Transaction Profile
Financing in action
Preferred Equity to Support Energy Ecient
New Building Construction in New York State
SARANAC WATERFRONT LODGE
Transaction amount: $11.5 million
Counterparties:
(Project Sponsor) Saranac Lake
Resort Owner, LLC
Product: Preferred equity
Date closed: December 2022
Estimated lifetime metric tons
CO
2
e reduced: 744
Technologies: Energy eciency /
building decarbonization
Location: Upstate
End-use segment: Commercial & industrial
NY Green Bank initially committed $5 million in September 2019 to finance
the construction and operation of an energy ecient lodging property, the
Saranac Waterfront Lodge, located in the Village of Saranac Lake. NY Green
Bank’s most recent upsize to its existing facility will continue to support the
hotel, which is registered under the LEED green building program.
Market Barriers and Solutions
Owners and developers of New Construction projects are not always able
to secure appropriately priced capital based on projected energy savings
and cost-benefit analysis. NY Green Bank’s facility demonstrates the
availability of capital to finance construction of real estate developments
pursuing energy eciency.
“Having NY Green Bank involved
in projects like the Saranac
Waterfront Lodge is crucial to
the survival and growth of
smaller destinations in the
New York State. With their
economic support, a new LEED
certified hotel like this can get
o the ground, provide quality
lodging facilities to grow the
region, and create good local
jobs. HEI Hotels & Resorts is
excited to team up with NY Green
Bank on opportunities like this
throughout the State of New York.”
Steen Petri, Managing Director
GB-tp-tenet-cs-1-v1 2/23
greenbank.ny.gov
1
Saranac Waterfront Lodges: Transaction Profile
TRANSACTION PROFILE
Revised February 2023
Preferred Equity to Support Energy Efficient New Building Construction in New York State
Saranac Waterfront Lodges
NY Green Bank (“NYGB”) initially committed $5.0 million on September 25, 2019 to finance the construction and
operation of an energy efficient lodging property seeking LEED® certification at completion. The project is located in
the Village of Saranac Lake (the “Project”) and is being developed by Saranac Lake Resort Owner, LLC (“Saranac”).
When the Project’s construction and operational delays resulted in a short-term $2.0 million liquidity requirement,
NYGB increased its funding commitment on July 17, 2020 with $2.0 million of additional preferred equity units to
finance incremental construction costs and support the opening and extended ramp-up of the property. NYGB
committed an additional $4.5 million in December 2022 to further support the project. The Project’s energy efficiency
measures are expected to reduce greenhouse gas (“GHG”) emissions relative to design standards. This is NYGB’s
first investment in an energy efficient, new building (“New Construction”) asset as part of its ongoing efforts to
participate in sustainable infrastructure investments in support of Clean Energy Fund objectives. The Project is
expected to create approximately 71 full time jobs in New York State (“NYS”), supporting economic development in the
North Country.
Transaction Description
Saranac Waterfront Lodge is registered under the LEED green building program and seeks to be the first LEED-certified
hotel in the Adirondack Park, located on the shores of Lake Flower and partially located on a former Superfund site,
remediated in 2018 under the guidance of the New York State Department of Environmental Conservation (“NYSDEC”).
The Project will incorporate energy efficiency measures including efficient HVAC equipment and insulation, advanced
lighting, and improved building controls, in addition to stormwater management improvements and electric vehicle
charging stations.
NYGB’s $11.5 million preferred equity investment (the “Investment”) diversifies NYGB’s portfolio and presents an
opportunity to increase market awareness of energy efficiency in the New Construction space. NYGB’s investment
signals to the market that NYGB capital is available to finance New Construction projects pursuing energy efficiency
upgrades, increasing primary building efficiency deployment in NYS. The investment also supports economic
development and job creation in the downtown Saranac Lake region and demonstrates the viability of financing a
sustainable new build in a tertiary market like the North Country. In addition to seasonal and part-time positions, the
Project is expected to create approximately 71 full-time jobs upon opening, and 116 jobs from construction.
This Transaction Profile is provided pursuant to the updated “NY Green Bank – Metrics, Reporting & Evaluation Plan,
Version 3.1” (the “Metrics Plan”) developed in collaboration with the NYS Department of Public Service and filed with
the NYS Public Service Commission (the “Commission”) on May 2, 2022.
1
This Transaction Profile contains specific
information in connection with the Saranac Lake Resort transaction entered into in September 2019 and upsized in July
2020 and December 2022, as required by the Metrics Plan.
2
1
Case 13-M-0412.
2
See Section 4.0, page 8 – 9 and Schedule 3.
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Saranac Waterfront Lodges: Transaction Profile
Form of NYGB Investment
NYGB Product
Product Sub-Type
Committed Capital
Asset Investment
Preferred Equity Investment
$5.0 million
Asset Investment
Preferred Equity Bridge Investment
$2.0 million
Asset Investment
Preferred Equity Bridge Investment
$4.5 million
Location(s) of Underlying Project(s)
North Country. The Project is located in Saranac Lake, New York.
Types of Organizations that are Transaction Participants
Name
Participant Type
Counterparty
Saranac Lake Resort Owner, LLC
Equity Issuer
BBL Construction
Construction Manager
Counterparty
HEI Hotel & Resorts
Hotel Manager
Summary of Financing Market Objectives & Barriers Addressed
Beneficiary
Market Barrier
Financing Solution
Owners &
Developers
When designing new buildings in NYS,
owners and developers of New
Construction projects are not always able
to rely on energy modeling and cost-
benefit analysis in order to secure
appropriately priced capital, reducing their
ability to realize the benefits of energy
efficient technology.
NYGB’s participation in this transaction
signals to the market that capital is available to
finance the construction of real estate
developments pursuing energy efficiency
upgrades. This should result in greater
interest from private sector capital providers in
committing capital for similar project types,
which will ultimately expand liquidity in energy
efficiency markets while reducing overall costs
for all.
Capital Market
Participants
On an individual basis, there is limited
capital support for energy efficiency
projects; however, capital providers are
more likely to participate on an aggregated
basis once a pipeline of projects has
achieved meaningful scale.
NYGB’s willingness to support the Project
helps to demonstrate to the broader market
that there is lender comfort with an appetite for
investments in energy efficient, new building
projects.
New Yorkers
While interest and activity in energy
efficient New Construction projects are
increasing rapidly in NYS, a relatively
small number of financial models are
being used, preventing New Yorkers from
realizing the benefits of completed
projects.
By providing financing, NYGB is encouraging
primary building efficiency deployment for
commercial and institutional projects in NYS.
Ultimately, this is expected to provide New
Yorkers with more efficient building stock at a
lower cost. The investment also supports
economic development and job creation in a
tertiary market like the North Country.
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Saranac Waterfront Lodges: Transaction Profile
Technologies Involved
Technology
Measures
Energy Efficiency
HVAC, Advanced Lighting, Improved Building Controls, higher-rated
insulation
Metrics & Evaluation Plan
Planned Energy & Environmental Metrics
NYGB’s minimum investment criteria specifically require that “transactions will have the potential for energy savings
and/or clean energy generation that will contribute to GHG reductions in support of New York’s
energy policies.”
3
In
addition, the Metrics Plan requires that the following energy and environmental measures, applicable to this transaction,
be reported:
4
Estimated gross lifetime and annual total energy savings (MMBtu equivalent);
Estimated gross lifetime and annual electricity savings (MWh);
Estimated gross lifetime and annual natural gas fuel savings (MMBtu); and
Estimated gross lifetime and annual GHG emission reductions (metric tons).
The estimated gross lifetime and annual energy and environmental impacts of the Project, facilitated by NYGB’s
financial
participation in this transaction, are as follows:
Planned Market Characterization Baseline & Market Transformation Potential
The Metrics Plan requires that market evaluation occur when a critical mass of NYGB financing and investment
arrangements are in place. Market evaluation activities commenced in 2018 on sectors that NYGB has supported since
inception, consistent with the requirement for such assessments approximately three to five years following initial NYGB
capital deployments. NYSERDA will use baseline data collected for indicators as a comparison point against which to
assess market progress in later studies. Progress indicators are defined below for the short, medium and long terms.
NYGB expects that program and/or future market evaluation will demonstrate progress across short-term indicators;
including:
Size and location of projects financed by the Facility;
Aggregate expected energy generation for projects financed by the Facility; and
The number of projects that finalize construction financing arrangements.
NYGB expects that program tracking and/or future market evaluation will demonstrate progress across medium- and
long-term indicators; including:
Increased market volume of high-performance new construction projects;
3
Case 13-M-0412, “Order Establishing New York Green Bank and Providing Initial Capitalization” issued and effective December 19, 2013
of the Commission, Ordering Clause 6 at pages 24 - 25.
4
See Metrics Plan, Section 2.0, pages 2 - 6.
Energy/Environmental
Impact
Lifetime
Low Estimate
Lifetime
High Estimate
Annualized Low
Estimate
Annualized
High Estimate
Estimated total energy savings
(MMBtu equivalent)
7,054 8,293 476 561
Estimated electricity savings
(MWh)
661 777 44 52
Estimated natural gas fuel
savings (MMBtu)
4,891 5,754 326 385
Estimated GHG emission
reductions (metric tons)
633 744 42 50
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Saranac Waterfront Lodges: Transaction Profile
Increased general understanding of high-performance new construction project benefits by financial
community;
Increased awareness and use of high-performance new construction subscriber performance data by
financing entities;
Increased awareness and use of project/technology performance data by financing entities;
Demonstration of competitive risk-return profiles for high-performance new construction investment;
Decreased project costs;
Increased volume of secondary market financing of high-performance new construction; and
Presence and number of new lending participants.
Proposed Method of Outcome/Impact Evaluation (by NYSERDA) & Timeframe
NYSERDA will evaluate the impact this transaction has had on the clean energy finance markets and the energy and
environmental benefits delivered by this transaction.
Market evaluation will address the short, medium and long-term indicators identified above. Methods will include analysis
of program data along with interviews and surveys of market participants to track information including but not limited to:
participation rates, project scale information, interest in New Construction financing, and influence of NYGB’s participation
on financial markets. As noted, baseline data was collected on key indicators in the first phase evaluation during 2018 –
2019. Subsequent studies will assess progress against baseline levels for other market segments like New Construction.
The specific timing of these efforts will be determined (and may be revised) on an ongoing basis as NYGB’s investment
portfolio continues to grow and evolve.
Impact evaluation is expected to draw upon and include data collected to support project-specific measurement and
verification activities (e.g., those associated with PON 3609
5
). Impact evaluation activities will likely rely upon energy
consumption data collected through environmental reports. Project savings will be assessed by comparing actual energy
consumption data against forecasted consumption, as set forth in the energy model completed for LEED certification.
As with all NYGB investments, projects that receive incentives or funding from other entities (e.g., utility, other
NYSERDA program) will be tracked, in accordance with the Metrics Plan, in order to minimize any double-counting
activity on a consolidated basis. As set forth in the Metrics Plan, evaluation sampling approaches will be used as a
mechanism to estimate overlap and minimize double counting. Attempts will also be made to coordinate market and
impact evaluation activities for the Project to maximize the efficiency of data collection and avoid survey fatigue.
5
NYSERDA’s Commercial New Construction Program Opportunity Notice PON 3609 offers objective technical and financial support to
building owners to effect a permanent transformation in the way buildings are designed and constructed in NYS.