San Francisco has launched a green financing program to help its estimated 226 million square feet of large commercial buildings become among the country’s most energy and water efficient.
The Port of San Francisco’s historic property at Pier 1, the corporate headquarters of Prologis Inc., will be the first energy-efficiency upgrade funded through the city’s GreenFinanceSF program that uses Property Assessed Clean Energy (PACE) bond financing. Johnson Controls, a leader in delivering solutions that increase energy efficiency in buildings, will design and implement the project.
PACE financing helps building owners access capital for a wide range of energy upgrades that can pay for themselves with reduced operating costs. San Francisco established its PACE district in 2010 and was one of the first U.S. cities to launch an “open market” PACE program last year, making $100 million in bonding capacity available to the city’s commercial property owners. The city recently joined a new statewide alliance among 14 California counties and 126 cities to help attract owners and lenders to take advantage of the benefits PACE brings.
“Since buildings contribute 53 percent of greenhouse-gas emissions in San Francisco, it is essential that we address inefficiencies in the built environment. Projects like this exemplify the successful combination of our policies and programs to reduce emissions and help save businesses money. As more businesses take similar action, we’ll continue to grow our economy while decreasing carbon emissions to help ward off the worst effects of climate change,” says Melanie Nutter, director of the San Francisco Department of the Environment.
Johnson Controls expects the retrofit project at Pier 1 to reduce annual energy costs by more than $98,000 and reduce purchased energy by 32 percent. Upgrades include retrofits for 1,500 lighting fixtures, a 200-kilowatt rooftop solar array and improvements to the building’s heating, ventilation and air-conditioning systems. During its construction phase, the project is expected to create nearly 30 local jobs and $3.7 million in additional economic development in California, based on multipliers developed by the U.S. Department of Commerce.
The project cost is approximately $1.6 million, of which 90 percent is being funded by PACE bonds. The 20-year, low-interest bond was purchased by Clean Fund of San Rafael, Calif., a specialty PACE finance provider and will be paid off through a special property tax assessment. With PACE, if the ownership of the building changes, payments get transferred to the new owner.
Prologis has long been committed to sustainable development at Pier 1. The facility was designed in the late 1990s with many sustainable features, including preservation of the pier’s existing warehouse, which launched a waterfront redevelopment plan in San Francisco that continues today. Participation in PACE is an extension of this commitment and Prologis hopes it will provide a catalyst for the program to gain traction and encourage other companies in San Francisco to make similar cost-effective and environmentally beneficial improvements.