Displayed below is a list of Frequently Asked Questions (FAQs). Click on the “>” icon associated with each question to view the answer.

How does the mortgage holder participate in the C-PACE project development process?

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.
  1. 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 3rdparty technical review process to validate the projected energy savings and related key financial metrics associated with the project.
  1. 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 User Guide for more information.
  1. 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.
  1. 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.
Why have mortgage holders embraced well-designed C-PACE projects?

Many C-PACE projects 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.

What happens if the property owner defaults on a C-PACE payment?

Under the C-PACE Act, the voluntary energy assessment is subject to the same penalties and the same procedures in the case of delinquency as is provided for through ad valorem (i.e., property) taxes. The C-PACE voluntary energy assessment has priority over all private liens on the property, is of equal priority to other special assessments and general property taxes. In the event of a default, only the amount of the assessment in arrears is due.

Are C-PACE assessments considered “off balance sheet”? Is there clarity on the treatment of C-PACE as an operating expense from the perspective of the accounting industry?

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

From an accounting perspective, have any auditing firms concluded that the tax lien (which supports the financing) is not a liability of the owner or the building?

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

When is the voluntary C-PACE energy assessment recorded on the property?

Upon closing of C-PACE financing.

Is this a voluntary program?

Yes. Owners who choose not to participate remain unaffected.

How do property owners qualify for financing?

Qualifying for C-PACE financing is based on the property, and not the owner. The C-PACE capital provider will look at underwriting criteria including but not limited to:

  • 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
How much can a property owner borrow using C-PACE financing?

C-PACE projects typically range from $200,000 to more than $1 million. 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
What are typical C-PACE financing interest rates?

To ensure the best possible terms, including interest rate and other fees, the property owner can review term sheets from multiple private capital providers.

How is the length of the repayment period determined?

Repayment periods span up to 30 years, depending on the owner’s preference, and are limited by the weighted average effective useful life (EUL) of the financed improvements.

How are tax credits, rebates, and utility incentives incorporated into C-PACE financing?

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.

Are there fees associated with the pre-payment of a C-PACE assessment?

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.

Back to Top