A Roofing Contractor Drives Sales and Leads with Fast and Easy Energy-efficiency Financing

After 15 years in the roofing business, I’ve seen countless construction, design trends and sales methods change over time. The one thing that has always stayed the same? That first discussion with the customer around the kitchen table, looking at the scope of the job and then getting right down to finances. It’s the conversation that can make or break a project: Can the customer get the financing he or she needs to complete the job? Do we need to offer other options? Scale back? Or, even better, can we expand the job and sell into higher-quality products and designs built to last?

Supported by local governments, the YgreneWorks PACE program allows property owners to perform energy-efficiency and resiliency upgrades on their homes or businesses with zero down, a low interest rate and simple annual payments made through their property taxes.

Supported by local governments, the YgreneWorks PACE program allows property owners to perform energy-efficiency and resiliency upgrades on their homes or businesses with zero down, a low interest rate and simple annual payments made through their property taxes.

Regardless of project size or complexity, customers have two top-of-mind factors when considering a reroof: cost and time. As roofing contractors, we strive to deliver the highest-value renovation in the shortest time possible. To keep our team at Cal-Vintage Roofing of Northern California, Sacramento, at the industry forefront with competitive product and service offerings, we’ve developed a partnership with Santa Rosa, Calif.-based Ygrene Energy Fund to offer customers the latest in financing. The result has been a much happier kitchen-table conversation, alleviating customer concerns about reroofing costs and ultimately increasing our business by 20 percent.

KEEPING PACE WITH A GROWING TREND

Ygrene Energy Fund is a leading multi-state provider of Property Assessed Clean Energy (PACE) financing. Supported by local governments, the YgreneWorks PACE program allows property owners to perform energy-efficiency and resiliency upgrades on their homes or businesses with zero down, a low interest rate and simple annual payments made through their property taxes. These “green” roofing projects can include everything from cool roof shingles that slow heat build and save on electricity costs to reflective insulation providing a better thermal barrier for a building.

Increasingly, Cal-Vintage customers are more concerned with how projects impact the environment and are always interested in ways to lower utility bills. In fact, many PACE-qualifying upgrades are now being mandated by law; for instance, Title 24, Part 6, of the California Code of Regulations requires that residential and nonresidential buildings adhere to strict energy-reduction standards mandated by local governments. This has resulted in an uptick in owners who need major roof renovations and also need a way to afford the upgrade. As similar laws gain popularity amongst U.S. cities and states, PACE is a valuable tool for customers looking for better reroof financing options. As a large roofing company, we at Cal-Vintage must take it upon ourselves to offer every way to comply with these rules.

To qualify, Ygrene considers the equity in the property, not the personal credit of the property owner, unlocking finance doors for entire groups of customers. So far, more than 40 Cal-Vintage clients have taken advantage of the PACE option to avoid dipping into savings, escape lengthy paperwork and skip extensive background checks. Securing traditional reroofing loans can be a long and difficult process. With PACE financing, our customers have been able to complete larger, longer-lasting projects faster because the financing comes through in two to three days rather than two to three weeks.

BECOMING A CERTIFIED PACE CONTRACTOR

many PACE-qualifying upgrades are now being mandated by law; for instance, Title 24, Part 6, of the California Code of Regulations requires that residential and nonresidential buildings adhere to strict energy-reduction standards mandated by local governments.

Many PACE-qualifying upgrades are now being mandated by law; for instance, Title 24, Part 6, of the California Code of Regulations requires that residential and nonresidential buildings adhere to strict energy-reduction standards mandated by local governments.


Our job as roofing contractors is to provide the best value to our customers and community, and in a world of changing regulations and housing needs, this value extends to financing. The entire Cal-Vintage team is trained through Ygrene’s Certified Contractor Education program to know when and how to offer PACE financing as an option at the kitchen-table discussion.
The Ygrene education and certification program includes in-person training for our sales teams matched with webinars and online tutorials that can be accessed from the web anywhere, anytime. Topics cover all the information we need, including details about the PACE program, important consumer protections, step-by-step instructions for helping customers fill out the online application and how to ensure we receive our payment in a timely manner.

The Cal-Vintage sales team also received an in-person, individual training by a Ygrene regional area manager dedicated to our team. The training included information about program features and benefits, access to the web portal, the proposal tool and in- depth answers to our questions. As PACE requires a number of legal disclosures and approvals, our contractor team was briefed on the application and approval and funding processes so we could properly answer any custom- er questions. Additionally, Ygrene offers a support call-center to field any additional questions on the financing.

GETTING STARTED

We heard about Ygrene through a customer and reached out to the company’s local representative to become certified. The process was simple, and all of our questions were answered in the training session. Since the company’s inception, Ygrene has trained nearly 3,000 contractor companies in communities across its service territory. With $1 billion in approved applications and $350 million in closed contracts, Ygrene has been generating successful outcomes for customers and contractor partners across the U.S. Those interested in becoming a certified contractor can visit Ygrene Works’ website.

PHOTOS: CAL-VINTAGE ROOFING OF NORTHERN CALIFORNIA

PACE Financing is the Key to Unleashing Energy-efficiency and Renewable-energy Retrofits in Commercial Buildings

Architects, contractors and managers who make a living improving the energy efficiency of buildings know the drill: They fight hard for cost-effective energy-efficient designs, and they fight even harder to ensure these designs and systems survive cost-cutting efforts that can arise.

Through the GreenFinanceSF program, San Francisco-based Prologis used PACE financing to fund lighting upgrades, HVAC improvements and rooftop solar. These upgrades reduced purchased electricity costs by 32 percent. PHOTO: PACENation

Through the GreenFinanceSF program, San Francisco-based Prologis used PACE financing to fund lighting upgrades, HVAC improvements and rooftop solar. These upgrades reduced purchased electricity costs by 32 percent. PHOTO: PACENation

Technically sound projects don’t always get off the ground for several economic reasons. Sometimes the split incentive embedded in leases means the owner makes the capital investment but the tenant reaps the economic benefit. Other times, architects, contractors and managers must face the fact that they simply cannot get internal capital allocated to energy-efficiency projects despite their undeniable cost effectiveness. For small business owners, it can come down to lack of funds. For larger companies, the capital allocation process often translates into investment hurdle rates that are hard to attain because energy-efficiency projects must meet two- or three-year simple paybacks.

If an energy retrofit project makes economic sense and internal capital won’t be allocated to it, textbooks suggest the use of external capital. In practice, it’s not that easy. For small business owners, getting third-party financing often requires personal guarantees, some equity investment or other conditions. For larger companies, the use of external capital involves lengthy discussions that may include the downside of borrowing when a building’s holding period is up in the air, the cost of project capital versus corporate debt, and the balance sheet impact of the borrowed funds.

Enter Property Assessed Clean Energy (PACE) Financing. PACE is a tax-lien financing program that allows interested property owners to finance qualifying energy-efficiency and clean-energy improvements on their properties through a voluntary benefit assessment placed on their property tax bill.

This exciting form of third-party financing provides unique benefits to building owners:

The 542 Westport Avenue Shopping Plaza, Norwalk, Conn., financed a $285,000 lighting upgrade, which reduced electricity costs by more than $17,000 per year. PHOTO: Hartt Realty Advisors LLC

The 542 Westport Avenue Shopping Plaza, Norwalk, Conn., financed a $285,000 lighting upgrade, which reduced electricity costs by more than $17,000 per year. PHOTO: Hartt Realty Advisors LLC

  • The cost of PACE financing and the benefits generated can be shared with tenants, thus eliminating the split-incentive issue that derails so many energy-efficiency projects.
  • One-hundred percent of project costs, including soft costs such as development fees, can be financed through PACE, which removes the requirement for out-of-pocket expenses for owners.
  • PACE financing is available with flexible terms up to 20 years, making it possible to generate positive cash flow—and operating income—from projects with simple paybacks as long as 12 years. This increased operating income translates to higher property values for building owners.
  • PACE is entirely property-based financing. As a result, it requires no personal or corporate guarantees.
  • PACE is attached to a property tax bill, so the obligation to repay the financing automatically transfers to the new owner upon the sale of the property, along with the energy-saving benefits generated by the project. This eliminates any holding-period concern owners may have.
  • It’s generally accepted that PACE does not affect a building owner’s typical loan covenants, such as debt to equity ratios.

PACE funding is provided or arranged by a local government for 100 percent of a project’s costs and is repaid with a voluntary assessment during a term of up to 20 years. The property owner pays its typical tax bill, which now includes the PACE finance charge, and the local government redirects that payment to the investor.

Capital provided under a PACE program is secured by a lien on the owner’s property. Like other tax assessments, PACE assessments assume a first lien priority and the repayment obligation automatically transfers to the next property owner if the property is sold.

Similarly, in the event of default, only the payments in arrears would come due and the PACE financing does not accelerate. Because assessments are repaid through the property tax bill—a secure payment stream—PACE projects are seen as less risky than other financing mechanisms and, therefore, benefit from lower interest rates from the private sector with no government financing required.

The 542 West Avenue Shopping Plaza features a solar canopy that powers the exterior LED lights. PHOTO: Hartt Realty Advisors LLC

The 542 West Avenue Shopping Plaza features a solar canopy that powers the exterior LED lights. PHOTO: Hartt Realty Advisors LLC

PACE builds on a long history of benefit assessments that a government can levy on real-estate parcels to pay for the installation of projects that serve a public purpose, such as sewers and sidewalks. PACE serves a public purpose by reducing energy costs, stimulating the economy, improving property valuation, reducing greenhouse-gas emissions and creating jobs.

Pioneered by the city of Berkeley, Calif., in 2008, PACE is now a proven and effective tool to attract private capital to clean-energy projects. Commercial PACE programs are currently operating in 16 states and Washington, D.C., including more than 2,000 municipalities.

More than 700 energy-efficiency retrofits have been financed to date by commercial and industrial building owners using PACE. Indianapolis-based Simon Property Group, a global leader in retail real estate and an S&P 100 company, first used PACE in 2009 and has accelerated its use since then. Prologis, a leading developer of industrial real estate, used PACE to perform an energy-efficiency and renewable-energy retrofit at its headquarters in San Francisco in October 2012.

In Connecticut, hundreds of owners have elected to use PACE to retrofit their buildings, including the Norwalk Center, a family-owned shopping center, whose owner found PACE was ideal to finance energy-efficiency and renewable-energy improvements. In Bridgeport, Forstone Capital used PACE to retrofit the mechanicals and envelope of its 100,000-square-foot office building, which will save the owner nearly $250,000 in energy costs annually. Without PACE, it would have implemented only a fraction of its desired work scope.

Property owners across the U.S. are using PACE because it saves them money and makes their buildings more valuable. PACE pays for 100 percent of a project’s costs and is repaid for up to 20 years with an assessment added to the property’s tax bill. PACE financing stays with the building upon sale and is easy to share with tenants.

PACE is a simple and effective way to finance energy-efficiency, renewable-energy and water-conservation retrofits to buildings. Building owners who want to take advantage of PACE financing can find out where PACE is available via PACENation, a recognized source of impartial, independent and consensus-based information about PACE.