Contact Us
Sponsored Content

How C-PACE Evolved Into CRE's Most Innovative Financing Option


The commercial real estate finance industry is at the vanguard of what has the potential to be an enormous transformation, similar to the rise of CMBS lending in the early 2000s.

A relatively nascent form of financing known as Commercial Property Assessed Clean Energy — or C-PACE — has been rapidly evolving from an inexpensive way to finance sub-million-dollar retrofits to becoming an integral part of the capital stack for large new construction and redevelopment projects nationwide. 

C-PACE financing is a tool for funding energy efficiency, renewable energy and resiliency improvements made to commercial properties. Through this program, property owners are able to finance 100% of the upfront costs associated with these improvements with zero out-of-pocket costs. C-PACE is repaid typically over 20 to 30 years through a voluntary tax assessment on the property. 

PACE was introduced in 2007 by Cisco DeVries, who at the time was an assistant to the mayor of Berkeley, California, and envisioned a program that would allow solar panels to be financed the same way garbage collection and sewers were financed in the city. By 2008, the program was being used to help homeowners finance solar power systems without spending their own money, instead paying the cost back over 20 years as a special assessment on their tax bill. 

In the early days of C-PACE, the program dedicated to commercial real estate, financings were typically for retrofits of HVAC systems and the installation of solar panels. 

“C-PACE has come a long way since its early days,” said Lain Gutierrez, CEO of CleanFund, a leading provider of C-PACE financing for energy efficiency, water conservation, renewable energy and resiliency improvements for commercial real estate. “There was a major shift in the industry to funding new construction and major gut rehab projects around 2018.” 

This shift led to much larger deal sizes compared to $250K to $500K for HVAC and solar projects, Gutierrez added. New construction also facilitated positive senior lender engagement early on when trying to fill out the capital stack.

In December 2019, CleanFund provided $54.7M in C-PACE financing to help fund a 700-key convention center hotel in Salt Lake City, connected to the Salt Palace Convention Center. The developer was experiencing some gaps in funding but was able to turn to C-PACE as an innovative solution to the problem and get the funding they needed to move forward.

“Most traditional forms of capital that would have filled that funding gap would have been very expensive, and would have likely had very onerous terms, shorter duration and the possibility of recourse,” CleanFund Vice President Luke Hingson said. “C-PACE, meanwhile, had the lowest cost of capital in the structure and fit seamlessly with the senior construction loan. As a result, the execution for the borrower was incredibly high quality."

At the time of its closing, the deal was the largest C-PACE transaction in the industry.

During the height of the coronavirus pandemic, when it was almost impossible to find financing for hospitality projects, SY Holdings set out to fund a 65-room ultra-luxury boutique hotel in the Hudson Valley dubbed Wildflower Farms, Auberge Resorts Collection. Despite the difficult economic climate, the stakeholders were able to secure $21.6M in C-PACE financing for the hotel in May, provided by CleanFund. 

Wildflower Farms, Auberge Resorts Collection is scheduled to open in fall 2022 and is expected to be one of the greenest hotels in the country.

“This transaction required ingenuity and close collaboration among all stakeholders under especially challenging market conditions for new construction and hospitality,” Kristin Soong Rapoport at SY Holdings said. “It signals the beginning of a green-led recovery for New York.”

This deal is the largest transaction in New York State’s EIC C-PACE program to date, and the program’s first new construction C-PACE loan.

Now, C-PACE is entering a new, exciting phase. New York City has launched its C-PACE program as part of the Climate Mobilization Act. This act includes Local Law 97, which requires the 50,000 largest buildings in the city to cut their carbon footprint by 40% by 2030 and 80% by 2050. Concurrent with the program's launch, developers secured $89M in C-PACE financing to retrofit the energy systems of a 1.2M SF office building on Wall Street in Downtown Manhattan. 

“NYC’s PACE program is already off to a strong start, and I think it’s clear that this is going to be an incredibly valuable tool for not just NYC developers, but developers across the country,” Winston & Strawn partner Pete Morgan said. “I would not be surprised to see NYC C-PACE deal value exceed California within two years.”  

According to the PACE industry trade association, PACENation, California has the largest C-PACE volume of any state at $625M.

Today, C-PACE is sweeping across the nation, encouraging green development, closing key project funding gaps, and helping real estate owners, investors, developers and in many cases, lenders, reduce risk and structure transactions in the most efficient manner possible. 

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

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to