Green Construction Loans offered by Arizona Bank 

Glendale, Arizona 

Community Bank of Arizona announced today that it will be using the U.S. Environmental Protection Agency’s (EPA) ENERGY STAR energy performance rating standards as criteria for underwriting green construction loans.  Under the unique program, qualifying commercial development, construction or remodeling loans over $100,000 will receive a half point interest rate reduction.  The premise being that the increased cash flow from energy savings both increases a building’s market value as well as improves the owner’s ability to repay the loan.  Community Bank of Arizona sees this as a win both for themselves through decreased exposure to credit risk and to the environment through decreased greenhouse gas emissions. 

According to Jim Nelson, executive vice president and chief credit office of Community Bank of Arizona, “"There is a growing concern about the environment and an increasing desire to take positive action.  The bank and its board of directors take a strong stance in encouraging green building in every way possible. We are proud to launch this program in hopes of seeing it replicated across the country.”

Perhaps the most interesting aspect of the Community Bank program is its use of the ENERGY STAR program to qualify commercial loans.  ENERGY STAR has long teamed with residential mortgage lenders to offer homeowners loan incentives and rebates, but has trailed the U.S. Green Building Council’s LEED program in terms of leadership on commercial green building standards.  On the other hand, ENERGY STAR has been the de facto standard for residential energy efficient building certification while LEED is still only engaged in pilot testing its LEED for Homes rating system. 

According to Community Bank’s press release it defines a qualifying commercial project as meeting “at least a 75 rating on the EPA's ENERGY STAR 1-100 rating scale or earn the "designed for ENERGY STAR" certification.”  This should not be confused with the HERS index rating used for residential ENERGY STAR certification.  In the case of ENERGY STAR for buildings, certification is awarded to those buildings that are benchmarked as being in the top 25% in terms of relative energy efficiency.  Unlike the HERS index which counts down from 100, a higher rating indicates better energy efficiency in the EPA’s ENERGY STAR for buildings rating scale.  This means that if you are a commercial developer or business in Arizona you will need to build a building 25% more efficient than the average building in order to qualify for Community Bank’s green loan program. 

If you are interested in finding more information on ENERGY STAR for buildings, visit their Portfolio Manager Overview page for more information on the process required for certification.

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