Glossary

C-PACE (Commercial Property Assessed Clean Energy) Financing

Also known as: PACE Financing, Property Assessed Clean Energy Financing, C-PACE, PACE

A financing mechanism, authorized by state and local legislation, that funds energy efficiency, renewable energy, water conservation, or resiliency improvements through a voluntary special assessment repaid via the property's tax bill, typically offering long amortization terms and non-accelerating, transferable obligations.

Because C-PACE is structured as a tax assessment rather than a conventional mortgage loan, it runs with the land, transfers automatically to a subsequent owner upon sale, and can be amortized over 20-30 years — often long enough to make retrofit projects cash-flow-positive from day one, since annual energy savings can exceed the assessment payment. C-PACE typically sits senior to the mortgage in a foreclosure context in most enabling states (though it is non-accelerating, meaning only the current year's payment is due even if the loan otherwise defaults), which requires existing mortgage lender consent before a C-PACE assessment can be placed on an already-encumbered property — a negotiation point that has become a routine part of closing C-PACE-funded retrofits and new construction sustainability features. C-PACE has grown from a niche retrofit tool into a mainstream capital stack component for ground-up development in PACE-enabled states, frequently layered in alongside senior construction debt to fund the incremental cost of high-performance envelope, HVAC electrification, or resiliency measures that a conventional construction loan would not otherwise size for.