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C-PACE Financing for Major Hotel Renovation

Thompson Partners

Electricity Focus: Solar PV
Project Description:

Challenge: As part of a Property Improvement Plan (“PIP”), Marriott required an upgrade from existing P-TAC units to a quieter HVAC system. The cost of making this upgrade along with associated other costs required significant new owner capital. Solution: Thompson Partners developed a comprehensive energy project that used energy savings from various measures (lighting, controls, efficient HVAC equipment, etc) plus PACE financing to fund majority of HVAC costs. The amount raised exceeded the owner’s expectations.Owner Benefits: 1) Preserved owner capital by securing $2.5 million PACE loan.2) Upgraded building systems for improved guest comfort and satisfaction.3) Secured an additional incentive of $300,000 from utility based on energy savings.

Key Metrics & Outcomes

Initial Capital Investment: $2.5 million
Incentives: Cash Grants
Cash Grants: $300,000 from utility
Levelized Cost of Energy or Cost per kWh / Gallon: $16.94/kwh used for underwriting
Operational and Maintenance Costs: $1,120,000 per year of which roughly $100,000/yr related to HVAC repairs with roughly $40,000/yr projected savings from C-PACE project. R&M savings was not allowed in underwriting.
Lifetime Cost Savings: $4,471,000 (using un-inflated first year savings over weighted average expected life of improvements of roughly 17 years)
Payback Period: 8.4 years ($2.5 million project cost less $300,000 utility incentives divided by $263,000 annual savings)
Installed Capacity (e.g., MW, GW): NA
Amount of Energy Produced or Saved (kWh, MWh, etc.): 1,838,506 kwh (first year savings)
Carbon Emissions Reduction (tons of CO2 equivalent): approximately 27,000 tons
Efficiency Improvements (e.g., % increase): 27% reduction in energy use
Financing Details: C-Pace Financing

Lessons Learned & Best Practices

Success Factors: An engaged ownership group, a very supportive utility and a responsive capital provider group that provided the C-PACE financing.
Failure Factors/Challenges: No failures but first of kind financing for multiple parties (owner, lender and City) made project challenging.
Scalability and Replicability: The comprehensive project approach and use of low-cost C-PACE financing can be scaled and replicated for various property types in Westchester as well as throughout the United States.
Innovative Strategies/Approaches: This project was one of first projects to utilize C-PACE financing in the city and provided model for hotel franchisor and lender consent as well as technical underwriting.

References and Sources

News Articles: https://lodgingmagazine.com/providence-marriott-undergoes-upgrades-with-c-pace-financing/
Interviews or Case Study Testimonials: see Thompson Partners website: www.tprea.com

Project Details

Project Address: 1 Orms St, Providence, RI
Start Date: 11/01/2019
Completion Status: Completed
New Construction or Retrofit: New Construction

Contact Information

Contact Name: Frank Owens
Contact Email: frank.owens@tprea.com
Contact Phone: 9144193339

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