FAQs: Your key questions of C-PACE answered.

What is C-PACE?

  • Commercial Property Assessed Clean Energy (C-PACE) is a financing mechanism that enables property owners to fund energy efficiency, renewable energy, water conservation, and resiliency improvements. This financing is repaid through a voluntary assessment added to their property tax bill, providing a secure repayment method tied to the property itself.

How does C-PACE financing work?

  • C-PACE financing allows property owners to borrow money for energy improvement projects and repay it over time through a special assessment on their property tax bill. This assessment is structured similarly to other local property taxes and remains with the property upon sale, transferring repayment obligations to the new owner.

What types of properties are eligible for C-PACE financing?

  • Eligible properties typically include commercial, industrial, agricultural, non-profit, and multifamily properties. Each local program may have specific eligibility criteria, so it is essential to verify with the local C-PACE administrator.

What types of projects can be financed with C-PACE?

  • Projects eligible for C-PACE financing include energy efficiency improvements (e.g., HVAC upgrades, insulation), renewable energy installations (e.g., solar PV systems, wind turbines), water conservation measures (e.g., low-flow fixtures, irrigation systems), and resiliency upgrades (e.g., seismic retrofits, flood mitigation).

What are the benefits of C-PACE financing for property owners?

  • Benefits of C-PACE financing include:

    • Long-term financing (up to 30 years).

    • No upfront costs, as financing covers 100% of project costs.

    • Potential energy cost savings and improved operational efficiency.

    • Increased property value due to energy improvements.

    • The assessment is transferable to new property owners if the property is sold.

How is C-PACE financing repaid?

  • Repayment is made through a special assessment on the property’s tax bill, typically over 20-30 years. This special assessment is collected alongside regular property taxes, ensuring a secure repayment mechanism.

What are the interest rates for C-PACE financing?

  • Interest rates for C-PACE financing are generally competitive, often floating at a spread above a risk-free rate like the U.S. 10-Year Treasury until fixed a few days before closing. Rates typically range from 3% to 5%, depending on market conditions and project specifics.

Is C-PACE financing available in all states?

  • C-PACE programs are available in many states, but availability and program details vary widely. It is crucial to check local regulations and program specifics to determine if C-PACE is available in your area.

How can property owners apply for C-PACE financing?

  • Property owners can apply through a C-PACE program administrator or an approved C-PACE lender. The application process typically involves submitting a project proposal, undergoing underwriting, and obtaining necessary approvals.

What is the role of a C-PACE program administrator?

  • A C-PACE program administrator manages the program locally, including:

    • Approving projects.

    • Ensuring compliance with program guidelines.

    • Facilitating financing with lenders and property owners.

Can C-PACE financing be used for new construction projects?

  • Yes, C-PACE can be used for new construction projects to incorporate energy-efficient designs, renewable energy systems, and water conservation measures from the outset, enhancing the building's sustainability and efficiency.

What is the typical term length for C-PACE financing?

  • The typical term length for C-PACE financing ranges from 20 to 30 years, depending on the project scope and local program guidelines. This long-term repayment structure aligns the financing term with the useful life of the improvements.

Are there any upfront costs associated with C-PACE financing?

  • One of the significant advantages of C-PACE financing is that there are usually no upfront costs. The financing typically covers 100% of the project costs, including soft costs like engineering and permitting fees.

Can C-PACE financing be combined with other incentives or rebates?

  • Yes, C-PACE financing can often be combined with other local, state, or federal incentives, rebates, and tax credits. This combination can enhance the financial benefits of the project, making energy improvements more affordable.

How does C-PACE affect property value?

  • Energy-efficient and renewable energy improvements financed through C-PACE can increase property value by:

    • Reducing operating costs.

    • Enhancing building performance.

    • Making properties more attractive to tenants and buyers due to improved sustainability.

What happens to the C-PACE assessment if the property is sold?

  • The C-PACE assessment typically stays with the property upon sale, and the new owner assumes the remaining payments as part of their property tax obligations. This transferability ensures continuity in repayment without burdening the original owner.

Are there any risks associated with C-PACE financing?

  • Risks associated with C-PACE financing include:

    • Potential changes in property value.

    • The obligation to repay the assessment.

    • Market fluctuations affecting interest rates.

    • However, many property owners find that the benefits of energy savings and increased property value outweigh these risks.

How does C-PACE financing impact a property's tax bill?

  • The property tax bill will include the C-PACE assessment as a separate line item, increasing the overall tax obligation by the amount of the annual repayment. This structured repayment is typically offset by the energy cost savings from the improvements.

Can non-profit organizations use C-PACE financing?

  • Yes, many C-PACE programs allow non-profit organizations to use this financing mechanism for eligible projects, enabling them to reduce operating costs and improve their facilities' energy efficiency.

What types of renewable energy projects are eligible for C-PACE financing?

  • Eligible renewable energy projects include:

    • Solar photovoltaic (PV) systems.

    • Wind turbines.

    • Geothermal systems.

    • Biomass energy projects.

What energy efficiency improvements are commonly financed through C-PACE?

  • Common energy efficiency improvements include:

    • HVAC upgrades.

    • Insulation.

    • Energy-efficient lighting.

    • Windows and doors.

    • Building envelope improvements.

How does C-PACE financing promote sustainability?

  • C-PACE financing promotes sustainability by:

    • Funding energy-efficient and renewable energy projects.

    • Helping reduce greenhouse gas emissions.

    • Lowering energy consumption.

    • Supporting sustainable building practices.

What is the role of a C-PACE lender?

  • C-PACE lenders provide the capital for the financing and often work with program administrators and property owners to:

    • Structure and fund the projects.

    • Ensure that projects meet financial and technical criteria.

Can C-PACE financing be used for water conservation projects?

  • Yes, C-PACE can finance water conservation measures such as:

    • Low-flow fixtures.

    • Irrigation systems.

    • Water recycling systems.

How do property owners find C-PACE programs in their area?

  • Property owners can find C-PACE programs by:

    • Searching online for local C-PACE program websites.

    • Contacting local government offices.

    • Reaching out to industry organizations that support C-PACE initiatives.