Crowdfunding Is Emerging as the Most Viable Way to Finance Existing-building Upgrades

Enter Brooklyn-based BlocPower, a socially responsible business that connects impact investors to institutional networks of energy-efficiency projects in churches, synagogues, non-profits and small businesses in underserved communities.

“We focus on energy-efficiency retrofits in financially underserved communities, mostly urban communities,” explains Donnel Baird, founder and CEO of BlocPower. “We aggregate projects into a portfolio. We analyze them for energy-efficiency and financial potential and roll them up into a portfolio and then connect them to investors via our online marketplace. That marketplace has kind of a crowdsourcing function.”

Nello Development Group Inc., Canonsburg, Pa., plans to take advantage of the location’s riverfront views when creating the brewery and gathering spot for the Rochester community. RENDERING: Pfaffmann and Associates

Nello Development Group Inc., Canonsburg, Pa., plans to take advantage of the location’s riverfront views when creating the brewery and gathering spot for the Rochester community. RENDERING: Pfaffmann and Associates

What makes crowdsourcing such an attractive option over traditional methods of urban development isn’t so much the size of the deal, but a very real sense of involvement and buy-in by the local community that helps ensure its success.

“I think crowdfunding lets local people participate in urban development. It helps to provide data on projects that may or may not be financeable by traditional criteria, but the flexibility of crowdsourcing allows you to create special risk tranches,” Baird says.

The downside to what BlocPower is doing is it’s fraught with risk. Baird says without government subsidies, retrofits in low- and moderate-income communities in urban environments are very hard to accomplish. However, he doesn’t consider the core obstacles to be on the financial side; rather, “they’re actually on the engineering side,” he says.

“The high cost of energy-efficiency audits and analysis, certainly externally, by third parties is super expensive. It’s super slow,” Baird observes. BlocPower is working on the problem and has designed a set of internal protocols that allow it to lower the cost of energy-efficiency audits—a proposition that, while admittedly tricky, is really important to Baird.

“We think there’s $400 billion worth of retrofit opportunity in American inner cities, and we have to provide better engineering and financing that’s really flexible, and crowdsourcing allows us to do that,” he explains. “We very much think it is the future, and we’re fortunate to have venture-capital investors that invest according to that thesis.”

Small Change = Big Impact

Similarly, Eve Picker, president and cofounder of Small Change, Pittsburgh, not only has a passion for serving underserved communities but believes in the opportunities that crowdfunding offers to effect change. As a real-estate developer, she always had an interest in projects that would revitalize the community and was often the first (and only) one interested in them, which drew skepticism by investors and compounded the problem of financing.

“All of the projects I have done in my career had appraisal issues,” Picker recalls. “Because I was typically the first developer into a neighborhood, and banks and appraisers are very leery about ‘how do you appraise something when it’s the first [of its kind]?’ But if you don’t have a first, how are you ever going to move forward? So it’s a really circular problem.”

About the Author

Robert Nieminen
Robert Nieminen is a freelance writer; the former editor of Interiors & Sources magazine; and retrofit’s editor at large, specializing in interiors. Under his direction, Interiors & Sources was the recipient of several publishing awards, as well as a pioneer of sustainability reporting.

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