Question 1

Will my lender agree to C-PACE?

Accepted Answer

Maybe. Over 200 lenders including many of the largest money center banks have consented to C-PACE financing. See a list of consenting lenders at the link here (PACE Nation Lender Consent).
 
Fewer lenders have agreed to C-PACE in the capital stack on bridge loans involving construction or heavy value-add; however, a number of recognized names have already successfully closed loans with C-PACE. The stronger the sponsor and business plan, the more leverage you have to get a lender to permit C-PACE at some level in the capital stack.
 
C-PACE execution is most effective when you identify the right construction lenders to bid on the financing. A variety of construction lenders ranging from debt funds to money center banks have successfully closed C-PACE in the capital stack.

We have a balance sheet construction program that permits C-PACE for the right multifamily projects and we have off-balance sheet solutions for projects that don't fit our internal programs

Question 2

How will my senior lender underwrite a project with C-PACE financing ?

Accepted Answer

Many lenders view a C-PACE financing similar to a ground lease payment, but with far more predictability and less stress since it's prepayable. 
 
A few other differences that make C-PACE even easier than ground leases include the following:
Fully amortizing
No payment escalation
No acceleration rights in case of defaults
No technical defaults
Actions limited to paymnt recovery
Lenders will look at their total combined loan and PACE leverage to value and/or cost comfort level.

Question 3

What are the default provisions and foreclosure process?

Accepted Answer

Similar to tax liens, default provisions in a C-PACE assessment are limited to non-payment and do not have any technical default provisions. In general, the defaulted C-PACE assessment is recovered through the regular local tax recovery process and the tax collector can only recover the defaulted coupon, rather than the entire outstanding assessment. Although the tax collection process will vary by state, generally a tax foreclosure is very property owner friendly in order to avoid losing the property.

Question 4

Can a lender escrow the C-PACE payments?

Accepted Answer

Yes. Similar to other taxes, a lender with concerns about payments of future tax assessment bills related to can require that funds be escrowed to ensure timely payment. In addition, a lender may request the C-PACE capital provider to capitalize an interest reserve to carry the PACE payments through the construction period.

Question 5

How is C-PACE financing different than Mezzanine Lending?

Accepted Answer

Unlike mezzanine lenders, capital providers for C-PACE assessments are not permitted any rights relative to any actions taken by the first mortgage lender, avoiding the need for complicated and expensive intercreditor agreements.

CPACE FINANCING

Better Capital for Better Buildings

FAQ

General Questions

What is C-PACE?

What are some C-PACE program highlights?

How can I use C-PACE?

Lender Consent Questions

Will my lender agree to C-PACE?

How will my senior lender underwrite a project with C-PACE financing ?

What are the default provisions and foreclosure process?

Can a lender escrow the C-PACE payments?

How is C-PACE financing different than Mezzanine Lending?