Green Roofs - Living Architecture Monitor - Winter 2017 - 11

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ECONOMICS & FINANCE

NEW FINANCING PROGRAM
IS RAISING THE PROSPECTS
FOR GREEN ROOFS
BY ERIC J. ALINI

In the past, the higher upfront costs of green roofs over conventional
roofing often stopped projects before they started. But no longer. Green
roofs can now effectively compete with conventional roofing through a
new type of financing that covers the cost of eligible energy efficiency,
sustainability and resiliency projects.
hrough a public-private partnership, Property Assessed
Clean Energy (PACE) incents owners to make energy
efficiency upgrades by providing 100% financing that is
long term, fixed rate and preserves the property owner's
capital. Owners may even elect to defer the first payments
by including capitalized interest in the financing - allowing
rental income to stabilize before repayment begins and aligning the ongoing utility savings with repayment costs for the
improvements. Prepaid service and warranty contracts may
be included, lowering maintenance costs as well. By including
irrigation, elevators, stairs and related roofing work in the
financing, green roofs can now be installed with no upfront
capital and have become economically attractive.
Since 1736, when Benjamin Franklin proposed the idea
of property tax to pay for the Philadelphia fire department,
tax assessment financing has funded public service projects
- from new sidewalks to schools. Today, PACE is the nation's

LIVINGARCHITECTUREMONITOR.COM

first voluntary property tax assessment applied to individual
buildings. It's an innovative way to pay for reducing the environmental footprint of America's building stock by helping
owners reduce their upfront costs through property tax assessment financing. For projects that typically can't calculate
energy savings or offer payback periods that are too long for
conservative investors, PACE transforms the standard return
on investment (ROI) model and provides a unique set of positive economic incentives that make environmental upgrades
such as green roofs very attractive.
The PACE financing mechanism begins when funds are
transferred from a capital provider to a government agency.
Funding is then secured through a tax assessment placed on
the building and repaid through the property tax bill. As a
result, the repayment of the financing is treated as a tax on
the property rather than a loan expense, greatly improving a
project's economics.

LIVING ARCHITECTURE MONITOR / WINTER 2017 / 11
http://www.LIVINGARCHITECTUREMONITOR.COM
Table of Contents for the Digital Edition of Green Roofs - Living Architecture Monitor - Winter 2017
