CPACE (Commercial Property Assessed Clean Energy) lending is a relatively new form of financing that has emerged in the last decade to help commercial property owners fund energy efficiency upgrades, renewable energy installations, and other sustainability projects. It is a type of Property Assessed Clean Energy (PACE) financing that is specifically targeted at commercial properties.
The idea behind CPACE lending is that property owners can borrow money to make energy improvements to their buildings, and then pay back the loan through an assessment on their property taxes. This means that the repayment obligation is tied to the property, not to the individual borrower. This makes it easier for property owners to invest in energy improvements that can be expensive upfront but have a long-term positive impact on their bottom line.
CPACE financing is typically offered by private lenders who partner with local governments to provide loans to property owners. The repayment obligation is tied to the property tax bill. This means that if the property is sold, the new owner assumes the repayment obligation. This also means that CPACE financing can be a more attractive option for lenders, as the repayment risk is lower than with other types of financing.
One of the key benefits of CPACE financing is that it can help commercial property owners reduce their energy costs, improve their buildings’ environmental impact, and increase their property values. Energy-efficient improvements can help reduce utility bills, while renewable energy installations can provide a source of clean, low-cost energy. Both of these factors can make a property more attractive to tenants, which can in turn increase the property’s value.
CPACE financing can be used to fund a variety of projects, including energy-efficient lighting, heating and cooling upgrades, solar panel installations, water efficiency measures, and more. The specific projects that are eligible for CPACE financing will vary depending on the program and the state or local government that administers it.