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GLENDALE, AZ-Community Bank of Arizona has launched a pilot program for what is being touted as the nation’s first discount loan program for commercial green building projects. The plan has a half-point interest rate reduction for construction, development or remodeling projects that qualify for at least a 75-point rating on the Environmental Protection Agency’s Energy Star 1-100 scale or earn the Energy Star designation.

“There are many residential loan programs that target environmental building, but this is the first for the commercial market,” says a spokeswoman for the wholly owned subsidiary of Las Vegas-based Community Bancorp. “There are all kinds of criteria for residential construction. We wanted to create criteria for commercial.”

The minimum loan amount under the program is $100,000. While the bank has officially set aside $20 million for the program, Community Bancorp president and CEO Edward Jamison says it would in fact consider funding projects above $20 million if they meet the program standards and fulfill the bank’s general lending criteria.

“We do over $100 million a month in transactions,” Jamison says. “We’re capable of participating in a larger credit deal. The $20 million is more a target to test demand than a limit.”

The program is marking its first week. Jamison says that so far no applications have come through, but he expects that to change once prospective borrowers become aware of the discount.

“A lot of people want to do environmentally friendly buildings, but it’s expensive,” Jamison tells GlobeSt.com. “But the savings on financing under this program coupled with tax breaks from the federal and sometimes state and local governments will offset some of the costs. Some of the utility companies will also participate in things like equipment purchase or change-out, which brings costs down.”

Jamison says he hopes other banks follow Community Bank’s lead. “Wouldn’t it be nice to have the competition? Anything that puts environmental concerns more on people’s minds would be welcome,” he remarks.

The Community Bancorp exec predicts all building projects eventually will have to meet more stringent environmental standards. “Over time it’s going to be the responsibility of architects and engineers to factor that in,” he says. “It’s going to be a transition for the developer to figure out what the benefit is to them to take the environment into account. We think the discount in our program will help them reach that point.”

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