C-PACE financing impacts property taxes by allowing energy-efficient improvements to be repaid through a benefit assessment, which is levied and collected in the same manner as municipal taxes, but listed separately on the tax bill. Here’s how this works and its implications:
Key Points About C-PACE Financing
- Repayment Mechanism: The financing for energy-efficient improvements is repaid through a special assessment on the property tax bill.
- Assessment Transfer: If the property is sold, the assessment automatically transfers to the new owner, providing continuity in repayment.
- Financing Terms: C-PACE offers long-term financing options, often up to 20 or 30 years, which matches the useful life of the improvements.
- No Upfront Costs: Property owners can access financing with no initial outlay, as the entire project cost can be covered.
Impact on Property Taxes
- Increase in Property Tax Bill: While C-PACE adds an assessment to the property tax bill, the annual payments are typically structured to be lower than the savings generated by the energy-efficient improvements.
- Pass-Through to Tenants: In triple net leases, the cost of the C-PACE assessment can be passed through to tenants as part of their property tax obligations. However, these tenants may also benefit from reduced utility bills due to the energy-efficient upgrades.
Overall, while C-PACE financing does increase the property tax bill, it provides a structured repayment mechanism that aligns with the benefits received from the energy-efficient improvements, while also offering property owners a low-cost financing option for sustainability projects.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-energy-efficient-improvements-financed-by-c-pace-impact-property-taxes/
