The other day, a reporter contacted me regarding my prediction that this is the year of the retrofit. I stood by my prediction, pointing towards stimulus funding that supports retrofits of existing buildings. I wish I had been able to point out the $1 billion lending program in New York to retrofit existing buildings that was just announced:

The Community Preservation Corporation (CPC), a non-profit affordable housing lender, today announced a new public/private partnership to provide $1 billion in construction and mortgage loans to multifamily housing owners for energy efficient upgrades and property retrofits. CPC announced the program together with government chartered mortgage investor Freddie Mac, City and State public employee pension funds, several private financial institutions with Deutsche Bank acting as agent bank, State and City government agencies and utility companies.

I am particularly interested in the fact that this fund was established as a public-private partnership (PPP). PPP’s are the wave of the future (PDF) of the construction industry:

PPPs are organizational structures by which the private sector finances, builds, rehabilitates, maintains, and/or operates specific public sector activities in exchange for a contractually specified stream of future returns.

The CPC Program is a perfect example of a PPP. Both public and private entities have come together to collectively provide financing opportunities for a particular sector:

The $1 billion includes $500 million available from Freddie Mac, $300 million from the New York State and New York City public employee pension funds, $150 million from private lenders — with initial investments of $15 million from Deutsche Bank, $10 million from HSBC, plus additional investments from other major institutions, including up to $10 million from Morgan Stanley — plus $50 million from CPC participating lending institutions. The State of New York Mortgage Agency (SONYMA) is providing critical mortgage insurance for the pension funds, and the New York City Department of Housing Preservation and Development will also be supporting the initiative through its Participation Loan Program (PLP).

Supporters of the CPC Program hope similar programs are created in other cities. Based on the strong interest in improving energy efficiency and the tight credit market, mimicking the CPC program will be an attractive option for other cities.

Do you think this type of program can work? 

Public-Private Partnerships on the Rise (PDF) Are You Ready for the Year of the Retrofit? (GBLU) CPC Launches $1 Billion Lending Program to Retrofit Existing Buildings (CPC) CPC Launches $1B Green Financing Initiative for Retrofits (GreenerBuildings)

Photo:  serdir