C-PACE is a proven, institutional-grade source of capital for commercial real estate. New users often have questions. Here are five of the most common, and the facts about each.
FAQ 1: Will C-PACE work in my capital stack?
Fact: Most commercial projects qualify for some C-PACE, because modern building codes for construction and renovation include requirements for efficient equipment and energy and water-saving measures. C-PACE funding is calculated based on the amount of utility-impacting costs in the construction or renovation budget. The most common eligible improvements include the following. If your budget includes some of these, you can qualify for C-PACE.
HVAC Equipment & Controls • Indoor & Outdoor Lighting • Insulation & Envelope • Roofing • Water Efficiency & Plumbing • Windows • Elevator / Escalator • Energy Recovery • Indoor Air Quality Equipment • Seismic & Resiliency • Renewable Energy & Energy Storage • EV Charging & Other Efficiency Equipment/Materials
C-PACE can strengthen the stack in several ways:
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- Increase overall financing and leverage
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- Replace more expensive mezzanine or equity
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- Preserve owner equity for your next project
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- Cover cost overruns from change orders or budget escalation
The answer? C-PACE CAN work in your capital stack.
FAQ 2: Will my senior lender approve of C-PACE?
Fact: C-PACE has grown to a multi-billion-dollar industry and more than 400 lenders nationwide, large and small, have already consented to C-PACE. Educating lenders on the merits of C-PACE — while preserving the rights and remedies to protect their security interest — is core to the end-to-end PACE Equity Finance execution platform.
The answer? We can use helpful education to overcome objections and help senior lenders understand the strength of a strongly underwritten C-PACE project.
FAQ 3: Will I have to change my building design?
Fact: Most projects qualify for some C-PACE using modern building practices, with no design changes at all. If you want to maximize proceeds, the firm’s in-house engineering team can recommend targeted enhancements or minor adjustments that increase the amount of C-PACE you qualify for — entirely at your discretion.
The answer? No changes to building design needed.
FAQ 4: How does C-PACE work with my financials?
Fact: C-PACE is voluntary financing that should be treated as a debt-service constraint, not an operating expense. It is not an increase in property taxes. Repayment runs through a simple special assessment that is fully assumable (C-PACE “runs with the land”). It is prepayable at any time, subject to a step-down prepayment premium (no lockout).
The answer? C-PACE is another financial tool to help fund construction, renovation, or refinancing. It is treated as a debt service constraint and is transferable upon sale of the property.
FAQ 5: Does C-PACE requires a municipal grant to fund it?
Fact: No, C-PACE is private capital. Financing decisions are made independently of any municipal entity; the municipality’s role is limited to administering the special tax assessment that repays the financing. That same assessment structure is what lets the obligation transfer cleanly to the next owner.
The answer? No municipal grant needed.
Still have a question?
If we didn’t cover it here, ask a PACE Equity Finance Originator how to get started — and how C-PACE can boost your project IRR.