New program aims to help make Newton’s industrial, commercial buildings eco-friendly

June 8, 2022 : The Boston Globe, by Walker Armstrong

The Newton City Council adopted an initiative June 6 in an attempt to make it easier for industrial and commercial property owners in Newton to retrofit existing buildings to meet eco-friendly standards.

The Property Assessed Clean Energy program is a national initiative organized through MassDevelopment, the state’s development finance agency. It enables property owners to take out 20-year loans for energy infrastructure upgrades.

“Oftentimes, traditional lenders, like banks, will say they want the money paid back in seven years, or at the most 10 years,” Newton City Council president Susan Albright said in an interview. “This gives you a much longer period of time to pay for the upgrades.”

There are 57 municipalities — including Newton — that have adopted PACE in Massachusetts, according to the MassDevelopment website.

Newton city treasurer Ron Mendes said the city would not incur any financial damages in the event a borrower defaults on their loan because Newton does not act as the lender — instead, a private bank will coordinate with MassDevelopment to provide financing to borrowers.

“If the property owner doesn’t pay, we just simply notify MassDevelopment that the property owner didn’t pay, and then MassDevelopment will do any kind of advanced collections needed,” Mendes said.

Albright said when a building owner wants to make an energy infrastructure upgrade using PACE, the city attaches a betterment — an asset added to a property increasing its value — to the real estate tax on the property.

“The benefit of doing it this way is that it’s a small effort on the part of the city to add a betterment because we already do that for things like sidewalks,” Albright said.

In 2019, the city adopted a Climate Action Plan outlining a strategy to reach carbon neutrality by 2050. Victoria Danberg, Newton City Councilor-at-Large for Ward 6, said the city will “have to do some fancy footwork” if they hope to achieve that goal.

“Improving existing buildings is really important because the majority of the carbon emissions come from buildings,” Danberg said.

Buildings account for 64 percent of the total greenhouse gas emissions in Newton, which is more than waste and transportation combined, according to the Climate Action Plan report. Residential buildings account for 55 percent of buildings’ emissions, the report states, and commercial and industrial buildings — which qualify for PACE upgrades — account for 41 percent.

Danberg said the PACE program will provide a path towards reaching the city’s climate goals.

“I see no reason why the city should not take advantage of this program and help move our climate action plan forward,” she said.

Newton is in the process of developing an ordinance similar to a measure the city of Boston passed, Albright said, which authorizes the city to set emission standards for large buildings and eventually achieve net zero emissions by 2050. She said the PACE program will be an important part of this effort.

“When we go tell the buildings you have to upgrade, you have to electrify your building, we can say not only do you have to do it, here is a potential funding source for it,” Albright said.

Joe Carella, executive director of the non-profit assisted living community, Newton-based Scandinavian Living Center, said his business could immediately benefit from the adoption of PACE.

“I have to replace our HVAC because of what happened last winter,” Carella said. “It’s over 20 years old, and it broke down during the winter — we know we have to replace it.”

The Scandinavian Living Center had been saving to fix the system, but Carella said because the pandemic put significant financial strain on their cash reserves, it became difficult to subsidize an HVAC upgrade.

Danberg said because those who qualify for PACE are existing industrial and commercial buildings, the Scandinavian Living Center would be “a perfect use” of the program.

“The Living Center will be able to do more upgrades, earlier at this time, than they would otherwise be able to afford to do,” Danberg said.

Carella said beyond helping his own business, the program stands to benefit everyone.

“If you can become more energy efficient, that’s fantastic,” he said. “And I hope the city adopts it, not because of us, but because it’s the right thing to do.”