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Financing for the Future: How Property Owners Can Use C-PACE To Enhance Value

By Matthew Bonney, Luke Aguera .

Commercial Property Assessed Clean Energy (C-PACE) is a government financing program allowing private lenders to provide financing for certain energy efficiency and renewable energy building improvement costs that fall under the criteria of the program. The financing is provided from private lenders and loan repayment is charged through property tax bills.

Some of the many advantages to using C-PACE financing include:

  1. C-PACE generally provides for lower cost of capital than mezzanine debt or preferred equity. The repayment period is over the life of the improvements which typically ranges from 20-30 years. Interest rates are competitive since the tax assessment repayment mechanism is considered secure and low risk. Capitalized interest and interest-only periods are available to support a wide array of structuring needs.
  2. C-PACE collateral is non-recourse, as opposed to mezzanine debt which can demand payment and assign ownership. Lenders of C-PACE financing do not have the ability to accelerate/demand payment. Although senior lenders need to consent to C-PACE financing, only the current portion of the payment gets priority to senior debt in the event of default.
  3. C-PACE can be structured to fit a diverse range of projects across including new construction, redevelopment, tenant improvements, and adaptive re-use. Additionally, C-PACE allows for retroactive refinancing for previously completed projects. This can allow for liquidity and decrease the cost of previously borrowed capital.
  4. C-PACE has sizing flexibility in the capital stack and is not only for large dollar value construction and development projects. C-PACE can finance small or large portions of total cost within the capital stack, depending on the needs of the project and eligible costs involved.
  5. C-PACE debt is tied to property as opposed to the property owners, meaning that the debt is assumable upon sale of the property. Property owners typically weigh heavily on their investment time horizon on the property to determine if investing in these energy efficient improvements will provide them their desired return on investment during the expected holding period of the property. The ability for the debt to be assumed allows property owners to reap the benefit of these energy efficient improvements at any point in their investment life cycle.
  6. In New York City, Local Law 97 was enacted in 2019 in an effort to reduce greenhouse gas emissions from buildings. Most buildings over 25,000 square feet will be required to meet certain emission limits by 2024 and even stricter standards by 2030. Many of costs required to comply with these standards will be eligible costs for purposes of C-PACE.

As of February 2023, C-PACE is available in 40 states and this number continues to grow. Municipalities must also adopt local law for establishing the program, such as New York City, which authorized the program under Local Law 96 in 2019. Real estate professionals should familiarize themselves with the program as we expect to see this type of financing used in more deals moving forward.

If you have questions on the program, contact Luke Aguera at, Matt Bonney at, or your Citrin Cooperman professional to learn more about C-PACE financing and the related tax and accounting considerations.

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