Putting PACE to Work for Senior Living Facilities

Putting PACE to Work for Senior Living FacilitiesSenior living facility owners have a lot to juggle: the health of their residents, the professionalism of the staff, and the administrative work that comes with running a business. Like most businesses, organizations in the senior living industry often seek out ways to improve business efficiency, save money, and cut costs. One way to do this is to increase energy efficiency to help reduce energy bills. By identifying ways to improve energy efficiency, it’s possible to save a substantial amount on your energy expenses.

 AssuredPartners NL, together with The Commercial Energy Group, provides energy efficiency project services to organizations in the senior living industry. A special program called Property Assessed Clean Energy, or PACE, is available to help finance and support energy efficiency upgrades in commercial buildings. PACE was established by the U.S. government to help remove some of the barriers to investing in energy efficiency.

How PACE Works

  1. State passes PACE-enabling legislation, local government creates or joins an assessment district
  2. Building owner evaluates projects that reduce energy costs and decides to go forward
  3. Local government (TLCPA PACE) provides financing — adds assessment to tax roll
  4. Property owner pays assessment on tax bill (for up to 20 years)

Some advantages of PACE Financing
According to the U.S. Department of Energy, PACE financing should help building owners overcome financing barriers to energy efficiency by:

  1. Requiring zero up-front investment:
    PACE provides up to 100 percent financing for building efficiency projects, providing external capital and freeing up internal budget resources. This feature addresses the number one barrier to pursuing energy efficiency – lack of internal funding.
  2. Delivering immediate positive cash flow:
    PACE projects are designed to ensure that the energy savings minus the PACE payment results in a positive cash flow each month based on a forecast of savings. Some owners also consider in their cash flow calculations other avoided costs, including repairs and maintenance, equipment replacements, regulatory compliance costs, and tax deductions.
  3. Offering long-term financing:
    Financing for commercial property almost never exceeds 10 years. Terms from five to seven years are the most common for general real estate lending, and one- to three–year terms are most common for construction project lending. Funding of energy efficiency projects over their useful lives (up to 20 years) makes many more projects cost-effective. Building owners on average prefer a 3.4-year payback time on energy efficiency investments, but this is when they are investing their own capital and expect to be cash-flow negative until the payback date. By providing 100 percent financing with a 20-year amortization, PACE should help overcome the number two barrier to pursuing energy efficiency: insufficient payback/ROI.

With financing programs available, taking the steps toward becoming an energy efficient senior living facility has never been easier. If you’re interested in learning more about how you can help your organization save, a member of the AssuredPartners NL Senior Living team can help. To learn more and contact an agent, click here: AssuredPartners NL Senior Living.

Brian Gould from The Commercial Energy Group Worldwide also contributed to this blog post.

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