Delaware Landmark Sets the PACE for Upgrades
- May 21, 2020
In a milestone for the C-PACE movement, the 112-year-old DuPont Building in downtown Wilmington, Del., is getting an energy efficiency overhaul through the financing tool. The project marks the state’s first use of the Commercial Property Assessed Clean Energy mechanism.
Completed in 1908, the 13-story, 1 million-square-foot building was the longtime corporate home of the DuPont Co. until 2015. It now serves as the global headquarters for The Chemours Co., a multinational chemistry company spun off from DuPont. The building, which takes up an entire city block, was purchased by Buccini/Pollin Group in 2017 and has since been undergoing a $175 million renovation.
The project included preserving The Hotel du Pont and its signature Green Room restaurant. In the first phase, BPG modernized about 280,000 square feet of office space for Chemours. When complete, the building will be a modern, mixed-use facility consisting of the hotel, luxury apartments, a theater, retail space and Class A office space. A ground-floor, 13,000-square-foot food hall opened last year and the apartments are still being developed. In 2019, Arch Street Capital acquired the Chemours space, set up as an office condominium, on behalf of an institutional client.
Other parts of the building are also now commercial condos, which presented a challenge for arranging the C-PACE lending, said Mike Doty, director of energy efficiency lending at Greenworks Lending. The Darien, Conn.-based company is providing the $3.9 million in C-PACE financing for the project. Doty reported that Greenworks worked with five different tax parcels when setting up the financing transaction.
C-PACE allows commercial property owners to secure low-cost, long-term financing for energy efficiency, water conservation and renewable energy projects that is then repaid as an assessment on the property tax bill for current and future owners. Currently 37 states and Washington, D.C., have enacted authorizing legislation; the program is active in 20 states and the District of Columbia.
Doty described the transaction as a 25-year loan but declined to disclose further details. He said the condo owners can expect to see a total of $14.2 million in savings over the equipment’s lifespan, which is projected at 25 years. The upgrades are estimated to reduce CO2 emissions by 2,670 metric tons annually.
“We were able to work with the condo association and the ownership structure to break the PACE loan up into pieces,” Doty said.
Doug Edwards of Seiberlich Trane Energy Services in New Castle, Del., the project contractor, worked with Doty to educate all parties and their mortgage companies on the work, its potential benefits and the mechanics of C-PACE financing. “Without C-PACE, I don’t think it would have made sense to do this project,” Edwards said.
Nuts and Bolts
The financing is covering multiple energy efficiency measures including chiller plant replacement, cooling tower refurbishment and upgrades to the steam distribution system. Most of the work involved replacing the 60-year-old central chilled water system, which had three large centrifugal chillers, plus a fourth smaller air-cooled chiller used only in winter.
“The chillers were 60-plus years old. They were operating at very poor energy efficiency, plus they required over $100,000 a year on maintenance due to their advanced age. They needed frequent leak repairs and other service work to keep them on line,” Edwards said. “It was a capital investment that needed to be dealt with eventually, and C-PACE allowed it to be done proactively and strategically, in a way that added the most value to the property.”
“It was not a small investment and not an investment any one of the condo units could likely have made on their own,” he added.
The work will include removing the three existing centrifugal chillers and replacing them with three new Trane CenTraVac high-efficiency chillers with Opteon XP30 (R-514A) refrigerant. Opteon XP30 is a non-flammable, high-performance refrigerant produced by Chemours.
One of the new chillers also features an internal free-cooling option, which takes advantage of refrigerant migration during cold ambient temperatures due to the use of low-pressure refrigerant. This feature will allow the plant to produce chilled water through most of the winter to meet the base load requirement without the use of compressor energy, another of the project’s energy-savings measures.
“The new chilled water plant is going to use half the annual energy consumption of the older one,” said Edwards. The chillers were recently delivered and will be brought to the project site in sections, Edwards said. Work is expected to continue for several more months.
The steam boilers did not need to be replaced but improvements to the steam distribution system include the addition of a new boiler feed water pump and control valves.
Doty had also noted there were uninsulated lines and out-of-date steam traps, which led to “a huge amount of loss in the steam system. We wanted to make the steam system operate as efficiently as possible.”
Another key element to the upgrades was the addition of sub-metering capabilities to note trends, track energy use and make intelligent energy decisions. “Ongoing monitoring is really key to drive the energy performance of the building,” Doty said.
The C-PACE lending for the DuPont Building was issued as part of the Energize Delaware program, which will be administered by the Delaware Sustainable Energy Utility, Inc. Allowance for C-PACE financing in New Castle County was granted last year. Tony DePrima, executive director of Energize Delaware, credited New Castle county officials for supporting the C-PACE enabling legislation and said they hope to expand the C-PACE program in Sussex and Kent counties this year.
More C-PACE opportunities are expected in Delaware as well as in neighboring Pennsylvania, Doty said. Philadelphia recently launched C-PACE.
Edwards said that C-PACE also provides options for his company and its clients. He predicted as commercial property owners and lenders get more comfortable with how C-PACE financing works, its use will accelerate.
“It’s going to be a bigger deal going forward than anyone fully appreciates right now,” Edwards said. “It’s still new to a lot of lenders.”