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Retroactivity: New Use for C-PACE During Challenging Times

Commercial Property Assessed Clean Energy (C-PACE) is a public/private financing tool authorized by state law that enables private capital – with advantageous terms and conditions – to improve the energy performance of commercial real estate. To date, this financing tool has primarily been used to fund building retrofits and new construction projects. However, in the wake of current economic challenges for the CRE market, a lesser-known application of this funding has taken precedence to help projects that have already been completed.

This “retroactive” type of funding has become particularly noteworthy as the country navigates the current public health and economic crisis from Covid-19. Commercial and multi-family properties that have recently had qualifying energy work done may find themselves with temporary financial challenges from a reduction in cashflow. In these cases, C-PACE can come in and help replenish a property’s reserves, provide liquidity for operational costs, and even potentially help other lenders in the capital stack reduce their exposure. For properties nearing completion, C-PACE can also offer funds for cost overruns and lender pullback, helping to fill that difficult gap. With the credit quality that C-PACE provides, the terms and conditions of this capital will likely far out-compete just about any other form of financing in the marketplace. There is no better financial resource for a property owner than C-PACE to bridge them to a stable financial footing.  

There are roughly two dozen states with active C-PACE programs. Retroactivity is not allowed in every state and is workable in roughly a dozen of those active markets. Moreover, the location within a state can inform the rules. For example, some level of retroactivity is possible in Prince George’s County in Maryland, but neighboring Montgomery County does not allow for it. Further, the length of time can differ between markets. In Michigan, the look-back period is 3 years. In Connecticut, that look-back is only 1 year.

After determining if a property is in an eligible municipality, C-PACE can unlock these accretive dollars that can dramatically improve the financial position for the property in question. Not only that, but the public benefit of preventing foreclosures, property tax payment delays, and even abandonment, is clear. Even through a retroactivity application of this P3 program, the public value is apparent, helping property owners and developers weather these uncertain times.

Aaron Kraus ( is the Vice President of Market Activation at Greenworks Lending.


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