CastleGreen Financing - C-PACE Financing Sustainable Energy Construction and Property Renovations

C-PACE Financing, CastleGreen Finance, and X-Caliber have joined forces to leverage innovative financing mechanisms that channel private capital into building construction and renovation projects with a strong emphasis on energy sustainability. This collaboration goes beyond merely meeting C-PACE eligibility and energy savings requirements; it represents a strategic, transformative effort to reshape the building construction and renovation landscape. By deploying lower-cost capital through C-PACE Financing, CastleGreen Finance and X-Caliber aim to substantially reduce development costs, making energy-efficient building practices more accessible and economically viable for property owners and developers.

This forward-thinking approach not only proposes to significantly lower future operating expenses for property owners but also integrates sustainable energy solutions, such as advanced HVAC systems, renewable energy installations, and cutting-edge building automation technologies, to optimize building performance, design, and functionality. The alliance between these entities underscores a profound commitment to energy efficiency, comprehensively responding to the evolving demands of public safety, environmental stewardship, and health. By aligning financial incentives with sustainable building practices, C-PACE Financing, CastleGreen Finance, and X-Caliber are driving a new era in construction that prioritizes environmental responsibility, cost-effectiveness, and innovation, all while supporting the broader objectives of reducing carbon footprints and fostering resilient communities.

C-PACE Financing for Sustainable Energy and Efficient Use of Resources

Collaboration for Sustainable Energy

C-PACE Financing: Collaboration of Asset Development and Sustainable Energy Solutions

C-PACE financing programs integrate cultural values and economic principles, creating a dynamic framework that harmonizes environmental consciousness with sound financial strategy. As an innovative financial instrument, C-PACE financing fosters a mutually beneficial relationship between the growing cultural movement toward sustainable energy practices and the economic drivers that compel property owners to modernize their buildings to meet increasingly stringent building codes and energy efficiency standards.

C-PACE programs enhance the conventional financial landscape by bridging the gap between asset development and sustainable energy solutions. It accelerates the transition toward a more sustainable, energy-efficient, and resilient built environment. This unique approach enables property owners to access affordable capital for energy-saving upgrades, reducing operational costs and contributing to broader climate goals, all while supporting local economic growth and community well-being.

Ultimately, C-PACE represents a forward-looking fusion of environmental stewardship and economic vitality, redefining how we finance and build for a sustainable future.

Clean Energy for Clean Environment

C-PACE Financing: Building Efficiency, Environmental Preservation and Physical Well-Being

C-PACE financing programs emerge as a cornerstone in advancing Environmental, Social, and Governance (ESG) initiatives, including NYC Local Law 97, transforming a shift toward sustainability in commercial real estate. By offering a more efficient financial tool, C-PACE enables property owners to significantly cut electricity and water usage, reduce greenhouse gas emissions, and foster economic growth through job creation. This strategic approach underscores a commitment to building efficiency and environmental preservation while highlighting the profound impact on physical well-being and community welfare.

The urgency of addressing buildings’ carbon footprint is underscored by the Center for Clean Air Policy’s findings, which expose buildings as a critical source of global greenhouse gas emissions, accounting for approximately one-third of the total and consuming 40% of the world’s energy.

The stark reality positions sustainable energy buildings at the forefront of the fight against climate change, making them prime candidates for innovative solutions like C-PACE financing.

Green Energy Projects Eligible for C-PACE Financing to Comply with NYC's Local Law 97 for the Reduction of Carbon Emissions

Solar Photovoltaic Systems

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High Performance HVAC Systems

financing sustainable energy - HVAC System

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Energy Efficient Cost-Effective Lighting

C-PACE Financing Conference Room Lighting

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Hi Tech Building Energy Monitoring Systems

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Sustainable Energy New Construction

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Seismic Strengthening Projects

C-PACE Financing - Seismic Strengthening

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Reflective Glass Windows

C-PACE Financing - Reflective Glass Facade

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Upgrading Building Insulation

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C-PACE Explained

What is C-PACE?

C-PACE stands for ‘Commercial-Property Assessed Clean Energy’. It’s a program legislated at the state and municipal levels allowing private investments to provide financing exclusively for energy efficiency and sustainability construction and improvements to commercial buildings. This public-private partnership was initiated to encourage investors to provide capital for the purpose of promoting commercial building energy efficiency and improving building systems as well as strengthening the physical structure of commercial real estate properties.

C-PACE may be used to finance building improvements that contribute to energy and water savings, as well as resiliency or “risk mitigation” such as seismic improvements or wind resistant improvements. Light to heavy renovations, gut rehabs, adaptive re-purposing and ground up development projects can utilize C-PACE financing as part of the capital stack.

What are the advantages of C-PACE?

There are several advantages provided by the C-PACE that are superior options to more traditional real estate financing instruments.

Long term, fixed rate financing provides predictability of borrowing by a reduction of carrying costs, in addition to a hedge against future increases in market rates.
Flexible prepayment options are available allowing property owners more freedom in their buy-hold decisions, as well as, easing the refinance burden.
C-PACE financing is property-based and non-recourse to the property owner with no financial covenants. Since it is property based, there is due on sale and the C-PACE is freely transferable to real estate buyers.
C-PACE is processed as a real estate tax and as such is treated as a property expense, as opposed to contingent liability against the owner’s balance sheet.
Financing costs may be offset by recovery through tenant tax reimbursements on retail, office or industrial assets or green room taxes/fees on hospitality assets.
Many jurisdictions have “lookback” features of one to three years. This provides the ability to access liquidity for energy efficient improvements that have already been completed without refinancing the entire capital stack.
C-PACE financing is a low-cost alternative to expensive construction first mortgage debt or mezzanine debt.
C-PACE assessments by definition have quantifiable savings and the result is increased building value, lower operating expenses and a better building for tenants which makes it a stronger asset for both building owners and mortgage lenders.

How does C-PACE work?

The financing is similar to other long-term, self-amortizing, fixed rate financing instruments historically used in commercial real estate. Terms generally range from 10 to 30 years and are underwritten consistent with the Estimated Useful Life “EUL” of the improvements for which they finance. At closing, the stream of interest and amortization payments are converted into a voluntary, non-ad valorum real estate tax or special assessment. The payments are subsequently collected as part of the real estate taxes collected by the municipality. Funds are administered through an investment grade rated trust or escrow account and released in accordance with draw requests from the general contractor or property owner.

What are C-PACE eligible improvements?

Installation and maintenance of high efficiency HVAC, including new heat pumps, water heaters, chillers, central air conditioning, building automation, and “smart” thermostats.

Modernized lighting technology like LED and Compact Fluorescence lighting for both indoor and outdoor use. LED and Fluorescence Lighting use less energy and produce far less heat.

Water Conservation is a big part of energy efficiencies through the use of low-flow faucets, shower heads and toilets, irrigation controls and high efficiency sprinkler systems.

Installation and updated resiliency measures improve structural integrity related to wind mitigation, seismic strengthening, wind and impact resistant doors and windows.

The building envelope includes a variety of eligible items through the insulating features of high efficiency glass, insulating doors, solar control window film, updated thermal insulation material, solar reflective cool roof panels and fluid silicon coating systems.

Renewable Energy Improvements include (but are not limited to) solar system installations, wind turbines, grey water recycling, charging stations, and energy storage systems.

Where is C-PACE eligible?

C-PACE-Active in 28 states (indicated on the map below in dark green).

Frequently Asked Questions

Does the C-PACE assessment impact the value of the property?

No. Although C-PACE assessments become a real estate tax obligation of the property and functions as a property expense, they may also be prepaid, thus creating a win-win situation for the property owner. The prepayment flexibility in C-PACE transactions allow the Borrower to eliminate the property obligation if they choose upon sale or refinance like a mortgage or mezzanine debt and therefore do not have a negative impact on the market value of the property. In fact, the energy efficient improvements financed by C-PACE serve to reduce utility costs permanently and increase property value.

Can I combine C-PACE with other energy related incentive programs and other rebates, grants or tax credits?

Yes, in fact C-PACE is complementary with other incentive programs and tax relief programs. The C-PACE provider does not participate in the benefits of any utility or property-based incentive program, leaving the benefits of such to the property owner. CastleGreen is supportive of the use of utility incentives and tax benefit programs to enhance energy efficiency, renewables and water conservation measures.

I already finished my improvements. Can I still use C-PACE financing?

In the vast majority of the United States, C-PACE may be used retroactively for a period of time after completion of a C-PACE eligible renovation or new construction completion. Retroactive periods typically range from one (1) year to three (3) years after completion or certificate of occupancy. Please inquire about the specifics of your property’s location.

Can my C-PACE be transferred to a new owner on sale?

Yes. C-PACE contains no due on sale provisions and may remain in place through a sale and/or refinance of the property. The C-PACE is freely transferable to the new owner without approval or transfer fees.

Do leaseholds qualify for C-PACE?

Yes. The C-PACE is secured by an assessment against the tax identification of the fee ownership parcel(s). A C-PACE may qualify for a leasehold improvement with the consent / participation of the fee owner.

Can I include soft costs and financing costs in my C-PACE financing?

Yes. Certain soft costs i.e., architectural costs, permits, development fees, etc. may qualify for C-PACE financing in conjunction with the financed hard costs. In addition, all fees, closing costs and payment reserves associated with the C-PACE transaction may be included in the financing.

Will my mortgage lender consent to the C-PACE?

Over 200 national, regional and local mortgage lenders have consented to and participated in C-PACE transactions. This list and the acceptance of C-PACE as a beneficial part of real estate capital stacks continue to grow. They include prominent lenders like JP Morgan, CIBC, Housing and Urban Development (HUD), US Department of Agriculture (USDA) and other banks, insurance companies, credit unions and private lenders.