The Distillery at South Shore: Funding Energy Savings With C-PACE

Built in 1856, the building at Pittsburgh’s 129 McKean Street was built to last. “It’s a tank,” said experienced real estate developer Bill Stolze. “I don’t know how strong of a tornado would have to hit that thing to knock it over.” This venerable old building has a place in Pittsburgh history: it’s the original site of the Joseph S. Finch Distillery, at one point the largest rye whiskey distillery in the world and the center of the bustling Western Pennsylvania whiskey industry.

So when Bill set out to develop the site, honoring the building’s history with a distillery and tasting room emerged as a natural path forward. “Why don’t we restore that building to the degree that we can and add a new component?” he told Energy Efficiency Stories. Stolze partnered with Big Spring Spirits, a Pennsylvania-based distillery whose Bellefonte location is the first distillery in Pennsylvania and the third in the entire world to receive a LEED Gold certification, to build a world-class spirits manufacturing center and gathering place: the Distillery at South Shore.

The resulting project, currently under development in Pittsburgh’s South Shore neighborhood, is no small feat. Stolze and his partner Eric Kraemer, Partner in Big Spring Spirits and President of Cedarcove Capital Ventures, set out to keep as much of the original historic building as possible while nearly doubling its square footage to 53,862 square feet (1). A five-story addition means the Distillery will not only feature spirits production, but a tasting room, upscale market, restaurant, cigar bar, and more, making it a true destination on the South Shore.

The project is having a significant economic impact on this “up-and-coming” portion of Pittsburgh, historically dominated by industry and warehouses. Bill estimates that the project currently employs around 100 construction workers and will employ around 150 workers once completed. The Distillery is located along the beloved Montour Trail, making it easy for cyclists to stop by for a sip and a bite to eat. And, Bill notes, it will also provide one of the best rooftop views of the riverfront in the entire city.

Energy efficiency measures at the building include high-efficiency ductwork and HVAC systems.

So why is the Distillery at South Shore an Energy Efficiency Story? The answer has everything to do with Commercial Property Assessed Clean Energy, or C-PACE.

C-PACE is a unique financial instrument enabled in Allegheny County in 2019. Administered by the Sustainable Energy Fund (SEF), Allegheny County’s C-PACE program lets commercial property owners access special long-term loans to develop clean energy, energy and water conservation, and resiliency measures. The loan acts like an assessment on the property, and payments are collected by the County each year alongside property taxes. This structure allows a longer payback period tied to the useful life of the equipment, and the loan stays with the property—not the property owner—which lets repayment continue smoothly even when ownership changes hands. Since C-PACE was authorized in Pennsylvania in 2018, over $250 million has been invested in C-PACE projects across the Commonwealth (2).

The project preserves wooden beams, brick walls, and other original elements of the historic building.

According to Bill, C-PACE wasn’t even on the development team’s radar when they started looking at the project—they found out about it from a flyer. But the more they learned, the more they realized it could make a sizable contribution to the project’s financial base while creating a more efficient building. “Eric started digging into it,” said Bill, “and it seemed like it was a heck of a potentially impactful part of the capital stack.”

Twain Financial Partners provided the capital, while the Sustainable Energy Fund served as Program Administrator. “Our role is to review their application, ensuring it meets the Allegheny County’s program guidelines, and also meets the C-PACE statute for the state of Pennsylvania,” explained SEF VP of Programs Kelly Sanders. For Bill and Eric, SEF provided crucial input on measures that could be eligible for C-PACE, from HVAC upgrades to lighting improvements.

The end result was over $5 million in C-PACE financing, applied to energy conservation measures throughout the entire project. The Distillery includes high-efficiency HVAC systems, LED lighting upgrades, energy-efficient elevator technology, improved insulation, and upgraded windows. An aerosol barrier applied to the Distillery’s brick walls helped seal the building envelope while maintaining the original brick facade, a measure developers identified and implemented after input from SEF. “We had debated whether or not the building envelope was going to be eligible,” recalled Bill. “And SEF came up with a solution that was cost-effective, and it’ll pay dividends down the road.”

The energy savings from all these measures adds up. Modeling projects that C-PACE measures at the Distillery will save 247,976 kWh in electricity and 552 MMBtu in natural gas per year, an overall energy savings of 58.7% below the building’s baseline.

Bill recalled being impressed with the scope of work C-PACE covers: “Frankly, it covers a lot of ground. The C-PACE program is broader than you think. Any of the mechanicals that run through there, anything to do with an energy-efficient building envelope, anything to do with more efficient electrical work or plumbing or heating and air conditioning. These are big-ticket items in any redevelopment project.”

Because C-PACE was a newer program in Allegheny County when work on the Distillery started, Eric and Bill faced a learning curve: “We had to learn together with the banks how to stack that program,” Bill said. But he explained that the more partner banks became familiar with C-PACE, the easier it got—and the more the banks themselves supported its use. “From a risk management standpoint, from the perspective of the bank, it’s a favorable condition,” said Bill. The fact that the assessment runs with the property helps make it a safer investment choice for finances.

Bill and Eric anticipate opening the Distillery to the public in 2024. In the meantime, they’ve become fans of C-PACE. “I would encourage anyone who could possibly use the C-PACE program to use it,” urged Bill.