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Oil-to-gas Conversion in CT



Project Overview

Capital for Change
Lender Type: 
Deal Overview: 

In September 2013, Capital for Change, Inc (C4C) received an inquiry from a developer who was planning an oil-to-gas conversion for one of his properties in CT. The property was financed by a mortgage from the CT HFA, so the developer could not use PACE financing. C4C offered an unsecured loan that would not interfere with the CHFA loan, provided that the projected cash flows to NOI from the proposed conversion were sufficient to make the debt paymnets on the C4C loan. C4C estimated annual savings of $70,000. The first year energy savings post-conversion were $75,000 and maintenance savings were $7,500 for a total property NOI increase of $82,500 (with a debt and equity investment of less than $400,000). This provided $46,388 of free cash flow to the property, net of C4C debt service, in the first year. The property was sold two years after the conversion. The value that the oil-to-gas conversion contributed to the increased value of the property was $1.45 million.

Improvements Covered: 
Energy efficiency
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Financing Details

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Borrower Equity: 
Loan 1 Amount: 
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Utility and operations savings
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Underwriting Considerations

Expected Annual Income: 
Cash Flow Projected to be Accrued to Date : 
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Project Affordability Criteria: 
The project is subject to rent restrictions per the CHFA loan agreement, requiring 20% of units to be maintained for tenants at or below 80% AMI and 20% of units for tenants at or below 60% AMI. All units are naturally affordable at or below 80% AMI.

Cash Flow Projection vs Realized

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Additional Information

Additional Information: 
Personal guarantee is provided by ownership group. First loss reserves held by CT Green Bank for 7.5% of exposure during interest-only term; 5% of exposure during permanent term. Loan is 12 month interest only, then 9 years fully amortizing. Total cost of project was "less than $400,000", but the borrower equity contribution is estimated based on a total project cost of $400,000.