C-PACE: Non-Traditional Funding Options Help Owners, Developers Go Greener

May 13, 2021

Learn More About C-PACE

Whether developing, renovating or improving properties, harnessing the power of non-traditional capital sources has always been top of mind for owners and developers of commercial properties.

A new opportunity has emerged in recent years as a strategic lending option for many within the commercial real estate space specific to clean energy construction and renovation projects.

Commercial Property Assessed Clean Energy (C-PACE) is one of the fastest-growing sources of capital for new construction or rehab/renovation projects. Endorsed by the U.S. Department of Energy to encourage business owners to embrace clean energy resources, including solar, HVAC and water conservation technologies, this new funding vehicle allows financial institutions, including Western Alliance Bank to provide a long-term, fixed-rate financing option to support clean energy elements for construction and renovation projects.


Incorporating energy-efficient elements into initial designs or retrofitting a building with the latest in clean energy technology can be a costly endeavor. C-PACE financing allows borrowers to tap into a more cash flow-friendly option to pay for the upfront costs associated with energy efficiency or renewable energy improvements.

While it works similar to other financing options, C-PACE uses borrowed capital to pay for upfront energy-efficient or renewable energy elements of a project budget. Yet unlike traditional financing, repayment occurs through a property tax assessment attached as a lien on the subject property. This creates longer-term financing and the ability to transfer repayment obligations to a new owner if the property is sold. As a result, longer payback terms and more significant property improvements can be made.

How It Works

While nuances exist from the approximately 30 states that have approved C-PACE as a financing option, the basic approval and lending process tends to be similar.

After an owner or developer determines the energy-efficient elements to be incorporated into a project, they work with a qualified financial institution to submit the project budget to a C-PACE program administrator, who approves the project scope and places a tax lien assessment on the property.

Once the project is complete, the property owner or developer begins payment at the same time and method as their property taxes.

Using C-PACE to Complement Traditional Lending

As most property owners or developers know, a renovation or construction project is a significant undertaking that often utilizes many creative financing options to bring ideas to fruition. By funding clean energy initiatives through C-PACE, real estate professionals can balance property development costs between different lending vehicles.

Specifically created for property owners and developers in good standing while wanting to better their infrastructure or make capital improvements, C-PACE allows clean energy enhancements for both ground-up developments and intensive renovations, such as retrofitting a newly purchased office building, with little or no capital up front on specific clean energy elements. From a borrower perspective, while many expenses would be captured in a traditional loan, including the initial purchase, the cash-flow friendly nature of the C-PACE product can be a smart way to finance the clean energy components of a project.

With C-PACE, borrowers can have longer terms over which to pay their loan. Terms tend to be long – an average of 20-30 years instead of a shorter term traditional commercial loan – since repayment occurs through a tax assessment and can either be paid off outright at time of sale or transferred to the next property owner.

Choosing a Lender

As a property owner or developer looks to enhance their project with clean energy capital improvements, it is vital to ensure a lender has the knowledge and bench strength to deliver commercial financing options with their best interests in mind.

Since Western Alliance Bank is focused on business banking, it is uniquely positioned to examine commercial projects with a keen eye. With its commercial & industrial loan teams, bond expertise and understanding of the C-PACE process, this specialty lending team provides a one-stop lending shop and does the heavy lifting that clients have come to rely on to provide the most financially sound lending packages available.

To learn more about C-PACE in your state, please contact Monika Suarez, Managing Director of Municipal Finance.

Monika Suarez

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All offers of credit are subject to credit approval satisfactory legal documentation, and regulatory compliance. Borrowers are responsible for any appraisal and environmental fees plus customary closing costs, including title, escrow, documentation fees and may be responsible for any bank fees including bridge loan, construction loan, and packaging fees.