2024年C-PACE（商业地产清洁能源评估政府专项融资）：对高级贷款的影响白皮书（英文版）-ALC

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Tableofcontents

1.ExecutiveSummary 2

2.UnderstandingC-PACEFinancing 4

DefinitionandStructureofC-PACE 4

DifferencesBetweenC-PACEandTraditionalCommercialLoans 5

LegislativeBackingandNationwideAdoption 6

3.ImpactofC-PACEonSeniorLoanSafetyandSecurity 8

4.RefinancingConsiderationswithC-PACEFinancing 10

CommonConcernsandMisconceptions 10

MarketPerceptionofPropertieswithC-PACEAssessments 11

StrategiesforSuccessfulRefinancing 11

5.StudiesandReal-WorldApplications 14

ExamplesofSuccessfulIntegrationofC-PACEandSeniorLoans 14

LessonsLearnedandBestPractices 15

6.LegalandRegulatoryFramework 17

OverviewofStateLegislationSupportingC-PACE 17

ComplianceRequirementsforPropertyOwnersandSeniorLenders 18

7.FinancialandEnvironmentalBenefitsofC-PACE 20

CostSavingsfromEnergyEfficiencyImprovements 20

EnvironmentalImpactandSustainabilityBenefits 21

8.FutureOutlookforC-PACEFinancing 23

TrendsinMarketAdoptionandInnovation 23

OpportunitiesforSeniorLoanInvestors 25

9.Conclusion 26

10.References 28

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1,Executivesummary

CommercialPropertyAssessedCleanEnergy(C-PACE)financinghasemergedasatransformativetoolintherealmofcommercialrealestate,offeringauniqueapproachtofundingenergy-efficientupgradesandsustainablebuildingpractices.Thisinnovativefinancingispartofabroaderpublic-privatepartnershipaimedatencouragingpropertyownerstoinvestinenergyefficiency,renewableenergy,andwaterconservationimprovements.C-PACEfinancingstandsoutduetoitslong-term,amortizingstructureandfixedinterestrates,whichalignwiththeusefullifeoftheimprovementsbeingfinanced.Byallowingpropertyownerstorepaytheinvestmentthroughaspecialassessmentontheirpropertytaxbills,C-PACEeffectivelyreducesupfrontcapitalrequirementsandspreadscostsovertime,makingenergyefficiencyprojectsmoreaccessibleandfinanciallyfeasible.

Inadditiontotheenvironmentalbenefitsofreducingcarbonemissionsandpromotingsustainableenergyuse,C-PACEfinancingofferssignificanteconomicadvantages.Forpropertyowners,theabilitytofinancesubstantialbuildingimprovementswithoutupfrontcostsandwithlong-termrepaymentoptionscanleadtoreducedoperatingexpenses,increasedpropertyvalues,andenhancedmarketability.Investorsbenefitfromtheimprovedassetperformanceandlowerriskassociatedwithpropertiesthataremoreenergy-efficientandhavelowerutilitycosts.ThisalignmentofenvironmentalandeconomicbenefitshasdriventherapidadoptionofC-PACEprogramsacrosstheUnitedStates,with38statesandtheDistrictofColumbiahavingpassedenablinglegislation.

ThecollaborationbetweenseniorcommercialmortgagelendersandC-PACEfinancingprovidersrepresentsasignificantstepforwardinleveragingC-PACE

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toenhancethecapitalstackofcommercialrealestateprojects.ThispartnershipisparticularlyimportantforSeniorloaninvestorswhoprioritizethesecurityandstabilityoftheirinvestments.

Byco-authoringthiswhitepaperontheimpactofC-PACEfinancingonseniorloans,ALCandCastleGreenaimtoclarifycommonmisconceptions,highlightthecompatibilityofC-PACEwithtraditionalcommercialfinancingstructures,anddemonstratehowthisinnovativetoolcanbeusedtoenhancepropertyvaluewhilemaintainingthesafetyandsecurityofseniorloaninvestments.

AsthemarketforC-PACEcontinuestogrow,withprojectionsofreaching$10billionincumulativeinvestmentbytheendof2024,theneedforclear,comprehensiveinformationaboutitsbenefitsandapplicationsbecomesincreasinglycrucial.Thiswhitepaperseekstoprovidethatinformation,drawingontheexpertiseofAmericanLendingCenterandCastleGreenFinancetooffervaluableinsightsintohowC-PACEcanbeeffectivelyintegratedintothefinancialstrategiesofcommercialpropertyownersandinvestors.

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2.understandingc-PACEFinancing

TheC-PACEfinancingmodelrepresentsasignificantshiftinhowenergyefficiencyandrenewableenergyprojectsarefundedforcommercialproperties.Unliketraditionalfinancingmechanisms,C-PACEprovidesauniquestructurethatalignswiththeneedsofpropertyowners,lenders,andlocalgovernments.TofullygraspthepotentialofC-PACE,itisessentialtounderstanditsdefinitionandstructure,howitdiffersfromtraditionalcommercialloans,andthelegislativebackingthathasenableditsnationwideadoption.

DefinitionandstructureofcPACE

C-PACEisafinancingtoolspecificallydesignedtofacilitatetheimplementationofenergyefficiency,renewableenergy,andwaterconservationimprovementsincommercialproperties.Itoperatesthroughapublic-privatepartnership,whereprivatecapitalisusedtofundtheimprovements,andrepaymentissecuredviaaspecialassessmentaddedto

thepropertytaxbill.Thisstructureallowspropertyownerstoundertakesignificantcapitalimprovementswithouttheneedforupfrontcapitalexpenditure,astherepaymentisspreadoveralongterm,typically10to30years,whichalignswiththeusefullifeoftheimprovementsbeingfinanced.

U.S.DepartmentofEnergy:LessonsinCommercialPACELeadership

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TheC-PACEmodelisfundamentallydifferentfromtraditionalcommercialloansinthatitissecuredbythepropertyitselfratherthanthecreditworthinessoftheborrower.Thismeansthattheassessmentremainswiththepropertyevenifownershipchanges,ensuringthatthepartybenefitingfromtheimprovementsistheonewhorepaystheassessment.Further,iteliminatesthecomplicationofobtainingapprovalsorincurringfeesupontransferoftheproperty.Thisfeatureprovidesflexibilityforpropertyownersandenhancesthemarketabilityofpropertieswithenergy-efficientupgrades.

DifferencesBetweencPACEandTraditionacommerciaLoans

OneofthekeydistinctionsbetweenC-PACEfinancingandtraditionalcommercialloansisthemethodofrepaymentandsecurity.Traditionalcommercialloansaretypicallysecuredbyamortgagelienorpledgeofpartnershipinterestsonthepropertyandaresubjecttotheborrower’screditrisk.Incontrast,C-PACEassessmentsarerepaidthroughpropertytaxbillsandaretreatedsimilarlytoothermunicipalassessments.Thismeansthatintheeventofadefault,theC-PACEassessmentdoesnotaccelerateandonlythedelinquentamountiscollected,reducingtheimmediatefinancialburdenonthepropertyowner.

Moreover,C-PACEfinancingdoesnotaffecttheseniorityoftheexistingseniorcommercialloan.Unlikeotherformsofseniordebt,C-PACEassessmentsdonotpushtheexistingseniorlenderintoajuniorpositionwhentheC-PACEiscurrent.Thischaracteristiciscrucialformaintainingthesafetyandsecurityofseniorloans,makingC-PACEanattractiveoptionforbothpropertyownersandseniorlenderswhowishtoimproveenergyefficiencywithoutcompromisingtheirfinancialpositions.

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LegislativeBackingandNationwideAdoption

TheadoptionofC-PACEfinancingacrosstheUnitedStateshasbeendrivenbystronglegislativesupportatbothstateandlocallevels.Currently,C-PACEprogramshavebeenenactedin38statesandtheDistrictofColumbia,withactiveprogramsin35statesandlegislationpendinginseveralothers.Thiswidespreadadoptionreflectsagrowingrecognitionofthebenefitsofenergyefficiencyandrenewableenergyprojects,bothintermsofenvironmentalimpactandeconomicdevelopment.

CastleGreenFinance,akeyplayerintheC-PACEAlliancelegislativecommittee,activelycontributestoshapingC-PACEguidelinesonanationalscale.Asacommitteemember,CastleGreenparticipatesinthelegislativeprocessbydraftingbillsfornewstateprograms,engaginglobbyiststogeneratepolitical

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support,andpromotingpositiveamendmentstoexistingC-PACEprograms.Overthelast18months,CastleGreenanditscolleagueshavecontributedtothepassageofnewC-PACEstatutesinNorthCarolina,Georgia,Idaho,NewMexico,andHawaii.

Inadditiontotheseefforts,CastleGreenhasworkedcloselywithProgramAdministratorsoverthepasttwoyearstodriveimportantamendmentsinstatessuchasMichigan,Pennsylvania,NewYork,Connecticut,andTexas.OngoingamendmentinitiativesinMassachusettsandMissouriaimtomakeC-PACEprogramsmoreaccessibletopropertyowners.

OfthetwelvestatesthatcurrentlydonothaveC-PACEstatutes,strategiesarebeingdevelopedorexpandedupontopursuethestatesofSouthCarolina,Arizona,Louisiana,Indiana,andIowaduringthe2025legislativesessionstocontinuegrowingtheC-PACE.

StatestatuteshavebeenenactedtoauthorizeC-PACEprograms,providingalegalframeworkthatenablesmunicipalitiestocollectC-PACEassessmentsalongsideregularpropertytaxes.Thislegislativebackingensuresthesecurityoftherepaymentmechanismandsupportsthelong-termviabilityofC-PACEfinancingasatoolforpromotingsustainablebuildingpractices.

Insummary,C-PACEfinancingrepresentsaninnovativeapproachtofundingenergyefficiencyandrenewableenergyprojectsincommercialproperties.Itsuniquestructure,whichtiesrepaymenttothepropertyratherthantheborrower,offerssignificantadvantagesovertraditionalcommercialloans.Withrobustlegislativesupportandagrowingnumberofparticipatingstates,C-PACEiswell-positionedtocontinueexpandingitsimpactontherealestateandenergysectors.

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3.Impactofc-PACEonseniorLoansafetyandsecurity

TheimpactofC-PACEfinancingonthesafetyandsecurityofseniorloansisacriticaltopic.Aspreviouslyexplained,C-PACEfinancingisstructuredasapropertytaxassessmentratherthanatraditionalcommercialloan,andthisdistinctionhassignificantimplicationsforthesafetyandsecurityofseniorloans.

C-PACEfinancingistieddirectlytothepropertythroughataxassessment.ThismeansthatC-PACEassessmentsaretreatedsimilarlytopropertytaxesandarecollectedinthesamemanner.Theseniorlenderstill

maintainsaseniorfeemortgagewhiletheC-PACEassessmentremainscurrent.ThisensuresthattheseniorlendermaintainsallitstraditionalrightsandremediesandmayberepaidatanytimeprovidedtheC-PACEisnotdelinquent.Thispermitstheseniorlendertoremedyproblemswithanassetastheywouldtraditionallyandmaintainscontrolstheyareaccustomedtointheirnormalcourseofbusiness.

Furthermore,C-PACEassessmentsdonotaccelerateintheeventofdelinquency.Ifapropertyownerfallsbehindontheirpropertytaxes,includingtheC-PACEassessment,onlythedelinquentamountissubjecttocollection.

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Futurepaymentsremainscheduledasinitiallyplanned,withoutacceleration.Inaddition,allnoticeandcurerightscontainedwithintheC-PACEstatuteextendtotheseniormortgageholder,aswellasthepropertyowner.Thisapproachreducestheriskofsignificantfinancialstrainonthepropertyownerandseniorlenderwhileminimizingthepotentialimpactoncashflow,whichinturnsupportsthestabilityoftheseniorloan.

Forseniorloaninvestors,whotypicallyprioritizethesecurityoftheirinvestments,itisimportanttonotethatC-PACEfinancingdoesnotdisrupttheseniorityoftheirloaninvestmentstructure.ThepaymentsassociatedwithC-PACEareincorporatedintothepropertytaxobligations,andassuch,theydonotpushtheseniorloanintoasubordinateposition.Thisarrangementensuresthattheseniorloan'spriorityispreserved,maintainingtheprotectionoftheseniorloancapital.

Inadditiontomaintainingloanpriority,C-PACEfinancingalsocontributestoenhancingtheproperty'svalueandoperationalefficiency.TheTreppReportandEnergyUsageandDefaultRiskstudiesprovideevidencethatbuildingswithpoorenergyefficiencyaremorelikelytodefault,whileenergy-efficientimprovementsfundedthroughmechanismslikeC-PACEreducethedefaultriskbydefaultriskbyimprovingtheproperty’scashflowandoverallfinancialhealth(Trepp,2017;LawrenceBerkeleyNationalLaboratory&UniversityofCalifornia,Berkeley,n.d.).This,inturn,canreducethelikelihoodofdefaultontheseniorloan,furthersecuringtheinvestmentfortheseniorloaninvestors.

Insummary,C-PACEfinancingisaproperty-basedtoolthatenhancesenergyefficiencywithoutcompromisingthesecurityofseniorloans.Itmaintainsthepriorityofseniorloans,doesnotaccelerateintheeventofdelinquency,andcanevencontributetothefinancialstabilityandvalueoftheproperty.ThismakesC-PACEacomplementaryfinancingoptionthatalignswellwiththeinterestsofseniorlendersandtheirinvestors.

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4,Refinancingconsiderationswithc-PACE

Financing

C-PACEfinancingprovidesauniqueandinnovativemethodforfundingenergy-efficientupgradesincommercialproperties.However,aswithanyfinancialproduct,propertyownersandinvestorsmustconsidertheimplicationsofC-PACEassessmentswhenplanningforrefinancing.Understandingcommonconcerns,marketperceptions,andstrategiesforsuccessfulrefinancingisessentialformaximizingthebenefitsofC-PACEfinancingwhileminimizingpotentialdrawbacks.

commonconcernsandMisconceptions

OneofthemostprevalentconcernsaboutC-PACEfinancingisitsimpactonrefinancingexistingdebt.ManypropertyownersandseniorlendersworrythatthepresenceofaC-PACEassessment,whichisrepaidthroughpropertytaxbillsandoftenholdsaseniorpositiontootherliens,couldcomplicaterefinancingefforts.ThisconcernstemsfromthemisconceptionthatC-PACEassessmentsmightsubordinateexistingmortgages,potentiallyreducingthewillingnessofnewseniorlenderstorefinancethepropertyorincreasingthecostofrefinancing.

However,thisconcernisunfounded.C-PACEassessmentsaretypicallystructuredinawaythatdoesnotimpairthepositionofseniorlenders.Theassessmentisrepaidasalineitemonthepropertytaxbill,andintheeventofadefault,onlythecurrentyear’sdelinquentpaymentsarecollected,notthefullamountoftheassessment.SincethetotalC-PACEfinancingtypicallyrepresents10%to30%oftheproperty’svalueandisrepaidover10to30years,

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evenintheeventofdefault,theimpactofdelinquentpaymentsofC-PACEontheseniorlenderisminimal,amountingtoonly0.3%to3%ofstabilizedvalue,makingtheimpactnegligible.ThisstructureminimizestherisktoseniorlendersandmakesC-PACEaviablefinancingtoolevenforpropertieswithexistingcommercialloans.

MarketperceptionofpropertieswithcPACEAssessments

ThemarketperceptionofpropertieswithC-PACEassessmentscanvary,butgenerally,propertiesthathaveutilizedC-PACEfinancingareviewedpositivelyduetotheenergyefficiencyandsustainabilityimprovementstheyrepresent.Studieshaveshownthatenergy-efficientbuildingstendtohavelowerdefaultrates,higheroccupancy,andbetteroverallfinancialperformancecomparedtolessefficientcounterparts.Asaresult,propertieswithC-PACEassessmentsmaybemoreattractivetopotentialbuyersandlendersbecausetheyarelikelytoincurloweroperatingcostsandofferamoresustainableinvestment.

Despitetheseadvantages,somemarketparticipantsmaystillviewC-PACEassessmentsasapotentialrisk,particularlyiftheyareunfamiliarwiththestructureandbenefitsoftheprogram.Educatinglenders,investors,andotherstakeholdersabouthowC-PACEassessmentswork,includingthefactthattheydonotaccelerateandarecollectedsimilarlytopropertytaxes,canhelpmitigateconcernsandimprovethemarketperceptionofpropertieswithC-PACEfinancing.

strategiesforsuccessfulRefinancing

Forpropertyownersconsideringrefinancing,thereareseveralstrategiesthatcanhelpensureasmoothprocessevenwithaC-PACEassessmentinplace.Clearcommunicationwithpotentiallendersiscrucial.Providingdetailed

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informationabouttheC-PACEassessment,includingtheamount,terms,andbenefitsofthefinancedimprovements,canhelpalleviateconcernsanddemonstratetheaddedvalueoftheproperty.

Additionally,securinglenderconsentisakeystepintherefinancingprocess.WhilemanylendersarenowfamiliarwithC-PACEandarewillingtoprovideconsent,itisessentialtoobtainthisconsentearlytoavoiddelaysorcomplicationslateron.Somelendersmayrequirespecificconditionstobemet,suchasescrowingtheC-PACEpaymentsorensuringthattheassessmentdoesnotexceedacertainpercentageofthepropertyvalue.Addressingtheserequirementsproactivelycanfacilitateasmootherrefinancingprocess.

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AnaddedbenefitofmostC-PACEstructuresisthattheyallowforearlyprepaymentoftheC-PACEassessment,whileC-PACEstatutesprohibitaC-PACEprovider’sabilitytocalloracceleratetheC-PACEassessment.Thisprovidesawin-winsituationforthepropertyownerandseniorlenderastheC-PACEmaystayinplaceuponarefinanceorsaleormaybepaidoff,allatthediscretionoftheseniorlenderandpropertyownerwithoutanyinputorinterferencefromtheC-PACEprovider.

Finally,leveragingtheimprovedpropertyperformanceresultingfromC-PACE-financedupgradescanenhancetherefinancingterms.Energy-efficientimprovementsoftenleadtohighernetoperatingincome(NOI)offsettingmostoralloftheC-PACEpaymentsandincreasedpropertyvalue,whichcanbeattractivetolendersandhelpsecuremorefavorablerefinancingterms.Byhighlightingthesebenefits,propertyownerscanmakeacompellingcaseforrefinancingevenwithaC-PACEassessmentinplace.

Inconclusion,whilethereareconsiderationstokeepinmindwhenrefinancingapropertywithC-PACEfinancing,thepotentialchallengescanbeeffectivelymanagedthroughclearcommunication,lendereducation,andstrategicplanning.Byunderstandingandaddressingcommonconcerns,improvingmarketperception,andimplementingsuccessfulrefinancingstrategies,propertyownerscanmaximizethebenefitsofC-PACEfinancingwhileensuringcontinuedaccesstocapital.

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5.studiesandReal-worldApplications

ThesuccessfulintegrationofC-PACEfinancingwithseniorloanshasbeendemonstratedthroughvariousreal-worldapplicationsacrossdifferentpropertytypesandmarkets.TheseexamplesillustratehowC-PACEcaneffectivelycomplementtraditionalfinancingstructures,offeringsignificantbenefitstopropertyowners,lenders,andinvestorswhilemaintainingthesecurityofseniorloans.

ExamplesofsuccessfulIntegrationofc-PACEandseniorLoans

OnenotableexampleoftheeffectiveintegrationofC-PACEfinancingwithseniorloansistheredevelopmentofahistoricconventinConnecticutintoa292-unitapartmentcomplex.Inthiscase,C-PACEfinancingprovided$13.8milliontofundextensiveenergyefficiencyupgrades,includingadvancedHVACsystems,high-efficiencywindows,andlightingimprovements.Theprojectalsosecuredseniorloanfinancing,andduetoitsstrongoperationalperformance,healthyfinancialcondition,andthestatutoryprotectionsinplace,theC-PACEassessmentremainedcurrent.Asaresult,theseniorlenderwasnotsubordinatedbytheC-PACEassessment.Thecombinedfinancingstrategyallowedforaloweroverallcostofcapitalandimprovedtheproperty'snetoperatingincome(NOI)byreducingenergyexpenses.Asaresult,theprojectnotonlypreservedahistoricbuildingbutalsocontributedtosustainabledevelopmentgoalsandeconomicgrowthinthearea.

AnotherexampleinvolvesacoldstoragefacilityinCaliforniathatutilizedbothC-PACEfinancingandseniorloanstofundsignificantenergy-efficientupgrades.The$17millionC-PACEfinancingwasusedtoinstallLEDlighting,supportseismicstrengtheningandfundahighlyadvanced,energy-efficient

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HVACsystemusedtostoreproduceinarefrigeratedenvironment,whileaseniorloanprovidedadditionalcapitalfortheconstructionofthefacility.TheintegrationofC-PACEfinancinghelpedlowerthehigheroperationalcoststypicallyassociatedwithsuchpropertiesandimprovethefacility'senergyperformance,ultimatelyenhancingitsmarketvalue.ThisprojecthighlightshowC-PACEcanbeeffectivelylayeredwithseniorcommercialloanstosupportlarge-scalecommercialdevelopments,ensuringthatenergyefficiencyandfinancialstabilityareachievedsimultaneously.

LessonsLearnedandBestpractices

Fromthesecasestudies,severalkeylessonsandbestpracticescanbederivedforsuccessfullyintegratingC-PACEfinancingwithseniorcommercialloans.First,itiscrucialtoengagewithallstakeholdersearlyinthefinancingprocess.Thisincludessecuringlenderconsentandensuringthatallparties,particularlyseniorlenders,understandthestructureandbenefitsofC-PACEfinancing.Clearcommunicationandeducationaboutthenon-accelerationclauseofC-PACEassessments,whichensuresthatonlydelinquentpaymentsarecollectedwithoutimpactingtheseniorloan'spriority,arevitalingaininglenderapproval.

Anotherbestpracticeistoconductathoroughanalysisoftheproperty'senergyperformanceandpotentialsavingsfromtheproposedupgrades.ThisanalysisshouldbesharedwithlenderstodemonstratethefinancialbenefitsoftheC-PACE-fundedimprovements,suchasreducedoperatingcostsandenhancedpropertyvalue.ByprovidingdetailedprojectionsofenergysavingsandtheirimpactonNOI,propertyownerscanmakeacompellingcasefortheeconomicviabilityofintegratingC-PACEwithseniorloans.BestpracticeamongC-PACEprovidersincludestheengagementofanenergyengineertoevaluatetheenergysavingsandwaterconservationtobederivedfromthe

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proposedimprovements.Thisresultingenergyauditmaybesharedwithotherstakeholderstosupporttheprojectedenergyperformanceandexpectedutilitycostsavings.

Additionally,itisimportanttostructurethefinancinginawaythatalignswiththeproperty'scashflowandoperationalneeds.Forinstance,someprojectsmaybenefitfromescrowingtheC-PACEpaymentstoensuretheydonotdisruptcashflow,therebymaintainingtheproperty'sfinancialstabilityandprotectingtheinterestsofbothseniorlendersandtheirinvestors.MostC-PACEfinancingswillincludeaperiodofcapitalizedinterestwhicheffectivelyprepaystheinterestforaperiodoftimewhiletheimprovementsarebeingimplementeduntilsuchtimeasthepropertycashflowisexpectedtobesufficienttoself-supporttheC-PACEpayments.

TheintegrationofC-PACEfinancingwithseniorloanscanprovidesubstantialbenefitsforpropertyownersandinvestors,enhancingbothenergyefficiencyandfinancialperformance.Byfollowingbestpracticessuchasearlystakeholderengagement,thoroughenergyperformanceanalysis,andstrategicfinancingstructuring,thesuccessfulcombinationofC-PACEandseniorloanscanbeachieved,supportingsustainabledevelopmentandeconomicgrowthacrossvariouscommercialrealestatemarkets.

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6.LegalandRegulatoryFramework

C-PACEfinancingoperateswithinarobustlegalandregulatoryframeworkdesignedtosupportenergyefficiencyimprovementsandrenewableenergyprojectsacrosscommercialpropertiesintheUnitedStates.ThisframeworkisessentialforensuringthatC-PACEfinancingiseffectivelyimplementedandwidelyadopted,providingbothpropertyownersandlenderswithaclearunderstandingofthelegalrequirementsandprotectionsassociatedwiththesetypesofprojects.

overviewofstateLegislationsupportingcPACE

C-PACEfinancingisenabledbystatelegislationthatauthorizeslocalgovernmentstoofferproperty-assessedfinancingforenergyefficiency,renewableenergy,andwaterconservationimprovements.Asofnow,38statesandtheDistrictofColumbiahaveenactedC-PACE-enablinglegislation,allowingpropertyownerswithinthesejurisdictionstoaccesslong-term,fixed-ratefinancingforeligibleprojects.Eachstate’slegislationsetsthelegalparametersforC-PACEprograms,includingeligibilitycriteria,thetypesofimprovementsthatqualify,andtheprocessforsecuringandrepayingC-PACEassessments.

ThelegislativeframeworkforC-PACEisdesignedtoprovideahighlevelofsecurityforboththepropertyownersandthelendersinvolvedintheprogram.MoststatelawsstipulatethatC-PACEassessmentsarerepaidthroughpropertytaxbills,ensuringthattheyaretreatedasalien,onparwithotherpropertytaxes.Thismeansthatintheeventofapropertysaleortransfer,theC-PACEassessmentremainswiththeproperty,providingcontinuityandreducingthefinancialriskforpropertyowners.

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Moreover,statelegislationtypicallyincludesprovisionsthatprotectseniorlendersfrombeingsubordinatedbyC-PACEassessments.Inmostjurisdictions,thelawrequiresthatexistingseniorlendersprovideconsentbeforeaC-PACEassessmentcanbeplacedonapropertyandindustrybestpracticesamongreputableC-PACEprovidersistorequirelenderconsentin100%ofprojectsfinanced.ThisrequirementensuresthatseniorlendersarefullyinformedandinagreementwiththeadditionofaC-PACEassessment,therebymaintainingthepriorityoftheirliensandprotectingtheirinterests.

complianceRequirementsforpropertyownersandseniorLenders

CompliancewiththelegalrequirementsofC-PACEfinancingisessentialforbothpropertyownersandseniorlenderstoensurethesuccessfulimplementationandoper