Mortgage Holders

C-PACE is designed to help qualifying commercial, industrial, and multifamily (with five or more units) property owners access long term financing for the installation of qualifying energy efficiency improvements and renewable energy projects (energy improvements). Such improvements may include any construction, renovation or retrofitting of energy efficient technology, clean energy systems, or qualifying waste heat recovery technologies that are permanently fixed to qualifying commercial property.

C-PACE is a win-win program that, aside from lowering the utility expenses and increasing the value of improved properties, advances important public policy goals that include reducing energy and water costs, increasing renewable energy deployment, reducing greenhouse gas emissions, and creating local jobs.

C-PACE financing is provided by private capital providers in an open market. The financing is secured through a voluntary benefit assessment and assignable lien that is levied against the owner’s property. Repayment to the capital provider is facilitated in accordance with a standard C-PACE financing agreement between the property owner, the City, and the capital provider.

The financing term is based on the useful life of the improvements and can extend up to 25 years. The financing itself can cover up to 100 percent of a building’s project cost and often requires no money down.

C-PACE projects must be designed such that the estimated energy cost savings, over the effective useful life of the qualified energy efficiency improvements and/or renewable energy improvements, exceeds the financing amount, i.e. the savings-to-investment ratio (SIR) be greater than one. Such projects create positive cash flow for the property owner.

This combination of benefits means C-PACE property owners can make substantial upgrades to their buildings and, in most cases, the upgraded building is more valuable after a C-PACE project has been completed.

C-PACE project financing is repaid via a voluntary benefit assessment (lien) that is placed on the property and assigned to the financial institution that provides financing for the project. Since the assessment has priority lien status, similar to a property tax assessment, the existing mortgage holder will be asked to consent to the C-PACE financing. Such consent is voluntary on the part of the mortgage holder.

There are multiple steps that will involve the mortgage holder:

1. Once a property owner determines that a building modernization project may enhance their building’s asset value (collateral) and cash flow (improved mortgage repayment ability), he or she will seek a preliminary meeting with the mortgage holder to review the opportunity.

2. At this first meeting, the owner and a representative of the C-PACE program administrator will describe the program’s requirements and answer any questions. In particular, they will discuss the independent quality assurance technical review process which is used to validate that the project’s estimated energy cost savings, over the effective useful life of the improvements, exceeds the total finance cost (SIR>1), and related key financial metrics associated with the project.

3. Assuming the mortgage holder does not object, the C-PACE program administrator will collaborate with the owner and the owner’s C-PACE registered contractor to develop and optimize the project to ensure it meets program requirements. See C-PACE Program Guide for more information.

4. The project development and optimization process includes the creation of a C-PACE Project Finance Report. This report is the culmination of a comprehensive process that includes input and reviews by the owner, contractor and the program administrator. The end product is a carefully designed, optimized project that meets all the requirements of the program.

5. At a second meeting with the mortgage holder this Project Finance Report will be reviewed in detail and a formal request for consent will be made by the owner.

C-PACE projects, over their estimated useful life, generate positive cash flow based on the energy savings. Such projects can result in increased net operating income, increased debt coverage ratio, increased value, and a greater return on investment. In the event of a default, the assessment does not accelerate, only the amount in arrears is due. View a list of lenders who have consented to C-PACE projects nationwide.

In the event of default or delinquency, only the current C-PACE installment payment and any Delinquent C-PACE Payments shall be prior and superior to all liens, claims, encumbrances, and titles other than the liens and assessments of general taxes pursuant to NRS 361.450. Delinquent C-PACE Payments shall (i) accrue penalties and interest in accordance with the Financing Agreement , and (ii) be enforced in accordance with the Financing Agreement. Foreclosure is the sole responsibility of the Qualified Capital Provider and shall be performed in the manner of a judicial foreclosure of a mortgage.

Sustainable Real Estate Solutions, Inc. (SRS), an industry leader in C-PACE program administration services nationwide, has been selected by the City to administer the program.

While many buildings need upgrading, until C-PACE there was no good way to pay for it. C-PACE solves the financial issues associated with a building modernization project by providing 100 percent financing that is long-term, non-recourse, and affordable. Since the financing is based on the building’s financial health, and not the owner’s creditworthiness, personal guarantees are not required. Once a project is complete, the property owner has a more valuable, competitive, and sustainable property with lower utility bills and higher net operating income.

No. C-PACE uses private capital to fund projects. View a list of capital providers that participate in the program.

Property owners are encouraged to consult their accountants on this matter.

There has been no specific ruling by the Financial Accounting Standards Board on this issue.

Upon closing of C-PACE financing.

Yes. Owners who choose not to participate remain unaffected.

Qualifying for C-PACE financing is based on the property, and not the owner. The capital provider will look at:

• The property’s estimated market value (assessed or appraised)
• The amount of the owner’s equity in the property
• The owner’s recent mortgage and property tax payment history
• The dollar value of the proposed eligible energy improvements

C-PACE projects typically range from $50,000 to multi-million dollars. Constraints on the amount are driven by the financial health of the building and include:

• Building financials
• Loan-to-value percentage (<80% LTV is preferred)
• Other considerations of the mortgage holder

Qualified capital providers typically set interest rates based on the term of the financing. For example, 10-year-term financing may have an interest rate in the range of 5% to 5.5%; 15-year-term, 5.5% to 6%; and 20-year-term, 6% to 6.25%. Moreover, capital providers will typically set applicable closing fees to cover transaction costs, e.g. legal, underwriting, appraisal, etc.

To ensure the best possible terms, including interest rate and other fees, the property owner can review term sheets from multiple C-PACE qualified capital providers to select the best fit.

Repayment periods span up to 25 years, depending on the owner’s preference, and are limited by the weighted average effective useful life (EUL) of the financed improvements.

Property owners are encouraged to pursue available federal investment tax credits (ITC), utility rebates, and all other available incentives. All or a portion of total incentives may be subtracted from the amount financed under the C-PACE program.

Each C-PACE capital provider set their own terms, including pre-payment, in its financing agreement with the property owner. It is common for C-PACE capital providers to include a pre-payment fee schedule.