C-PACE for Local Governments
C-PACE boosts the economy and creates jobs by funneling private investment into C-PACE enabled communities. The contributions of C-PACE to the economy measure in the billions for private investment and tens of thousands for jobs created (PACENation). Local governments desire to create greater prosperity in their jurisdictions but are hampered by lack of funds and inability to attract new business and younger demographics. Many architectural and development trends point to the high marketability of “green buildings,” and studies indicate that a younger workforce prefers to live and work in spaces that are friendly to the environment. Finally, C-PACE helps local governments meet federally- or state-mandated efficiency and clean energy standards as well as accomplish local energy efficiency goals while requiring no government funding as the financing is offered by private capital providers.
C-PACE for Property Owners
C-PACE is, at its core, a reliable source of affordable financing for property owners to make money- and energy-saving improvements to their buildings. Property owners are able to procure and install efficient, triple-glazed windows for their storefronts that reduce heat transmission, high-efficiency HVAC models, interrelated systems that synergize temperature control and lighting, and much more. C-PACE is growing in the United States real estate industry is because it is an effective tool for defraying upfront cash expenses and allowing businesses and developers to enjoy utility savings without the burden of utilizing existing credit capacity. Fixed interest rates are competitively set by the market and C-PACE typically requires no down payment. The assessment is attached to the property, so there is typically no personal or corporate guarantee required by capital providers that fund projects.
C-PACE for Contractors
C-PACE finances 100% of all hard and soft costs associated with eligible energy improvement projects, inclusive of a contractor’s time and resources to design and install those improvements. For contractors, C-PACE is a way to both pitch deeper energy retrofits that, due to cost, would otherwise not be implemented and to effectively sell green building design features that typically would be value-engineered out of a development project.
C-PACE for Capital Providers
Capital providers see in C-PACE a highly reliable, long-term investment. Requisite capital for C-PACE projects routinely run into the hundreds of thousands to millions of dollars. Through the seniority of the property assessment, capital providers are secured by the value of the real estate and are repaid through a known repayment stream.
C-PACE for Mortgage Lenders
For existing buildings, C-PACE projects typically provide numerous benefits to existing mortgage holders. C-PACE projects typically help to boost net operating income through funding improvements that dramatically reduce a building’s operating costs while charging a low annual repayment that is frequently less than the savings. Increased cash flow from C-PACE projects can improve debt service coverage ratios for mortgage holders and boost asset value. For the acquisition and renovation of vacant buildings, C-PACE financing typically offers lower interest rates than preferred equity or mezzanine debt with longer maturities, helping projects to fill gaps in the capital stack and a achieve a lower overall blended cost of capital. Finally, mortgage holders are relatively protected with C-PACE as C-PACE assessments are non-accelerating in the event of a payment default or delinquency. Only past due assessments are enforced through the C-PACE lien while the balance of assessments remain with the property.