C-PACE financing provides low-cost funding advantages to projects that include sustainable design and energy efficiency measures. Most commercial projects can qualify for some C-PACE financing since modern building renovations and new construction projects include efficient equipment and energy-saving measures.
C-PACE financing can be added to your capital stack:
One Minute Video: Find out how PACE Equity financing impacts your IRR
Yes, PACE Equity uses utility-impacting measures to provide a new funding option for your capital stack. We now offer a substantially reduced rate and other financial and marketing benefits when you use our CIRRUS Low Carbon funding which includes third party verification for your building. Our CIRRUS Low Carbon funding provides the benefits of green building certifications such as LEED® but with additional financial incentives. Learn more.
PACE Equity offers a Fast Track™ Funding process that guides you through step-by-step from a first pass estimate to funding. The first time you do a C-PACE project it often feels like you have a lot to learn, but we’ve done hundreds so you can rely on us to make it easy.
One Minute Video: Fast Track™ Funding
In our experience, 8 out of 10 deals at PACE Equity START with primary lenders who are unaware or uncomfortable with C-PACE. If this happens to you, don’t be surprised! However, over 300 lenders across the U.S. (large and small), have already consented to C-PACE in the capital stacks they fund. We’ve talked to lenders hundreds of times and are experts at educating lenders on the merits of C-PACE in a capital stack (read our Insights article on this topic!). If you talk to a lender about C-PACE and they push back; call the experts at PACE Equity!
Most projects with modern building practices can qualify for some C-PACE financing without any changes to design. But we’ve learned that there is a proven way to maximize the amount of available funding while meeting C-PACE financing requirements — and we’ve got the process to get it right, every time. We call it the Fast Track™ Funding process, but it isn’t all about speed. The PACE Equity engineering team analyzes your project and suggests optional design tweaks that can make a big difference for your efficiency and funding. Our proven process removes the risk of a funding roadblock because we know detailed design criteria and we perform our own energy study.
Read our Insights article on Design Assistance.
Read our Insights article on How Much Funding Can I Get for My Development Project
Do an online Funding Application for your project
C-PACE is a voluntary source of financing that falls below the line and should be treated as a debt service constraint and not an operating expense. It is not an increased property tax. Municipalities want to encourage commercial building to be sustainable, so they have adopted C-PACE and a simple special assessment structure as a vehicle for payment which makes it transferable with the property.
C-PACE financing is private capital funding. Financing decisions are generally made independently of any municipal entity. The local municipality will pass legislation to approve C-PACE financing and generally delegates the approval to an administrator of a special improvement district. Using the tax assessment structure allows the financing to be transferred easily to the next owner.
Learn more about how C-PACE works.
One Minute Video: States activate PACE financing to improve energy efficiency & create jobs – with private capital
Yes. PACE Equity pioneered the idea of passing costs through to tenants and guests who benefit from the building improvements. This means improved returns! Different asset classes have different ways to accomplish this. Contact us to discuss this option for your project.
There will be an outstanding tax bill and a substantial amount of time allowed to get any outstanding back payments up to date. This is often multiple years. A great protection for lenders is that we have no way of calling the principal balance in the event of a default. The only payment obligation is the amount due at that time, not future payments or principal. In the case of a missed payment, PACE Equity asset management would generally be reaching out to the lender to ensure they are aware of outstanding balance if it is not made within a reasonable timeframe of being due.
Not at all. You maintain complete autonomy to call a default and foreclose, and your security interest is protected. You do not need to involve us in a foreclosure.
There are no SNDAs or intercreditor agreements. The only paperwork needed for the bank to sign is an agreement accepting the financing from PACE Equity. Many lenders like the simplicity that they do not have to work through complicated intercreditor agreements to enforce their rights such as what is required with mezzanine financing.
PACE is a voluntary financing obligation. It is not considered an operating expense, nor would it be included in any appraisal. It is underwritten as a part of debt service.
Both the lender and PACE Equity are doing underwriting on the property to ensure the project has adequate cash flow for its obligations. You also have sign-off and control of whether or not to accept PACE Equity financing.
In order for PACE Equity to be involved, there has to be an improvement to the property, which increases the collateral value. After the project, it is a more valuable building with lower long-term operating costs.
You’re able to differentiate yourself with competitors by partnering with PACE Equity. You can bring in a capital source for future clients, as well as have a competitive advantage for potential clients.
An energy study is required to qualify for PACE Equity financing and will quantify the utility savings and other benefits of the improvements. The energy modeling looks at current utility spend or will use a building model based on local code.
Commercial real estate development is a proxy for local business investment. You want to make sure obstacles for development are overcome. Capital availability, equity requirements, and cost of capital are the biggest obstacles to local project development. PACE Equity helps these obstacles (and others) by providing gap financing that seamlessly pairs with almost any other form of capital such as TIF, NMTC, HTC, Opportunity Zones, Brownfields, ground leases and more. PACE Equity has enabled $1 billion of project developments like the ones in your community. Many of these projects would have been delayed or canceled without PACE Equity funding.
There is no cost to taxpayers or the community for PACE Equity to participate in the project. Funding comes from private sources and is repaid by the property owner via long-term tax assessments, so no financial burden is placed on the community for PACE Equity to be involved.
The C-PACE funding available from PACE Equity pairs easily with other incentive programs. We want to partner with you to create attractive funding stacks that pull together federal, state, and local incentives and include PACE Equity financing to “gap-fill” any funding shortfalls. Our local managing directors know your area and act as your local point of contact to make these projects happen.
Simply put, we make finishing the capital stack easy while our funds reduce the costs of capital for your local businesses. Using PACE Equity and its lower cost of capital means local businesses have more resources to hire and invest in growth.
Yes, PACE Equity financing often completes a capital stack once other funding sources have been identified, including federal, state, and local incentives. Our funding can be used to fill the last needed capital for the capital stack. The funding is based on the measures that impact utility spending such as energy and water. Learn more about how our funding is calculated.
Absolutely. PACE Equity is a great solution when additional investment dollars are needed – we can “fill the gap” and are often the last dollar in the cap stack.
Our local Managing Directors can help you host meetings or educational events, participate in webinars, work together on joint marketing campaigns, speak at events, and more. Schedule time with a local Managing Director to start the conversation.
Nu-Tek Biosciences, Austin, MN: This industrial property is a build-to-suit for Nu-Tek Biosciences — a biotech manufacturer of peptones and protein hydrolysates for biotech and wellness foods industries. High efficiency dryer and evaporator equipment are installed as part of the build-out. Our low-cost financing is an excellent solution for the capital stack since it reduces the WACC while leveraging the investments already being made.
Capital Stack Details
Construction Loan: $6.5 million
Tenant Equipment & Equity: $15.0 million
Developer Equity: $3.75 million
TIF: $2.5 million
EDO: $2.5 million
PACE Equity: $3.0 million
Badger Packaging, West Bend, WI: Badger Packaging is a custom manufacturer of corrugated fiber board packaging and point of purchase displays. To pursue business growth and increase local jobs, they chose to invest in a new scrap recovery system, renovating their existing site and adding new space to handle business growth into biodegradable boxes. Rather than raising capital or opening a second expensive mortgage to fund the building & system updates, they chose PACE Equity funding – a low cost alternative that delivered the capital they needed while supporting local business growth.
PACE Equity funding: $1.4 million
Green Leaf Grocery, St. Louis County, MO: PACE Equity funding provided the needed capital to get this project off the ground. The complex capital stack included New Market Tax Credits and a USDA-backed loan. This grocery store and gas station ended one of the most prominent Food Deserts in the County of St. Louis.
PACE Equity funding: $2.7 million