C-PACE financing improves a borrower’s ability to pay

C-PACE (Commercial Property Assessed Clean Energy) is a green energy financing program that helps commercial and non-profit property owners get affordable, long-term financing for green energy upgrades to their buildings. For building owners, energy improvements financed by C-PACE can produce immediate energy savings and enable them to increase their bottom line. And mortgage holders benefit from C-PACE, too!

C-PACE energy improvements are paid for out of the savings that the project creates. Borrowers should realize improved cash flow, leaving them less encumbered and able to repay the financing.  Modernized buildings are stronger and more valuable assets on the mortgage holder’s balance sheets. And because building owners are required to get their mortgage holder’s consent before their project is eligible for financing, mortgage holders are involved in determining a property’s eligibility.

For C-PACE financing to go forward for a prospective borrower, the mortgage holder must agree to allow the C-PACE Benefit Assessment, which takes a senior position to their mortgage, to be levied on the property. This allows the borrower to pursue energy efficiency or renewable energy improvements using C-PACE, which will be repaid through the Benefit Assessment and collected in installments on their property tax bill. By completing a Lender Consent form, mortgage holders indicate their understanding that the C-PACE Benefit Assessment will be collected in the same manner as and subject to the same penalties, and remedies as real property taxes. By statute, C-PACE Benefit Assessments are senior liens, subordinate only to real property tax liens.

C-PACE creates stronger properties and stronger cash flow

Mortgage holders can be confident about C-PACE green energy financing because it enhances a borrower’s ability to meet their financial obligations. This is what makes consenting to C-PACE financing a fundamentally sound business decision. Here’s why:

• C-PACE assessments do not accelerate. This means that in the unlikely event of foreclosure, only the amount of the C-PACE assessment currently due (and/or in arrears) would be collected and extinguished through such foreclosure action.
• Better cash flow for borrowers. C-PACE offers 100% financing for green energy upgrades up to 25 years, increasing the borrower’s cash flow and maintaining their ability to repay their mortgage.
• Permanent, affixed improvements. Building owners make permanent energy improvements affixed to the structure, improving the building’s value for current and prospective investors.
• Increased asset value. C-PACE increases building value, meaning stronger assets on a mortgage holder’s balance sheets. It’s a win for the borrower, who builds a better business. It’s a win for mortgage holders whose investment becomes more valuable. Plus, it’s a win for the community as it builds a better business environment.
• Transferable liens. C-PACE is transferable and in the event of a property sale, C-PACE assessments automatically transfer to the new property owner (unless the buyer or seller decides to prepay the assessment).
• Projected savings. Mortgage holders can be confident in their support of C-PACE because the Connecticut statutes require C-PACE projects to have a Savings to Investment Ratio (SIR) greater than 1, meaning that projected lifetime savings from the improvements must exceed the total investment (including financing costs).
• Trusted Ally. The Connecticut Green Bank (which administers the C-PACE program) is the nation’s first green bank and deeply experienced in the administration and processing of C-PACE financing. This is what makes the Green Bank, a quasi-public agency whose mission is to accelerate the growth of green energy, such a trusted partner to the stakeholders it serves.