The repayment process for C-PACE (Commercial Property Assessed Clean Energy) financing involves a unique mechanism tied to property tax assessments. Here’s how it works:
- Assessment Placement: When a developer or property owner secures C-PACE financing for energy efficiency, renewable energy, or resilience projects, a special tax assessment is placed on the property.
- Repayment via Property Taxes: The loan repayment is made through annual or semi-annual property tax bills, typically over a period of 10 to 30 years, matching the useful life of the improvements.
- Transferability: Since the assessment is tied to the property rather than the property owner, the repayment obligation transfers to new owners if the property is sold.
- Payment Timing and Frequency: Payments are generally collected annually and are included in the property tax bill, allowing owners to spread the cost over an extended period.
- Pass-through to Tenants: In some cases, especially under triple net leases, tenants may cover the C-PACE assessment as part of their lease terms, though this should be agreed upon in the lease agreement. However, if the energy efficiency improvements generate sufficient savings, tenants should not incur additional costs.
Overall, C-PACE financing offers a low-cost, long-term repayment structure that helps property owners achieve energy-efficient upgrades without significant upfront costs.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-the-repayment-process-work-for-c-pace-financing/
