Developers and commercial building owners have a range of financing options to consider when completing their projects, and it is often challenging to find the winning combination. In addition, they must consider the various ways in which these financial structures interact.
PACE Equity is a proven leader in structuring C-PACE funding within complex financing scenarios, with special expertise in integrating tax credits and public-private partnerships.
Learn more about PACE Equity’s complex capital stack projects.
Leveraging C-PACE with Tax Credits and Incentives
C-PACE (Commercial Property Assessed Clean Energy) is a financing solution offering fixed-rate, non-recourse private capital with up to a 30-year amortization. Available for recapitalization, retrofits, and developments, repayment is made through a non-accelerating property tax assessment, which is transferable upon sale or prepayable.
PACE Equity has innovated the use of C-PACE funding alongside a range of tax credit and incentive programs, offering developers a flexible, low-cost capital source that integrates seamlessly into projects with challenging financing structures. These include:
- Historic Tax Credits (HTC)
- New Market Tax Credits (NMTC)
- Opportunity Zone (OZ) Funds
- Tax Increment Financing (TIF)
- Brownfield Grants
C-PACE in the Capital Stack
C-PACE is a versatile financing mechanism that fills many roles in the capital stack, from gap financing to recapitalization. It excels as a replacement for substantially more expensive debt or equity alternatives, such as mezzanine or preferred equity, increasing returns. By incorporating C-PACE into their developments, developers gain access to:
- Substantially reduced cost gap financing
- Fixed rates for up to 30 years
- An attractive non-recourse structure
- Seamless integration with incentives and tax credits
- In-house C-PACE engineering support to maximize funding amounts and improve building performance
Renovations or redevelopments of historic buildings greatly benefit from C-PACE in the capital stack. Financing covers 100% of eligible costs related to energy efficiency or resiliency upgrades, which are often necessary to modernize older properties.
Also, there is an opportunity to further improve existing buildings through PACE Equity’s CIRRUS C-PACE program, which offers reduced pricing for green-certified buildings or buildings that meet the CIRRUS design standard.
PACE Equity’s Knowledge of Complex Capital Stacks
Bader Rutter Headquarters Adaptive Reuse
PACE Equity pioneered the use of C-PACE for brownfield projects in 2016 with a 110,000 SF Class A new construction project and a partial adaptive reuse office building housing Bader Rutter’s headquarters.
The project was also the first new construction office building project in the United States to use C-PACE, and represented an over $30,000,000 investment in a former brownfield manufacturing site.
Other financial partners in the complex capital stack include:
- New Market Tax Credits
- A City of Milwaukee TIF
- A loan from the Milwaukee Economic Development Corporation
- A brownfield grant
- Mortgage financing from Tri-City National Bank
Our funds were used for several building improvements on the Bader Rutter headquarters project ($2.2 million), including geothermal, PV solar, LED lighting, and double-pane windows. 7% of the total cost of the project was funded by PACE Equity.
Historic Tax Credit Properties Using PACE Equity Funding
Gulfstream Hotel Renovation
The historic Gulfstream Hotel was constructed in 1925 and added to the National Register of Historic Places in 1983, and was transformed to its original glory in the form of a 90-room Marriott resort hotel along the Atlantic Ocean.
PACE Equity provided low-cost, non-recourse, fixed-rate financing, filling a 27 percent gap in the capital stack. This complex redevelopment featured several financing partners as well as Historic Tax Credits and Community Reinvestment Act funds.
