September 2016 – The U.S. Department of Energy’s (DOE) Better Buildings Residential Network recently interviewed NYCEEC about our success with financing multifamily projects, having financed energy upgrades for 5,415 multifamily units to date. The Residential Network published the case study interview with our Director of Business Development, Jay Merves, in their September newsletter. Following is one of the key takeaways from the discussion.
What is your approach for identifying and financing projects?
We try to really understand our borrowers’ objectives to create a financing solution that meets the project’s needs, like bridging incentive payments to match milestones. In order to be good stewards of the money we were given, we have to be prudent in our investments. We cover all types of buildings, from affordable housing to high-end residential, and all kinds of upgrade projects, from lighting upgrades to cogeneration.
How is NYCEEC different from other lenders and typical multifamily financing approaches?
Typically, multifamily rentals, condominiums, and coops have reserves or bank lines of credit to cover emergencies. They maintain a capital needs plan of projects that usually get funded when they refinance their mortgage. The problem is that energy efficiency measures are often viewed as more discretionary and may get dropped from the list. We’re able to come in and take an investment–rather than expenditure–approach. We underwrite energy savings and can finance up to 100% of project costs, so that the building’s cash flow can increase from day one of the energy savings project.
What are some of your financing options for multifamily projects?
One unique thing we do as an energy efficiency lender is underwriting projected energy savings, enabling us to better meet our borrowers’ needs and provide larger loans to finance 100% of project costs. We’ve also financed the construction of “passive house” and high-performance buildings. Our financing covers hard and soft project costs—equipment, energy assessments, and upgrades. On average, loans are financed at a rate of 6% to 7.5% over an average term of 5 to 7 years. We can provide loans as small as $50,000 and as much as $6 million.
Read the full case study here.