Displayed below is a list of Frequently Asked Questions (FAQs). Click on the “>” icon associated with each question to view the answer.
RI Commercial Property Assessed Clean Energy (C-PACE) is a financing program for commercial, industrial, agricultural, non-profit and multifamily (with 5 or more units) properties. C-PACE gives building owners owners access private-sector financing to upgrade their building with energy efficiency, clean energy, and water efficiency improvements. With C-PACE, building owners receive up to 100 percent financing with attractive repayment terms consistent with the useful life of the improvements (up to 25 years). This typically enables them to undertake larger building modernization projects that addresses multiple deficiencies.
In well-designed C-PACE projects, the energy cost savings exceed the PACE payments, creating a cash-flow-positive project. By using C-PACE, building owners can reduce their operating costs, improve the value and competitiveness of their building, meet energy performance goals, and increase their cash flow. C-PACE is also available to developers with new construction projects if they design their building to exceed current energy codes.
Repayment is facilitated through the municipal property tax assessment process. A voluntary assessment (similar to a sewer district assessment) is placed on the building owner’s property tax or other municipal bill. The assessment is repaid over the financing term (up to 25 years, project dependent) and the annual energy cost savings will, in most cases, exceed the annual assessment payment. As a result such projects are typically cash flow positive in the first year. Because the C-PACE assessment obligation runs with the property, the assessment automatically transfers to the next owner when the property is sold.
RIIB will review each capital provider’s underwriting standards in the C-PACE Investor Approval Application (see underwriting standards). At a minimum, capital providers must use the following factors when determining whether to underwrite C-PACE projects:
- Total property-related debt to property value ratio (total property-related debt includes mortgage debt, the RI C-PACE financing and any other obligations secured by the property). The property value which may be established either (i) as the assessed value of the property, or (ii) its appraised value, as supported by a recent appraisal. In either case, the property’s value may include the enhanced value of the property resulting from the installation of the improvements being financing with RI C-PACE.
- The property owner has been current on its property tax and assessment payments.
- The property owner must not have any involuntary liens, defaults, or judgments applicable to the subject property. A property owner may be able to participate if it can be demonstrated that there is an acceptable reason for the lien, default, or judgment and provide supporting documentation.
- The property owner(s) or their affiliated companies have not been a debtor in a bankruptcy.
- Cash flow generated by the property.
RIIB will review each capital provider’s underwriting standards in the RI C-PACE Investor Approval.
The C-PACE Program deploys an “open market” capital provider structure under which any qualifying capital provider may participate and fund eligible projects. In order to participate in a project funded through C-PACE, capital providers must meet eligibility criteria set forth by the program.
Capital provider criteria will be defined in an Investor Approval Application, expected to be published in Q1 2016. C-PACE encourages capital providers to take steps toward program eligibility prior to submitting a specific project application.
Commercial, industrial, agricultural, non-profit and multifamily (with five or more units) properties are eligible to participate in the C-PACE program. C-PACE financing is only available for buildings that are located in a municipality that has opted to participate in the program.
In order to become eligible, the RI C-PACE Statute requires a municipality to adopt a resolution that empowers it to enter into a RI C-PACE agreement between the RIIB and the municipality. Once the municipality and RIIB sign the Participation Agreement, that municipality will be part of the C-PACE program, and projects located within that municipality may be funded using C-PACE financing.
Visit the Participating Municipalities page for a current list of municipalities participating in the C-PACE program. C-PACE may only accept applications from property owners with properties located in municipalities that have joined the program by passing a simple opt-in resolution. Feel free to email info@RI-CPACE.com if you have questions about getting a non-participating municipality to join C-PACE.
Funding for C-PACE financing will be provided by private capital providers, which may be banks, specialty financiers, institutional investors, insurance companies or other capital providers. No state funds are anticipated to be made available for funding C-PACE projects.
C-PACE projects typically range from $200,000 to over $1.0 million. There are no C-PACE Program defined minimum or maximum project financing size limitations. Rather each participating capital provider is expected to set their own financing parameters.
Repayment of the C-PACE financing is secured by a special assessment (similar to a sewer district or business improvement district assessment) recorded in the property records of the municipality in which the participating property is located.
C-PACE assessment repayment is managed through a new line item on the building’s property tax or other municipal bill. Typically the C-PACE assessment annual payments are less than the annual dollar value of the energy saved. As a result such projects are typically cash flow positive to the owner in the first year.
Under the RI C-PACE Statute, the C-PACE special assessment is subject to the same penalties and the same procedures in the case of delinquency as is provided for through ad valorem (i.e. property) taxes. The C-PACE assessment has priority over all private liens on the property, is of equal priority to other special assessments, and is junior in priority to general property taxes.
Because the C-PACE assessment obligation runs with the property, the assessment automatically transfers to the next property owner if the property is sold. C-PACE assessments are billed on the property tax bill with payments due at the same time as property tax payments, thus many observers view PACE financing as less risky than commercial loans, which could generate attractive interest rates and longer terms from the private sector.
If a building owner is deficient or delinquent on their C-PACE assessment, C-PACE is not responsible to cover the shortfall. As a C-PACE assessment is associated with the property, not the building owner, in the case of a non-payment, the assessment (which is a priority lien) will fall into arrears and be repaid after all other taxes are satisfied and prior to any outstanding mortgage.
Municipal liens related to real property have first priority, followed by any C-PACE payments in arrears, followed by non-real property municipal liens and assessments, followed by the first mortgage holder.
The C-PACE program administrator will actively engage with building owners, contractors, mortgage holders and capital providers to raise program awareness. In addition, the program administrator will provide municipal governments (and others) with educational material, including:
- Data on eligible building types
- Marketing material
- In-depth training for contractors seeking to develop projects for building owners.
After a competitive bidding process, the RIIB selected Sustainable Real Estate Solutions, Inc. (SRS) to be the RI C-PACE program administrator.
Repayment periods can be 10, 15, 20, or 25 years, depending on the owner’s preference, and are limited by the weighted average effective useful life (EUL) of the financed improvements.
Property owners are encouraged to pursue available federal investment tax credits (ITC), utility rebates, and all other available incentives. All or a portion of total incentives may be subtracted from the amount financed under the C-PACE program.
No there is no fee to apply for C-PACE financing.