CPACE Financing

Commercial Property Assessed Clean Energy (CPACE) is an alternative financing mechanism which makes it possible for commercial property owners and developers to obtain low-cost, long-term, interest only financing which is paid back through a special assessment on the property tax bill.

Free Consultation – No Obligation

CPACE Financing

What is CPACE Financing?

Commercial Property Assessed Clean Energy (CPACE) is an alternative financing mechanism for energy efficiency, water efficiency, renewable energy and resiliency projects.

It allows building owners and developers to access the capital they need to make energy related deferred maintenance upgrades in their existing buildings, support new construction costs, and make renewable energy accessible and cost-effective.

It provides low-cost, long-term, interest only financing which is paid back through a special assessment on your property tax bill.

How Does CPACE Financing Work?

CPACE is a public-private partnership enabled by state and local legislation, allowing CPACE lenders to provide financing for eligible measures that improve building energy performance.

  1. States pass legislation authorizing CPACE financing, which then allows counties and cities to develop a CPACE program. CPACE administrators are selected to regulate the C-PACE program and other counties and cities may choose to opt into the program.
  2. Property owners and Developers secure CPACE financing from a CPACE lender, alongside senior loan and equity.
  3. Loan Funds are then repaid via a special assessment on the property tax bill.

 

PACE enabling legislation is active in 30 states plus DC. And PACE programs are now active, launched and operating in 30 states plus DC.

Example:

Say you apply and are approved for PACE and have secured financing. You hire a contractor who installs clean energy equipment and your property begins to realize energy savings. The financing is then repaid in the form of a benefit assessment on the your commercial property tax bill over a period of typically 15-30 years. The assessment transfers on the sale of the property and can be passed through to tenants where appropriate.

The beauty of the program is while facilitating sustainability efforts, it reduces your property's annual costs and pro­vides dramatically better-than-market financing for green new construction.

How Can I Use My CPACE Financing?

Renewable Energy

  • Solar/solar thermal
  • Fuel cells
  • Cogeneration Geothermal
  • Wind

 

Energy Efficiency

  • HVAC systems
  • Boilers & chillers
  • Building automation & control systems LED lighting
  • Building envelope, including insulation, windows, doors & roofing
  • Motors & drives

 

Water Efficiency

  • Low-flow plumbing fixtures
  • Irrigation sensors/controls Greywater/wastewater recovery
  • Water-efficient appliances (permanently affixed)
  • Rainwater harvesting

 

Resiliency*

  • Seismic
  • Wind-hardening
  • Microgrids

 

* CPACE financing can be used for seismic upgrades in California and Oregon and for wind-hardening upgrades in Florida.

CRITERIAREQUIREMENTS
Amortization15-30 years, may not exceed useful life of funded PACE measures
GeographyAll active PACE jurisdictions
PACE LTVUp to 30% as-stabilized value
Combined LTV (PACE + Debt)Up to 100% as-stabilized value
Combined DSCR*Minimum of 1.1x based on appraised NOI
Capitalized Interest PeriodNot to exceed 24 months
Energy SavingsEnergy audit required, varies per state statute and program guidelines
InsuranceCPACE lender added as additional insured to Property/Builder’s Risk policy
EnvironmentalNo un-remediated RECs
RecourseNon-recourse after construction
CollateralSpecial assessment lien
Mortgage Lender ConsentWritten lender acknowledgment required if property is mortgaged in most states
Completion GuarantyRequired on new construction and gut rehabs
Payment & Performance BondsApplicable on new construction and gut rehabs, CPACE lender to be named additional beneficiary
Construction InspectionsThird party engineering/inspection firm to review all draw requests, CPACE lender to approve prior to disbursements

What Are The Advantages of CPACE Financing?

POSITIVE CASH FLOWS:
CPACE financing can cover 100% of project cost with long 10-20 year terms, not to exceed the useful life of the installed equipment. This results in lower annual payments that are typically less than project savings.

FAVORABLE TERMS:
CPACE provides strong security for you as an investor because the financing is repaid on the property tax bill. This allows our lenders the ability to offer better interest rates and longer repayment terms than are otherwise available.

TRANSFERABILITY:
CPACE assessments are linked to the property and automatically transfer to a new owner upon the sale of the property.

FLEXIBLE BALANCE SHEET TREATMENT:
CPACE may be structured to be off-balance sheet or on-balance sheet. However, appropriate accounting treatment for CPACE remains inconclusive, as clear consensus has not been reached by the accounting community.

OVERCOMES THE TENANT/LANDLORD SPLIT-INCENTIVE:
CPACE can align incentives for landlords and tenants, as both the tax assessment and cost-savings from the project can be shared with tenants under most lease structures.

CAN WORK FOR BUILDIGS IN ANY SECTOR, INCLUDING NON-PROFITS

What Are The Disadvantages of CPACE Financing?

LIMITED AVAILABILITY:

CPACE is limited to jurisdictions with PACE-enabling legislation, which has currently been passed in 32 states and the District of Columbia.

MORTGAGE LENDER APPROVAL:

For properties with a mortgage, mortgage lender consent is usually required before CPACE can move forward. This can be difficult and time-consuming to obtain.

LIMITED TO INDIVIDUAL PROPERTIES:

CPACE financing must be structured differently for specific properties, making it challenging to use for portfolio-wide initiatives.

Pros

Cons

How Do I Apply For CPACE Financing?

Simply give us a call, or fill out our Contact Us form, and we'll start the process

What If I Am Declined For CPACE Financing?

We offer a variety of commercial real estate loans using more than 50+ lenders. We'll work with you and our lenders to ensure one of them approves your loan. We will ensure your goals are met.

What is a CPACE Financing?

Commercial Property Assessed Clean Energy (CPACE) is an alternative financing mechanism for energy efficiency, water efficiency, renewable energy and resiliency projects.

 

It allows building owners and developers to access the capital they need to make energy related deferred maintenance upgrades in their existing buildings, support new construction costs, and make renewable energy accessible and cost-effective.

 

It provides low-cost, long-term, interest only financing which is paid back through a special assessment on your property tax bill.

How Does CPACE Financing Work?

CPACE is a public-private partnership enabled by state and local legislation, allowing CPACE lenders to provide financing for eligible measures that improve building energy performance.

  1. States pass legislation authorizing CPACE financing, which then allows counties and cities to develop a CPACE program. CPACE administrators are selected to regulate the C-PACE program and other counties and cities may choose to opt into the program.
  2. Property owners and Developers secure CPACE financing from a CPACE lender, alongside senior loan and equity.
  3. Loan Funds are then repaid via a special assessment on the property tax bill.

 

PACE enabling legislation is active in 30 states plus DC. And PACE programs are now active, launched and operating in 30 states plus DC.

 

Example:

Say you apply and are approved for PACE and have secured financing. You hire a contractor who installs clean energy equipment and your property begins to realize energy savings. The financing is then repaid in the form of a benefit assessment on the your commercial property tax bill over a period of typically 15-30 years. The assessment transfers on the sale of the property and can be passed through to tenants where appropriate.

 

The beauty of the program is while facilitating sustainability efforts, it reduces your property’s annual costs and pro­vides dramatically better-than-market financing for green new construction.

How Can I Use My CPACE Financing?

Renewable Energy

  • Solar/solar thermal
  • Fuel cells
  • Cogeneration Geothermal
  • Wind

 

Energy Efficiency

  • HVAC systems
  • Boilers & chillers
  • Building automation & control systems LED lighting
  • Building envelope, including insulation, windows, doors & roofing
  • Motors & drives

 

Water Efficiency

  • Low-flow plumbing fixtures
  • Irrigation sensors/controls Greywater/wastewater recovery
  • Water-efficient appliances (permanently affixed)
  • Rainwater harvesting

 

Resiliency*

  • Seismic
  • Wind-hardening
  • Microgrids

 

* CPACE financing can be used for seismic upgrades in California and Oregon and for wind-hardening upgrades in Florida.

How Can I Qualify For CPACE Financing?

CRITERIAREQUIREMENTS
Amortization15-30 years, may not exceed useful life of funded PACE measures
GeographyAll active PACE jurisdictions
PACE LTVUp to 30% as-stabilized value
Combined LTV (PACE + Debt)Up to 100% as-stabilized value
Combined DSCR*Minimum of 1.1x based on appraised NOI
Capitalized Interest PeriodNot to exceed 24 months
Energy SavingsEnergy audit required, varies per state statute and program guidelines
InsuranceCPACE lender added as additional insured to Property/Builder’s Risk policy
EnvironmentalNo un-remediated RECs
RecourseNon-recourse after construction
CollateralSpecial assessment lien
Mortgage Lender ConsentWritten lender acknowledgment required if property is mortgaged in most states
Completion GuarantyRequired on new construction and gut rehabs
Payment & Performance BondsApplicable on new construction and gut rehabs, CPACE lender to be named additional beneficiary
Construction InspectionsThird party engineering/inspection firm to review all draw requests, CPACE lender to approve prior to disbursements

What Are The Advantages of CPACE Financing?

POSITIVE CASH FLOWS:

CPACE financing can cover 100% of project cost with long 10-20 year terms, not to exceed the useful life of the installed equipment. This results in lower annual payments that are typically less than project savings.

 

FAVORABLE TERMS:

CPACE provides strong security for you as an investor because the financing is repaid on the property tax bill. This allows our lenders the ability to offer better interest rates and longer repayment terms than are otherwise available.

 

TRANSFERABILITY:

CPACE assessments are linked to the property and automatically transfer to a new owner upon the sale of the property.

 

FLEXIBLE BALANCE SHEET TREATMENT:

CPACE may be structured to be off-balance sheet or on-balance sheet. However, appropriate accounting treatment for CPACE remains inconclusive, as clear consensus has not been reached by the accounting community.

 

OVERCOMES THE TENANT/LANDLORD SPLIT-INCENTIVE

CPACE can align incentives for landlords and tenants, as both the tax assessment and cost-savings from the project can be shared with tenants under most lease structures.

 

CAN WORK FOR BUILDIGS IN ANY SECTOR, INCLUDING NON-PROFITS

What Are The Disadvantages of CPACE Financing?

LIMITED AVAILABILITY:

CPACE is limited to jurisdictions with PACE-enabling legislation, which has currently been passed in 32 states and the District of Columbia.

 

MORTGAGE LENDER APPROVAL:

For properties with a mortgage, mortgage lender consent is usually required before CPACE can move forward. This can be difficult and time-consuming to obtain.

 

LIMITED TO INDIVIDUAL PROPERTIES:

CPACE financing must be structured differently for specific properties, making it challenging to use for portfolio-wide initiatives.

Pros and Cons of CPACE Financing?

Pros

Cons

How Do I Apply For CPACE Financing?

Simply give us a call, or fill out our Contact Us form, and we’ll start the process

What If I Am Declined For CPACE Financing?

We offer a variety of commercial real estate loans using more than 50+ lenders. We’ll work with you and our lenders to ensure one of them approves your loan. We will ensure your goals are met.

CPACE Financing Amount, Rate, Term and Time to Fund

Frequently Asked Questions

How does CPACE Financing compare to other Commercial Real Estate Loan Options?

Financing TypeFinancing AmountRateTermTime to Fund
Bridge Loan$500k – $20M10.25% – 15.25%12 months – 3 years2- 4 weeks
CMBS Loan$2M – $100M7.09% – 8.94%5-, 7-, 10-year fixed (25/30 year amortization)30 – 45 days
Construction Loan$50k – $20M10.25% – 11.99%18 months2 – 4 weeks
CPACE Financing$1M – $100M4% – 8%15 – 30 years30 – 45 days
Fix and Flip Loan$50k – $7.5M10.25% – 11.99%12 – 18 months2 – 4 weeks
HUD and FHA Loan$1M – $100M7.18% – 8.125%5-, 7-, 10-year fixed (20 – 30 year amortization)60 – 120 days
Long Term Rental Loan$55k – $5M10.25% – 11.99%5/7/10 year hybrid arms; 30 year amortization2 – 4 weeks
SBA 504 Loan$250k – $5M7.12% – 10.25%10 – 25 years45 – 60 days
USDA Loan$2M – $25M9.75% – 12.5%up to 30 years60 – 90 days
CPACE Financing
Financing Amount$1M – $100M
Rate4% – 8%
Term15 – 30 years
Time to Fund30 – 45 days
Bridge Loan
Financing Amount$500k – $20M
Rate10.25% – 15.25%
Term12 months – 3 years
Time to Fund2- 4 weeks
CMBS Loan
Financing Amount$2M – $100M
Rate7.09% – 8.94%
Term5-, 7-, 10-year fixed (25/30 year amortization)
Time to Fund30 – 45 days
Construction Loan
Financing Amount$50k – $20M
Rate10.25% – 11.99%
Term18 months
Time to Fund2 – 4 weeks
Fix and Flip Loan
Financing Amount$50k – $7.5M
Rate10.25% – 11.99%
Term12 – 18 months
Time to Fund2 – 4 weeks
HUD and FHA Loan
Financing Amount$1M – $100M
Rate7.18% – 8.125%
Term5-, 7-, 10-year fixed (20 – 30 year amortization)
Time to Fund60 – 120 days
Long Term Rental Loan
Financing Amount$55k – $5M
Rate10.25% – 11.99%
Term5/7/10 year hybrid arms; 30 year amortization
Time to Fund2 – 4 weeks
SBA 504 Loan
Financing Amount$250k – $5M
Rate7.12% – 10.25%
Term10 – 25 years
Time to Fund45 – 60 days
USDA Loan
Financing Amount$2M – $25M
Rate9.75% – 12.5%
Termup to 30 years
Time to Fund60 – 90 days

Can I apply for Retroactive Financing?

Yes! Depending on the state, you may still apply and receive your tax rebates retroactively for projects completed up to 3 years in the past.

Ready to take the next step and apply for CPACE Financing?

Free Consultation – No Obligation

Give us a call to see how we can help your business