according to McKernon.
McKernon noted for some property owners the long-term repayment period for C-PACE loans makes them less attractive because not every owner intends to hold onto a property long enough to reap the benefits.
'What's interesting to them is buying and selling,' he said, noting 'environmental upgrades are just not first and foremost in property owners' minds.'
McKernon's company recently closed the financing for C-PACE-funded improvements at the Corison Winery in St. Helena and has worked on financing solar-powered improvements at SOMO village, formerly Sonoma Mountain Village, a business park in Rohnert Park.
Last year San Rafael-based Seagate Properties also inked a 30-year C-PACE loan through CleanFund for upgrades to two of its Marin office buildings.
Seagate installed a 76,000-kilowatt solar electricity array on its 32,000-square-foot 3030 Bridgeway building in Sausalito. At its 11,300-square-foot headquarters building at 980 Fifth Ave. in San Rafael Seagate also installed a 49,600-kilowatt photovoltaic array plus a new roof and more-energy-efficient boilers, chillers and mechanical systems.
Improvements that increase energy efficiency like solar power and more efficient boiler systems make sense for companies like CleanFund to fund and for property owners to invest in since they create savings over the longer term. But McKernon said other improvements, like hardening against wildfires and earthquakes, don't have the same margins and are less attractive.
Providing financing for fire protection 'doesn't really move the needle' while seismic improvements do not create a return other than allowing a business owner to maintain insurance, he said.
'You spend the money and you don't get anything back other than returning tenants,' McKernon added.
That is why for some projects, getting PACE funding from public sources might make more sense.
As Guayakí and Highway Partners found, one of those sources is Sonoma County and its Energy Independence Program which has financed over $81 million in PACE projects, according to Division Manager Jane Elias.
Elias said about $13 million has gone to around 80 commercial projects in the county. She noted using the funding model for water and solar projects also benefits companies since it allows them to keep their capital free for other projects.
Elias said the county is expanding its program to include seismic strengthening and wildfire safety projects by the end of the year and currently offers an interests rate of 7% for PACE financing and varied repayment terms of up to 30 years.
According to the California Solar Initiative website, Sonoma County has installed just under 120 megawatts of photovoltaic solar in total with more than 10% of these systems having been financed through the county's PACE program.
Not all North Bay counties operate a similar program.
Not-for-profit Marin Clean Energy operates in Marin, Napa, Contra Costa and Solano counties.
MCE Marketing Manager Kalicia Pivirotto wrote in an email that Marin County does not allocate funding to PACE or C-PACE and any loans are provided by the PACE programs themselves using private capital.
'However, MCE and the County do provide funding for energy efficiency, electrification and renewable energy projects and programs,' she wrote.