What is C-PACE Financing?
Commercial Property Assessed Clean Energy (C-PACE) 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 on the property which is transferable upon sale or prepayable at any time.
Why Use C-PACE?
Increase IRR
- Replace expensive debt alternatives
- Add accretive leverage to overcome low LTC lending
- Lower WACC with a custom delayed draw schedule that fits your construction schedule
- Use alongside EB5, HTC, NMTC, TIF, OZ, brownfield grants & more
FLEXIBLE STRUCTURES
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- Tailored solutions to support sponsor objectives
- Use for pre-construction, mid-construction, or post CO
- Short and long-term capital structures
- Lower cost of capital with non-recourse financing
Recapitalize
- Recapitalize recent building renovations or new construction
- Fund cost-overruns or debt payoff/paydowns
- Cover costs during lease up or build debt service reserves
- Avoid a capital call, extend or payoff maturing loan
Calculating Financing Amounts
The amount of C-PACE funding and its amortization period is determined by the equipment and other costs in the construction budget that impact energy & water use, renewable improvements, or building resiliency. Measures shown below are the most common improvements used to calculate C-PACE funding amounts.
HVAC equipment
& controls
Indoor air
quality
Seismic &
resiliency
Indoor &
outdoor lighting
Elevator/
escalator
Windows
Insulation &
envelope
Water Efficiency
& Plumbing
Roofing
Renewable Energy & Energy Storage
EV Charging
Energy Recovery
FUNDING AMOUNT AND TERM
C-PACE financing covers 100% of eligible hard and soft costs in a construction budget -- usually 30-35% for new construction and 50-100% for renovations.
Term is equal to the life of the financed equipment, typically 25 - 30 years.
C-PACE Loan Repayment
- PACE Equity Finance funds proceeds.
- After construction, sponsor pays PACE special tax assessment to municipal government once or twice a year with property taxes.
- The local C-PACE financing program is managed by a PACE Authority, which follows state-legislated guidelines.
- Municipal government remits payment to PACE Equity Finance.
Delayed Draws
Reduce the interest costs associated with capitalized interest for funds disbursed at closing. For new construction projects with C-PACE funding over $10 million, PACE Equity Finance distributes C-PACE funds like a construction loan, with funds distributed according to a custom funding schedule — with rates locked for up to 2 years. Dramatically reduce your total WACC since the interest carry is no longer calculated from day 1 – but from when the funds are needed.
Read our Insights post on delayed draws.
Where Is C-PACE Financing Available?
C-PACE financing is available when a state passes C-PACE-enabling legislation. Local municipalities then opt-in to a local program. PACE Equity Finance is a national C-PACE capital provider, lending wherever C-PACE is available. Click on the map below to explore your local C-PACE program.
Funding Available
No Funding Available
Which Asset Classes Does C-PACE Finance?
- Hospitality
- Senior Housing
- Multifamily
- Office
- Retail
- Mixed Use
- Storage
- Industrial
C-PACE Project Types
Used as a supplement to a construction loan, C-PACE completes the capital stack and improves IRR by replacing expensive debt alternatives.
C-PACE covers 100% of eligible improvements, often the entire renovation budget. It helps cover deferred maintenance costs, comply with local carbon mandates, and decrease operating expenses.
PACE Equity Finance can fund up to 100% of eligible solar and renewable improvements of commercial buildings.
Available pre-construction, mid-construction, during lease-up, or after stabilization. Use low-cost C-PACE to improve short-term economics and long-term asset performance.
Senior Mortgage + C-PACE Solution
PACE Equity Finance offers a full capital stack solution for highly experienced sponsors – senior mortgage debt integrated with C-PACE. This combined solution adds value for both developments and recapitalizations.
Frequently Asked Questions
Are there financial incentives for energy efficient buildings?
Yes. PACE Equity Finance’s CIRRUS C-PACE program is the only financial product to offer preferential pricing for better buildings. Our CIRRUS Low Carbon and CIRRUS Zero Carbon programs provide a substantial reduction in interest rates for developments that perform better than America’s highest building codes. Renewable energy projects and green certified buildings automatically qualify for our lower CIRRUS C-PACE rates.
Does C-PACE financing require senior lender consent?
Yes. Prior to closing, existing mortgage holders on the property must consent to the C-PACE financing. This consent is not a subordination agreement or intercreditor agreement, it is simply ensuring all parties are aware of PACE Equity Finance’s participation in the project and how C-PACE financing works. Learn more.
Do I need to change my building design when I use C-PACE financing?
No. Most projects with modern building practices can qualify for some C-PACE financing without any changes to design. Exact requirements vary from state to state. PACE Equity Finance’s role is to qualify your project with our in-house engineering team. We will set a target amount based on our experience and guide you to meet the requirements. Our engineers may also provide you with suggested design changes to maximize the funding amount.
Is C-PACE government funding?
No. C-PACE financing is private capital funding. Financing decisions are made independently of any municipal entity. The local municipality will pass legislation to approve C-PACE financing and generally delegate the approval to an administrator of a special improvement district.
My project won’t have a property tax bill. Can I use C-PACE?
Yes. While C-PACE is not available for government or municipally owned buildings, non-profits and some other tax-exempt businesses can benefit from this financing. Instead of a standard property tax bill, a voluntary special tax assessment would be issued.
What happens when I sell a property with a C-PACE assessment?
C-PACE assessments “run with the land”. They are non-recourse to the borrower and may be transferred to the new property owner without any re-underwriting, assumption fees, or penalties.
Is C-PACE debt or equity?
Although our name is PACE Equity Finance, C-PACE is an assessment, underwritten as a debt service constraint. The repayment of the private capital is made through a long-term special tax assessment on the property, making it transferable upon sale.