C-PACE Financing in California
The Start of C-PACE
In 2008, Berkeley enabled PACE providing the nation with an innovative financing tool that has been since adopted by a majority of states. With the success of these early days, PACE programs were established and Counterpointe is proud to be among the first California PACE program administrators helping owners protect tenants and decrease their property’s energy use through the CSCDA Open PACE Program.
Early California legislation allowing energy efficiency, renewable generation, water efficiency and conservation, and EV charging improvements.
The City of San Francisco added seismic strengthening as an eligible improvement selecting CounterpointeSRE (2015) as it financing partner for its mandatory soft-story program. CounterpointeSRE has subsequently developed exceptional seismic expertise and has provided capital to hundreds of property owners to finance seismic strengthening improvements in both new construction and retrofits.
California state PACE law continutes to evolve and to expand eligible improvements that serve the common good by including seismic strengthening (2017) and wildfire safety (2022).
- Non-recourse capital provided with agreement with the CSCDA (California Statewide Development Authority) and no intercreditor agreements
- Flexible terms with option to defer payment for years or to include an interest-only period before self-amortization
- 100% financing avoids CAPEX for projects and includes design, engineering, and all related costs
- Provides financing for new construction, renovations as well as many code compliance mandated measures
- Completed projects may be financed subject to same eligiblity requirements as new projects for term up to remaining EUL
- Repayment through property taxes as OPEX may be treated off-balance sheet¹ and passed through to NNN tenants
New Construction Finance
During development of the Tommie hotel, a Hyatt brand hotel, the owners sought to lower the cost of capital for this 212 key hotel and turned to C-PACE as the optimal financial tool to support the sustainable and resiliency aspects of their build.
“Working with Counterpointe Sustainable Real Estate to help build sustainability into our projects has become an important part of our capital strategy,” Warren Cruz, Relevant Group
- $12 million 30Yr fixed rate C-PACE
- Energy efficiency and seismic resiliency
PACE Eligible Improvements
This national guide to eligible projects provides basic project eligibility by state guidelines with our approach to maximizing net proceeds and providing cost benefits analysis of a project.
Completed projects may be eligible for PACE financing for up to three years+ depending upon location to recapitalize energy efficiency, renewable and resiliency investments.
Retroactive financing is a strategic resource for owners in new PACE markets where owner investment precedes owner’s investment or to provide liquidity for expended capital.
PACE for Green Roofs
C-PACE is public private partnership among private capital, government or state economic development agency to promote commercial property wind resistance and clean energy through use of the property taxes.
Since 2013, Counterpointe has provided this innovative financing as a respected leader in the foundation of the industry.
What are the financing terms?
Self-amortizing financing at fixed rates up to 35 years, term capped by life of equipment, with ability to defer start of repayment for years through capitalizing interest.
No credit impact, non-recourse with no financial covenants, intercreditor agreements, or personal guarantees.
Repayment cannot be accelerated with no due on sale clause
Competive interest rates that lower blended rate of developmer’s capital stack that vary by project and market conditions.
How much PACE financing can my property support?
Maximum net proceeds vary from 20-35% LTV (PACE lien to value) of property’s valuation once project is completed and property is producing income.
Many retrofit and gut rehab projects qualify for 100% financing, excepting FF&E. Please submit schedule of values or list of proposed measures with costs and projected savings for assistance in determining qualifying costs. Measure by measure cost benefit analysis available at no cost upon request and our underwriters are happy to work with professionals to maximize operational savings.
Removing acquisition costs, new construction typically qualifies for 25-30% LTC. Please submit schedule of values for eligibility screen and assistance.
How long is the process and what do I need to submit?
Timing varies with complexity of project and property with many financings closing 30-60 days once underwriting documents, appraisal, and other third party reports are received. Standard document requests include organizational documents for owning entity, historical or pro forma property financials, mortgage documents, rent roll, and construction documents.
Many owners elect to complete underwriting and then hold off closing for months until start of demolition or ground breaking. Closing may occur mid-construction or after completion for retroactive financing for years, with certain limitations. Please contact us for details and to discuss your project.