First-of-its-kind loan backs DuPont Building renovations

The DuPont Building will undergo renovations will the help of a C-PACE loan. | PHOTO COURTESY OF BPG

WILMINGTON – The historic DuPont Building in downtown Wilmington will be getting new heat and air conditioning units by way of the state’s first green energy loan to be amortized on a tax bill.

The Buccini/Pollin Group obtained the $3.9 million commercial property assessed clean energy (C-PACE) loan from Greenworks Lending, a Connecticut-based lender focused on such deals, which are limited by a property’s assessed value but paid annually over the loan’s term as part of a property’s tax bill.

While the C-PACE financing option has existed in the U.S. since a 2008 pilot program, Delaware only authorized its program in 2018. Today, the Delaware Sustainable Energy Utility Inc. administers the Energize Delaware C-PACE program.

Tony DePrima, executive director of Energize Delaware, said his organization was excited to celebrate its first deal.

“This would not be possible without the strong support of New Castle County Executive Matt Meyer and the whole County Council [and] we hope to expand the program in Sussex and Kent counties this year,” he said in a statement.

More than 35 states plus the District of Columbia have C-PACE enabling legislation and more than $800 million in projects have been financed, according to the U.S. Department of Energy  The financing option mirrors that used for other infrastructure projects, like sewer, water and roads, but extends it to projects that would incentivize investment in clean energy technology.

A 2019 DOE-backed study of C-PACE loans found that there were successful in creating clean energy jobs while supporting property owners. From 2008 to 2017, projects worth $887 million were completed, creating more than 13,000 jobs. In the same period, the study found just one default on a C-PACE loan out of 1,870 deals nationwide. Property owners who fall into arrears on the annual payments for the upgrades can be hit with a lien on the property, but in nearly every scenario payment plans were devised or tax obligations sold to third parties to ensure the payments were caught up.

Genevieve Sherman, head of new markets and partnerships at Greenworks Lending, said her company was excited to sign Delaware’s first C-PACE loan. She noted that C-PACE is still a new financing option for many states, but one that carries significant benefits.

C-PACE allows property owners to make significant upgrades to buildings without having to put capital up front or make monthly loan payments, Sherman explained. The loans are also transferrable to new owners, meaning they don’t have to cut into an owner’s profit on a property sale.

Sherman said that her 5-year-old company has signed about $200 million in C-PACE loans backed by private investors, while the industry overall hit a milestone of $1 billion last year.

“We do have other projects we’re working on in Wilmington and coastal Sussex County, but we’re eager to connect to anyone who is an owner of commercial property,” she said.

For the first project, Greenworks was able to find a high-profile borrower and building.

Originally constructed in 1908, the DuPont Building had been the longtime corporate home to E.I. DuPont du Nemours until 2015. Today, it is the global headquarters for The Chemours Co., a global chemistry company.

At approximately 1 million square feet and taking up an entire city block, the building has been undergoing a significant $175 million renovation project since BPG purchased it in 2017. When completed, the space will be a modern, mixed-use facility consisting of a hotel, luxury apartments, a theater, retail space, and Class A office space.

The C-PACE financing will be used to cover multiple energy efficiency measures, according to Greenworks, including chiller plant replacement, boiler replacement, and cooling tower refurbishment. Notably, the new HVAC units will utilize Opteon refrigerant, made by Chemours, which has much lower global warming impact that prior refrigerants like hydroflourocarbons.

These upgrades will deliver estimated savings of $14.2 million over the equipment’s lifespan while also delivering environmental benefits equivalent to reducing 2,670 metric tons of carbon dioxide emissions annually.

In a statement, Doug Edwards of Seiberlich Trane Energy Services, the contractor on the project, said the C-PACE financing will back a project that “will create many local jobs and will significantly lower the property’s carbon footprint. It’s an exciting win-win for all parties involved.”

By Jacob Owens

jowens@delawarebusinesstimes.com