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.
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.
Senior to all debt except real estate taxes. Assessed as a line item on the property tax bill.
Up to 40% LTC or 35% LTV, lesser of. B-note structures available for eligible costs exceeding A-note limits.
Non-recourse to the borrower. Obligation runs with the property.
Fixed-rate, fully amortizing. Terms up to 30 years matched to useful life of improvements.
Obligation transfers with the property upon sale. No acceleration at disposition.
Active in 40+ states plus Washington, D.C. Enabling legislation continues to expand.
C-PACE replaces more expensive capital in the stack, reducing blended cost of capital and improving sponsor returns.
First-loss position
Junior capital
Subordinate
First lien
Senior secured, tax bill
Most senior position
C-PACE replaces mezzanine, preferred equity, and sponsor equity in the capital stack at a significantly lower cost of capital.
By reducing the equity check and blended cost of capital, C-PACE financing improves IRR and equity multiple on every dollar invested.
Senior lenders benefit from the "synthetic A-note" effect, as C-PACE absorbs first-loss exposure that would otherwise sit with the mortgage.
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.
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.
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.
High-efficiency boilers and chillers reduce energy costs by operating 20-40% more efficiently than existing equipment commonly found in older properties.
Adding or updating automated control systems decreases electricity costs while reducing operational and maintenance expenses across the property.
New heating, ventilation, and air conditioning systems can reach 97%+ efficiencies and reduce utility bills up to 50% while improving tenant comfort and retention.
C-PACE legislation allows for 100% financing of roof replacement when coupled with other energy upgrades such as solar, creating compelling capital stack efficiencies.
Connect with a Clearwater PACE investment professional to discuss your financing requirements and receive a preliminary term sheet.
We’ll respond within 24 hours with preliminary terms.
Clearwater is an institutionally capitalized direct C-PACE lender focused on deploying fast, flexible capital for bold, sustainable projects spanning all asset types and geographies across the U.S.
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