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July 9, 2019

Save Green by Going Green on Your Construction Project with C-PACE Financing

Property owners and developers now have another incentive to go “green” with their construction projects. Commercial Property Assessed Clean Energy (C-PACE) is a unique financing opportunity for commercial building owners to use on energy upgrades.

Understanding C-PACE

Commercial Property Assessed Clean Energy (C-PACE) allows energy efficient building elements and renewable energy components to be financed over periods of 20+ years, and repaid through a special property tax assessment. The assessment provides a stable and fixed source of financing that is likely less expensive than traditional debt or equity alternatives. The C-PACE assessment stays with the property, even if sold.

C-PACE financing may be used on green elements in a rehab, remodel, or new construction project in states with applicable legislation and active C-PACE programs. The program is currently available in Missouri and is being developed in Illinois.

Benefits of C-PACE

C-PACE allows real estate developers and property owners to gain access to funding for key building improvements that will increase the value of their property. Below are a few of the main benefits of the program:

  • 20+ years of fixed-rate funding
  • Funding for up to 25% of the property’s value
  • No payments for up to two years
  • No principal repayment required upon sale
  • Can pass through tax assessment to tenants

Challenges of C-PACE

The biggest challenge to utilizing C-PACE may be getting all participants on board. If there is a mortgage on the property, C-PACE requires the mortgage holder to consent to the arrangement. This could be difficult in the beginning when C-PACE is not widely used, or if the lender is not familiar with the program. Despite these initial challenges, C-PACE provides an attractive opportunity for developers, owners and contractors.

The Anders Construction Team can help determine if C-PACE is a good option for your construction project. Contact an Anders advisor more information.

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