Next Generation Construction Finance

What is C-PACE?

Commercial Property Assessed Clean Energy (C-PACE) is a state policy-enabled financing mechanism that provides low-cost, non-recourse capital to fund energy efficiency, water conservation, and resiliency improvements in commercial real estate.

A Senior Secured Financing Instrument

C-PACE financing is repaid as a line item on the property tax bill, giving it a priority position senior to all other debt on the property, similar to sewer tax. This is not mezzanine debt. This is not preferred equity. C-PACE occupies a structurally superior position in the capital stack.

Eligibility varies by state and locality. An energy audit determines the scope of C-PACE-eligible improvements for each project. In many states, C-PACE can cover up to 100% of eligible improvement costs for new construction, value-add, and retroactive reimbursement transactions.

C-PACE financing is non-recourse to the borrower, fixed-rate, and fully amortizing with terms up to 30 years. It transfers with the property upon sale, providing long-term certainty for both sponsors and senior lenders.

C-PACE at a Glance

Position

Senior to all debt except real estate taxes. Assessed as a line item on the property tax bill.

Sizing

Up to 40% LTC or 35% LTV, lesser of. B-note structures available for eligible costs exceeding A-note limits.

Recourse

Non-recourse to the borrower. Obligation runs with the property.

Rate

Fixed-rate, fully amortizing. Terms up to 30 years matched to useful life of improvements.

Transfer

Obligation transfers with the property upon sale. No acceleration at disposition.

Availability

Active in 40+ states plus Washington, D.C. Enabling legislation continues to expand.

Capital Stack Positioning

Where C-PACE Sits

C-PACE replaces more expensive capital in the stack, reducing blended cost of capital and improving sponsor returns.

Sponsor Equity

First-loss position

Preferred Equity

Junior capital

Mezzanine Debt

Subordinate

Senior Mortgage

First lien

C-PACE Assessment

Senior secured, tax bill

Real Estate Taxes

Most senior position

Displaces Expensive Capital

C-PACE replaces mezzanine, preferred equity, and sponsor equity in the capital stack at a significantly lower cost of capital.

Enhances Levered Returns

By reducing the equity check and blended cost of capital, C-PACE financing improves IRR and equity multiple on every dollar invested.

Synthetic A-Note Benefit

Senior lenders benefit from the "synthetic A-note" effect, as C-PACE absorbs first-loss exposure that would otherwise sit with the mortgage.

A-Note / B-Note Structuring

When eligible costs exceed A-note limits (40% LTC / 35% LTV), Clearwater can structure a C-PACE B-note subordinate to the A-note but senior to all other property debt.

Eligible Improvements

Which Projects Qualify?

Solar Energy

Modern solar arrays meet most commercial building demands, particularly when combined with efficiency measures. Additional utility incentives and grants coupled with C-PACE can generate superior risk-adjusted returns.

Solar for Nonprofits

C-PACE can deliver a discount to nonprofits through the upfront monetization of tax incentives by a third party, while simultaneously allowing nonprofits to take advantage of lower-cost C-PACE financing.

Boilers, Chillers & Furnaces

High-efficiency boilers and chillers reduce energy costs by operating 20-40% more efficiently than existing equipment commonly found in older properties.

Building Controls

Adding or updating automated control systems decreases electricity costs while reducing operational and maintenance expenses across the property.

HVAC Systems

New heating, ventilation, and air conditioning systems can reach 97%+ efficiencies and reduce utility bills up to 50% while improving tenant comfort and retention.

Roof Replacement

C-PACE legislation allows for 100% financing of roof replacement when coupled with other energy upgrades such as solar, creating compelling capital stack efficiencies.

How It Works

The C-PACE Process

1
Submit Request
Provide project details including IM, proforma, detailed construction budget, and estimated stabilized value.
2
Preliminary Terms
Clearwater reviews eligibility and delivers a preliminary term sheet within days, not weeks.
3
Underwriting
Full credit underwriting, energy audit coordination, and senior lender consent negotiation.
4
Fund & Close
C-PACE assessment recorded. Funds disbursed through construction draws or lump sum reimbursement.
Get Started

Get C-PACE for Your Project

Connect with a Clearwater PACE investment professional to discuss your financing requirements and receive a preliminary term sheet.

Submit a Financing Request

We’ll respond within 24 hours with preliminary terms.