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A $60,000 solar project, with no money down: A Colorado program helps businesses finance renewable energy projects

29 Colorado counties have opted in to C-PACE, Colorado Commercial Property Assessed Clean Energy

A large solar array sits on top of the Swiss-O-Matic manufacturing center in Montrose on Tuesday morning Oct. 15, 2019. The solar system now provides 75% of the company’s electricity use. (William Woody, Special to the Colorado Sun)
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Delta County farmer Steve Ela saved a minimum of $1,000 per month on utility bills last year after installing solar panels at his 100-acre organic farm where he grows mostly tree fruits – peaches, plums, pears, sweet cherries and apples.

Ela financed 100% of the $60,000 solar project, with no money down, thanks to Colorado C-PACE (Colorado Commercial Property Assessed Clean Energy), a New Energy Improvement District program that offers a financing tool for commercial and multi-family property owners to install energy efficiency, water conservation and other renewable energy improvements on existing and newly constructed properties. 

Ela added a 26-kiloWatt solar photovoltaic system to existing solar panels, maximizing the amount of solar power his utility company will allow. The combined 50-kW system provides 90% of the fourth-generation farmer’s electricity needs. 

“The nice thing about the loan is they attach it to your property tax bill – that’s where C-PACE is different from a traditional loan,” Ela said. “You make one payment a year, as part of your regular property tax payment.”

Ela expects to pay off his loan within eight to 10 years, at which time he said he will no longer have a utility bill. The solar system is expected to last more than 25 years. 

Montrose and Delta counties are among 29 Colorado counties that have adopted the C-PACE loan program, with 10 other counties currently “in discussion” with program officials. Only one, Mesa County, has declined to participate in C-PACE after it was introduced to county commissioners a couple of years ago. 

The remaining 24 counties have not yet been approached by C-PACE, said Tracy Phillips, director of Colorado C-PACE. Most often a county contacts C-PACE after a building owner, developer or contractor brings a prospective project to the attention of C-PACE, he said.

The 29 participating counties represent roughly 75% of the state’s building stock, Phillips said. Mesa County has a significant amount of commercial stock that would be eligible for the financing tool, he added.

To get started, Ela hired Empowered Energy Systems in Hotchkiss, which prepared a cost proposal for his solar project. C-PACE then introduced Ela to the program’s various participating private lenders who then determined their interest in financing the project. 

“They did the background work,” said Ela, allowing him to quickly determine which bank was the most competitive and best fit for his project. 

In Montrose County, two businesses — Mayfly Outdoors, maker of fly-fishing equipment and other outdoor products, and Swiss-O-Matic, a Swiss screw manufacturer that produces miniature components for all types of industries, are also enjoying lower utility bills after installing renewable energy and energy efficiency improvements financed through C-PACE.

Swiss-O-Matic owner and cofounder Claude Rocchia, back, his wife, Diane, and their son Joe in their micromachining factory in Montrose. The company makes tiny parts for the aerospace industry and also little screws used by Mayfly Outdoors in its fly-fishing reels. Swiss-O-Matic, which moved to Montrose in 2000, is using a solar-power array on its factory roof to lower its manufacturing costs. The array provides about 75% of the electricity needed by the plant. (William Woody, Special to The Colorado Sun)

Swiss-O-Matic owner Claude Rocchia learned about C-PACE from Atlasta Solar Center after he hired the Grand Junction-based company to install a photovoltaic system for his home. When he mentioned the possibility of adding solar panels to his commercial property, the company told him about the financing tool available to Montrose County businesses.

The timing was good, as Rocchia was in the process of adding 3,000 square-feet to his Swiss-O-Matic building, as well as 12 additional machines. Even with that additional space and electricity use, Rocchia’s utility bills are half of what they were prior to the renewable energy upgrade. His utility bills went from roughly $2,500-$3,000 per month to an average of $1,200-$1,600.

The solar array on his 15,000 square-foot building — where 62 machines run day and night — provides 75% of the company’s electricity use, including for lighting, heating and cooling. 

Rocchia chose Montrose Bank (now Bank of Colorado) as his lender, which worked directly with C-PACE and Atlasta Solar Center. 

Individual counties must formally opt into the program for it to be available to constituents. Commissioners must pass a resolution, vote on it and then sign a participation agreement that allows commercial property owners access to the program. 

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Counties are involved because the project’s loan repayment is routed through the county property tax assessment process — akin to a sewer district assessment. A voluntary assessment is placed on the owner’s property tax bill, which is repaid over the financing term. The assessment can transfer to the next owner if the property is sold.

Counties are paid a 1% fee to cover the cost of county administrative time. For example, an annual loan repayment of $5,000 would include an additional $50 fee to pay for the county treasurer’s time. This payment happens during the course of paying the property tax bill each year. 

Mesa County treasurer Sheila Reiner said the county’s role would not require much time. 

“I visited with Montrose, and a few other counties,” she said. “Treasurers said it was a ‘positive experience.’ I would be glad to do it if the commissioners agreed it was a good move for Mesa County.”

Thus far, Mesa County commissioners are not interested. Republican commissioner John Justman said he wasn’t familiar with the program and didn’t remember ever discussing it. 

Commissioner Scott McInnis said it is Mesa County’s position to “not be a collection agency for banks.” 

“It’s private individuals dealing with private banks asking the government to broaden its role to ask the county to put (a payment) on a tax bill,” saic McInnis, also a Republican. “It’s not my highest priority.”

“It’s a collection; it’s an assessment,” said Phillips, whose company, Sustainable Real Estate Solutions, was hired by NEID to administer the program. “Counties place special assessments on properties all the time. All of these appear on the property tax bill. The program is not asking the county to do something they don’t already do.”

Both Montrose and Delta counties — each also governed by Republican commissioners, have adopted the program.

Delta County Commissioner Don Suppes said many farmers and other business owners have used C-PACE to upgrade systems, increase efficiency and become more profitable. 

“The payoff through the property tax system is new and unique,” Montrose County Commissioner Keith Caddy said. “The treasurer assured our board that she could handle it — putting the assessment on property tax bills.”

While acknowledging he “doesn’t know all the details,” McInnis said he “never got a straight answer” as to what happens if a loan goes into default.

So far, that hasn’t happened in Colorado, where C-PACE is offered only for commercial properties. 

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If a default were to happen there would be a notice of the property being delinquent, then a notice for a tax sale. At that point, if the property didn’t sell, a mortgage loaner can step in, said Andrew Sand, NEID board chairman. 

If the bank declined to buy the defaulted property, it would transfer to a treasurer’s deed, which is what concerns counties, Phillips said.

In Denver, where there’s a high commercial transaction rate, it’s rare for a property to transfer to a treasurer’s deed because selling those properties is profitable for banks, Phillips said. 

“The assessment fee placed on the property is critical for making this a compelling financing tool for owners,” he said. “This is the mechanism to do that. It’s terrifically effective. Being able to transfer a loan to a new owner is critical. It’s the only way to transfer this type of loan. It’s an elegant solution to a problem that’s plagued the energy efficiency industry for years.”

As a longtime energy efficiency consultant, Phillips said he’s often found property owners interested, yet hesitant to add renewable energy projects, not knowing if they’ll own their property long enough for the resulting savings to cover the upfront costs. One-hundred percent financing, spread out over a long term, and being able to transfer the loan to subsequent owners if the property should sell — addresses those concerns, he said.

The Colorado legislature passed a bill authorizing the program in 2013. More than 35 states, plus the District of Columbia, have C-PACE enabling legislation, and more than $1 billion in projects have been financed so far. The program’s administrative costs are paid via a 2.5% fee (not to exceed $50,000 per project) added to each C-PACE project, which is typically included in the total financed amount. Program and projects are solely financed through private capital.

A painter rappels down from the top of the Colorado Capitol building in Denver on Aug. 16, 2019. (Jesse Paul, The Colorado Sun)

Several Front Range communities adopted C-PACE early on, including Boulder County, where three businesses have used the financing tool to install renewable energy and energy efficiency upgrades. Another half-dozen businesses are in the process of using C-PACE for building improvements, said Boulder County Treasurer Paul Weissman.

“I hate to brag, but our commissioners were the first” to pass the resolution, he said. “In Boulder County it was easy for us.”

Weissman contends that counties that have not yet adopted C-PACE will change their minds when they understand the process and when local businesses begin to apply pressure. C-PACE is just one option for obtaining financing for energy efficiency upgrades, and “a really good one,” he said.

While El Paso County has not yet adopted C-PACE, it is one of the counties listed on the copace.com web site as “in discussion” about the program. 

Colorado Springs Utilities is supportive of C-PACE if it should be adopted, said public affairs specialist Danielle Oller, because it would provide its business customers with an additional financing option for energy and water efficiency and renewable energy projects. 

The Colorado Renewable Energy Standard requires municipal utilities to generate 10% of their electricity through renewables by 2020. C-PACE projects can help utilities reach that goal. 

Sandy Head, executive director of the Montrose Economic Development Corporation, introduced Montrose County commissioners to the program after a group of citizens brought it to her attention.

“It’s a great tool for new construction,” Head said. “We work with primary employers who build large buildings. We’re always looking for tools to help businesses do better. We try and bring new wealth into the community.”

Head said she was surprised at the apparent lack of interest in the program while attending a meeting with county officials in southern Colorado. Adding energy efficiency to buildings creates jobs and saves owners money, she said.

“It baffles me,” she said. “I told them, it doesn’t cost you anything and it would benefit your own citizens. Our own commissioners were very receptive. It’s great to have a county open-minded like that. To me there’s no logic in not doing it. It’s an economic driver. I don’t know why any county is not doing it.”


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