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How C-PACE Financing Can Help Multifamily Buildings Go Green


When it comes to making improvements to a commercial building’s energy efficiency, tenants want it, investors expect it and some regulators even demand it. 

The question is, how to pay for it?

Elford Development in Columbus, Ohio, faced this question when it was putting together a capital stack for a new 240-unit multifamily building and realized it had a gap of $9.4M needed for an energy-efficient building envelope. 

The firm turned to Commercial Property Assessed Clean Energy funding, known as C-PACE, to help pay for the improvements.

Jessica Bailey, president, CEO and co-founder of CRE lender Nuveen Green Capital, said C-PACE funding is increasingly popular among multifamily developers who need to pay for a green improvement, whether it is better-insulated exterior walls or solar panels on the roof.

Nuveen was able to provide C-PACE funding for Elford so it could fill in the gaps in its capital stack. 

“Our job is to educate building owners about C-PACE financing and help them navigate the process, since it is a little bit different from a traditional loan,” Bailey said. “We help them see that C-PACE financing is not only something that they can do, but something that they ought to do because it is the most economical way for them to finance these long-term capital improvements.”

Bailey said C-PACE is a public-private funding mechanism available to building owners and developers in most states. It gives owners and developers access to low-cost, long-term and fixed-rate financing for energy efficiency, water conservation and renewable energy projects on their properties.

“The really unique thing about C-PACE financing is that it allows an owner to upgrade their building without having to take any money out of pocket, and it allows for all of the hard and soft costs associated with an upgrade to be covered,” she said. 

Bailey said fixed-rate C-PACE financing is particularly attractive to borrowers in this time of volatile and rising interest rates. The borrowed capital can be repaid over time through a voluntary tax assessment. In addition, repayment obligations can be transferred to the next property owner and the borrower also may be able to pass along costs to tenants.

The latter factor is “a great benefit for owners because those tenants are the ones getting the reduced utility bill from the improved building,” she said. “It solves the split-incentive problem that we've seen in clean energy finance where one party pays for the upgrades while another receives the benefits.”

Tenants, in fact, are one of three important constituents that Bailey said are calling for commercial property owners to prioritize sustainability in their construction and building improvement practices. Another group is investors who are attracted to the hot multifamily market and expect a building, whether new or renovated, to meet today’s energy efficiency standards. State and local regulators are the third.

“These upgrades are being mandated by law in certain markets,” Bailey said. “In places with more ambitious clean energy or climate change targets — such as New York City; California; Washington, D.C.; and Boston — you're seeing owners respond to that. And that drives quite a bit of demand for financing that we can help them with.”

New York City is requiring that all buildings 25K SF or more must significantly cut their greenhouse emissions by 2024 or face fines. Spread over the city’s five boroughs, the mandate applies to more than 1 million buildings.

One of the first buildings in the city to take advantage of C-PACE is 730 Third Ave., which is Nuveen’s headquarters. The building utilized more than $28M in C-PACE financing to support a major renovation with energy-efficient measures such as smart windows that automatically adjust to the sun, lighting upgrades and roof insulation. 

Bailey said buildings that are ideal candidates to receive C-PACE financing meet three criteria. First, the building must be located in a C-PACE-eligible market. 

“We lend through public-private partnership that requires that there is a state policy that permits C-PACE financing to be available,” she said. “The good news is that we can lend in most states at this point.” 

Secondly, whether the building is under construction or already occupied, the upgrades must improve the energy and/or water performance of the building. Third, the building’s credit must be of sufficient quality to allow it to borrow.

“The cost savings available through C-PACE are pretty meaningful for a building owner,” Bailey said. “In addition, we will work alongside any other incentives that a utility or a state might offer to a building owner to go green.”

To learn more about C-PACE financing, visit

This article was produced in collaboration between Studio B and Nuveen Green Capital. Bisnow news staff was not involved in the production of this content.

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