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GEORGETOWN – Ocean Atlantic Companies is lobbying Sussex County officials to pave the way for commercial property assessed clean energy (C-PACE) loans, a financing option that several developers are pushing to attract more development in the state.

“This is another tool to encourage businesses to locate here, and there’s minimal risk but real opportunity for local businesses and other businesses to relocate here,” Ocean Atlantic Companies President and Co-Founder Preston Schell said. “We’re at a disadvantage if we don’t pass this because almost all of the counties around us have this.”

Ocean Atlantic Companies is reportedly looking to use a C-PACE loan to move forward the $30 million Ashton Oaks project, a 178-unit apartment complex west of Fenwick Island. For that to happen, however, the Sussex County Council has to approve legislation offering the program.

C-PACE loans focus on projects that include energy efficiency, renewable energy measures, and are limited by a property’s assessed value. The loan is paid annually as part of a property’s tax bill. The financing option has existed since a 2008 pilot program, but Delaware only authorized its program in 2018. 

Today, the Delaware Sustainable Energy Utility Inc. administers the Energize Delaware C-PACE program. The Buccini/Pollin Group obtained the state’s first C-PACE loan at $3.9 million to cover new heat and air conditioning units at the historic DuPont Building in early 2020.

The maximum loan value is typically 15% of property value, but the cap can go as high as 20% of construction costs if additional energy efficiencies are met.

Schell told the Sussex Economic Development Action Committee (SEDAC) on Friday morning that the C-PACE loan is a well-kept secret because today’s developers look into energy efficient practices to add value on their buildings. The loan could cover insulation systems, roof systems, HVAC and a large portion of the building’s framing.

“It doesn’t make financial sense to build energy-inefficient buildings. In our case, we want tenants in our apartment buildings to pay the least amount of electricity as possible. We make them energy efficient for that very reason,” he said. “When we started looking into this program, about 25% of what we’re already doing is already qualified.”


Ocean Atlantic hopes to use the C-PACE program to help finance rental complexes, in particular those that have an affordability component. Schell said that he has three term sheets drafted for apartment complex projects, and using the loan program will increase returns on remaining equity while lowering out-of-pocket capital costs. It can also allow projects that may be held up due to inadequate returns.

“We had to sit on the sidelines and let rents appreciate before we can start the project,” Schell said. “The case we made with our bank is that even with C-PACE funding, Delaware’s property taxes are going to be half or less than what’s in front of you for the loans in New Jersey.”

C-PACE funding can also give Delaware a competitive edge, as more than 35 states and the District of Columbia have enabled legislation for it. More than $800 million projects have been financed, according to the U.S. Department of Energy. The financing option mirrors that used for other infrastructure projects, like sewer, water and roads, but extends it to projects that would incentivize investment in clean energy technology.

The program also is an economic driver for clean energy jobs, not just development. A 2019 federal study showed that between 2008 to 2017, projects worth $887 million were completed, which created about 13,000 jobs. In the same time span, the study found one default on a C-PACE loan out of 1,870 deals.

On a local level, Schell assured SEDAC members that the program was low-risk for defaulting on the C-PACE loan. From his analysis of Sussex County Sheriff sales between September 2019 and March 2020, out of the 132 properties that would have qualified for C-PACE funding, none were on the auction block because of defaulting on property taxes.

“So if this financing exists, it will allow us to be more flexible with the county and future projects if and when they ask us to offer an affordability component,” Schell said. “It really helps.”