Fairfax County is restarting and opting into a statewide program that helps commercial properties with financing for energy efficiency and resiliency improvements.
Last week, the Fairfax County Board of Supervisors approved the amending and re-adoption of the Commercial Property Assessed Clean Energy and Resiliency (C-PACE) program, which aims to assist commercial building owners with energy and water-saving improvements for little to no upfront costs.
The county first established its own program in 2019, the first in the state to include resiliency projects that address high wind, extreme temperature and flood risks. But in the four years since, no contracts have been executed, and no projects have been completed under the program.
C-PACE is intended as a financial tool designed to “provide long-term private funding to [commercial] building owners for energy-saving and water-saving projects,” according to the county website.
A C-PACE loan is intended to be easier for the property owner to pay off, acting director of the county’s Office of Environmental and Energy Coordination (OEEC) John Morrill told FFXnow in an email.
“The intent of the energy improvements financed through a C-PACE loan is to reduce the operating costs of a property, thereby putting the property owner in a better financial position to pay off all loans,” Morrill said.
He said C-PACE “has struggled to gain traction” because of a confusing process, lack of understanding of the financial product, and the “reluctance” of first-lien debt holders to give up being first to be paid back.
At the meeting, several supervisors expressed their disappointment in the county program so far, voting unanimously to instead opt into a statewide program created in late 2021.
“It’s obviously disappointing that…we adopted a program that has not been used,” Dranesville District Supervisor John Foust said. “I think the step that you are taking us on, with aligning us with the state program, is a very positive change that could help make it more popular.”
Opting into Virginia’s version of C-PACE provides the county with two main benefits, the staff report notes. One, it relieves individual localities from procuring, administrating, and managing contracts.
“Under the statewide program, [the Virginia Department of Energy] is solely responsible for the solicitation of bids, selection of a program administrator, and contract administration,” the report says.
Secondly, it standardizes the program across jurisdictions and provides more support for messaging, engagement, and public awareness. It will also expand the types of projects eligible for loans to include stormwater management and electric vehicle infrastructure.
Morrill said the county hopes partnering with the state will help solve the challenges that the program has faced.
By standardizing application documents in the state program, attorney fees and other transaction costs for completing loans will be less expensive through the state program and result in less friction for getting deals completed. In addition, Fairfax County will work with the state energy office and C-PACE program administrator to promote the availability of C-PACE financing in order to help the market better understand this financial product. As for concern about losing first lien status, we hope consistent marketing and promotion of the program with some success stories will help give lenders confidence that C-PACE can be successful in Virginia, just as it has been in several other states.
But the county had similarly high hopes when it launched C-PACE years ago.
Mason District Supervisor Penny Gross recalled a luncheon in 2018 where the county introduced the program to local business owners. The room was full of excitement that appeared to have nothing to do with the free lunch, she said. But when the program was enacted and the application period opened, the excitement seemingly dissipated.
“I thought we’d sit back and watch the applications roll in, and nothing happened,” Gross said. “It was a great disappointment for those who worked on C-PACE.”
The county hopes local commercial business owners will now become aware of the program and its ability to provide financial help to make climate-friendly changes.
“Now there appears there is a pathway to actually make C-PACE work,” Gross said. “I’m glad the Commonwealth has determined that [the program] really needs the state to come in and assist with this.”
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