Smart Financing for Sustainable Properties: Explore the Power of C-PACE

Commercial Property Assessed Clean Energy (commonly referred to as Commercial PACE or C-PACE) is a financing tool that enables low-cost, long-term funding for energy efficiency, renewable energy, water efficiency, resilience (e.g. storm and seismic hardening), and public health to new and existing buildings. C-PACE financing is designed to support sustainability initiatives by allowing property improvements that reduce energy consumption and environmental impact, which in turn can significantly enhance property values and reduce operational costs. The program is levied as a special assessment in the property records and repayments are made via an assessment on a property tax bill. Financing terms match the useful life of the improvements, which can be up to 20 or 30 years, thereby lowering annual payments and making projects immediately cash flow positive. C-PACE seldom requires an upfront payment, and funding is available for most commercial property types, including hospitality, industrial, office, retail, multifamily, agricultural, non-profit, and senior living and healthcare-related properties. Many jurisdictions have “lookback” features of 1 to 3 years, providing property owners the ability to access liquidity for energy efficient improvements already completed without refinancing the entire capital stack. The concept of Property Assessed Clean Energy financing began to take shape in the early 2000s, and more than $2 billion in projects have been financed since its launch in 2009.
C-PACE is only available to property owners and must be authorized by state legislation and requires further authorization from local governments. Commercial PACE is currently available in more than half of the nation’s states, plus the District of Columbia, and is rapidly gaining legislative momentum in many more. C-PACE can finance building improvements for efficiency, renewable energy, and resiliency projects that contribute to energy and water savings. Applicable costs include, but are not limited to, heating/cooling HVAC improvements, interior and exterior lighting, building controls, windows, and in many instances, water efficiency measures. Light to heavy renovation, gut rehab, adaptive reuse, and ground-up development projects may all utilize C-PACE to improve capital efficiency and create a more effective capital stack. It is important to note that C-PACE cannot finance portable items (screw-in light bulbs, standard refrigerators, etc.). The regulatory environment for C-PACE is evolving, with different states and localities having distinct rules and eligibility criteria that must be navigated carefully. If you have any questions or would like more information on C-PACE financing and how it could benefit your business, please reach out to Preferred Capital Funding at (770) 648-8100.