Prosper Portland has closed the first PropertyFit Oregon project using the new (in Oregon) Commercial Property Assessed Clean Energy (CPACE) financing structure, authorized by the state legislature in 2015. The $3.5 million investment helps finance the revitalization of the historic 1911 Vivian Apartments, a vacant 22,500 square foot building off Martin Luther King, Jr. Boulevard, into KEX Portland, a first-of-its-kind social hotel. The project broke ground last fall, developed by Green Light Development in partnership with KEX Iceland and ChefStable, which will manage day-to-day operations of the property’s hotel and restaurant, respectively.
Mark Desbrow of Green Light Development said, “Social hotels and hostels are just gaining traction in the US which requires an innovative approach to project financing. We turned to Prosper Portland and PACE Loan Group to help make it happen. The CPACE financing structure was the key to making this project a reality and the process was smooth and transparent.”
Administered by Prosper Portland, PropertyFit Oregon is a partnership between Prosper Portland, Multnomah County, and Energy Trust of Oregon to bring the innovative CPACE financing structure to the Multnomah County commercial real estate market to support carbon reduction, water conservation, redevelopment and economic development goals.
The program offers paths for both existing buildings and new construction/major renovation. Eligible improvements include energy and water conservation, renewable energy and seismic resiliency projects. Unique elements of this new financing structure are its long-term (20+ years) - fully amortized financing, is secured by a benefit assessment lien which requires no personal guarantee, does not accelerate upon default and automatically transfers upon sale; for existing building projects, Property Fit can provide up to 100% of the financing of eligible improvements.
Prosper Portland Executive Director Kimberly Branam said, “We’re proud to deliver the first use of this valuable new financing tool, which brings new private capital into the Portland market, removes barriers to up-front investment, and benefits commercial, industrial, and multi-family property owners in Multnomah County.”
“To meet our ambitious climate goals, it’s important for every sector to step up,” said Multnomah County Chair Debra Kafoury, “By providing this innovative public-private financing mechanism, PropertyFit is helping the KEX project upgrade the seismic resiliency of this historic building and complete above-code water and energy efficiency enhancements. We need a lot more projects like this one, and PropertyFit can help make it happen.”
PACE Loan Group out of Minneapolis funded the $3.5 CPACE investment. Raphael Golberstein, its President said, “For owners and developers, the critical thing to understand is that PropertyFit is truly an equity alternative, which increases yield. And the breath of eligible improvements allows PropertyFit to touch virtually every commercial property in Multnomah County, whether its new construction, adaptive reuse or just upgrades to an existing building.”
The program also leverages Energy Trust’s building assessment capacity. “By working with Energy Trust early in the development process, owners and developers can get help scoping energy efficiency and renewable energy options and developing the documentation needed to meet PropertyFit’s technical standards,” said Peter West, Energy Program Director at Energy Trust.
The KEX project is slated to open in late 2019 and will include guest room and dorm-style accommodations, rooftop bar, ground floor restaurant and bar, live performance space, sauna, guest kitchen, guest laundry and a flexible venue for private dining and events. It is the first U.S. location for KEX Iceland.