How C-PACE works for you

C-PACE for Mortgage Holders

C-PACE is an innovative, voluntary financing program that enables borrowers (with the consent of the mortgage holder) to modernize their building by installing qualifying energy improvements funded with affordable, long-term financing.

Building upgrades designed to conform to C-PACE standards which require that, over the effective useful life of the improvements, the estimated energy cost savings exceed the total finance cost. Owners of C-PACE-financed buildings typically experience improved net operating income, increased asset value, and a positive return on their investment.

Mortgage Holder Benefits

From the mortgage holder’s point of view, a completed C-PACE project has the following key benefits:

  • The mortgage holder’s loan is more secure due to the borrower’s increased cash flow
  • The property is more attractive to current and potential tenants or buyers
  • The assessment does not accelerate. In the event of a default, only the amount of the assessment in arrears is due.

Across the country, commercial property assessed clean energy (C-PACE) programs have been embraced by more than 170 national, regional, and local mortgage holders. View a list of consenting mortgage holders.

How it Works

C-PACE can provide up to 100% financing to owners of new and existing buildings which need routine energy equipment replacement or are simply looking to modernize and improve the value of their eligible building. The financing, which is based on the estimated useful life of the improvements—up to 25 years—is secured by a voluntary benefit assessment and is levied against the property by the City Clerk in the County Recorder’s Office.

The C-PACE voluntary benefit assessment lien levied against an eligible property:

  • Is of co-equal priority with real estate tax liens and other assessments
  • As to the current C-PACE installment payment that is due and any delinquent C-PACE payments, is senior to:
    • All previously recorded senior liens, provided a written lender consent agreement is executed by the holder of each such senior lien, and
    • Shall run with title to the property and shall not be extinguished by a foreclosure, and
    • Is evidenced by a C-PACE certificate, as may be amended from time to time in accordance with the C-PACE Resolutions and the C-PACE Assessment and Financing Agreement.

Process

A borrower who wishes to pursue C-PACE financing will, typically in collaboration with the program administrator, seek a meeting with the mortgage holder. At the meeting, the owner or program administrator will describe the program’s requirements and answer the mortgage holder’s questions. In addition, the program administrator will provide a description of 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.

Assuming all parties agree that a project is worth pursuing, the project will move to development and underwriting. As part of the underwriting process, the program administrator will support the mortgage holder’s project review, as needed.

Consent

Once the owner is satisfied with project design and cost, the C-PACE program administrator will review the scope of work and, assuming it meets program eligibility requirements, make a determination that it is eligible for financing under the C-PACE guidelines.

The owner will then meet with the mortgage holder to provide a summary of the project’s key assumptions. To facilitate the mortgage holder’s due diligence process, this review will include a description of the equipment to be replaced, the projected financial metrics, and the enhanced cash flows that will result from the building equipment upgrade.

Learn More

To learn more about how you can reduce mortgage default risk and increase the value of your collateral, contact us today or visit our FAQs page.

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