The Wisconsin-based Public Finance Authority (the “Authority”) recently completed a first-of-its kind bond transaction that securitizes up to $30 million of commercial property assessed clean energy (“PACE”) loans originated by the Connecticut Clean Energy and Finance Investment Authority (“CEFIA”).1 This Update discusses the legal context for PACE financing, and addresses special considerations for lenders and building owners involved in PACE financing transactions.
Under the Connecticut PACE Program (“C-PACE”), CEFIA made loans of up to $2.5 million to commercial property owners in Connecticut to fund renewable energy and energy efficiency improvements on their properties (such as new HVAC and solar photovoltaic systems). The C-PACE loans are secured by “benefit assessment liens” on the improved commercial properties that, under the Connecticut enabling legislation, are superior to all other liens on the property except tax liens. CEFIA has the authority to enforce a benefit assessment lien if a borrower defaults. Read more.