A downtown Anchorage business expects to save tens of thousands of dollars annually in energy costs under a loan program that is new in Alaska, and which officials say requires little or no money up front for clean energy upgrades on commercial properties.
RIM Investments is the first company in Alaska to take out a loan under the program, called C-PACE, or Commercial Property Assessed Clean Energy, according to officials with the Municipality of Anchorage’s C-PACE program. The program is already in place in many parts of the Lower 48.
RIM is borrowing $680,000 from Nuveen Green Capital, based in Connecticut, to make energy efficiency improvements to its four-story building at Seventh Avenue and G Street next to City Hall, home to a new mural and businesses including RIM Architects and UPS.
Larry Cash, a co-owner at the RIM companies, said improvements to be made in the coming months include the installation of a small co-generation system on the roof that will combine the building’s heat and power using natural gas, plus LED lights, a new water heater and a thermostat that lowers heat when the building is not occupied.
The energy cost savings of about 40% will more than cover the cost of the loan, he said.
“They will be significant,” Cash said.
City officials who administer the program said other commercial property owners are pursuing similar loans.
The loan can pay for projects like wind turbines, solar panels and other energy efficiency upgrades, said Melanie Lucas-Conwell, a co-administrator of Anchorage’s C-PACE Program.
Eligible properties including commercial buildings, warehouses and multifamily housing with four units or more, she said.
“This is good for our local economy, jobs and business growth,” she said in a statement from the municipality on Monday.
“We hope this is the first of many clean energy projects in Anchorage financed through this innovative program,” Mayor Dave Bronson said in the statement.
The program facilitates a loan from a lending institution based on the savings the energy upgrades will provide, said Shaina Kilcoyne, also co-administrator for the C-PACE program.
Under the program, the city allows a lending institution to issue the loan backed by a lien against the property. That allows the lender to make a long-term, low-interest loan without requiring the building owner to provide a down payment or other up-front cost, Kilcoyne said.
“You can do it with zero out-of-pocket investment,” she said.
More than 35 states have passed legislation enabling the program in their state, including the Alaska Legislature in 2017. “There have been no foreclosures as result of C-PACE in the Lower 48 after billions of dollars of investment,” Kilcoyne said.
The Anchorage Assembly modified municipal code to bring the program to Anchorage in 2020. The municipality administers the only program in Alaska. Other local governments in the state are expected to create their own programs.
The Legislature this year also expanded the opportunities in Alaska, so lenders can provide loans for commercial property involving new construction, and for resiliency projects like earthquake and fire preparedness or recovery, Lucas-Conwell said. The expansion will be implemented in Anchorage next year and could help spur new multi-family housing in Anchorage, she said.
Chris Rose with Renewable Energy Alaska Project said C-PACE loans are a convenient way for commercial building owners to make buildings more energy efficient, productive and comfortable.
“This first loan is exciting because it will demonstrate to other buildings owners in the city that there’s an opportunity to affordably borrow money for these kinds of projects,” he said.
Cash said his payments for the loan will be made to the city, like a property tax payment, under a special assessment by the city. The city will pay the bank.
Cash said he began trying to get a C-PACE loan about two years ago. He said his building was older and inefficient. He got in touch with his mortgage holder, Anchorage-based Northrim Bank, which worked on the loan with Nuveen. He also reached out to the city’s C-PACE program.
He had to hire an energy auditor to detail the energy cost savings that are fundamental to the loan, he said. But the costs of the audit are worked into the loan, he said.
“It’s just a no-brainer,” he said of the program. “It reduces the energy the building is using, reduces the carbon footprint, so you get all the positive things about more efficiency from an energy utilization standpoint.”
The city is working with other municipalities in Alaska that are looking to adopt the program, Kilcoyne said.
Alaska’s building stock is aging and in need of upgrades, Kilcoyne said.
“This offers an opportunity for economic development when we really need it. This can improve our building stock for decades to come,” she said.