Mortgage Holders

Commercial property assessed clean energy, or C-PACE, is a program that helps property owners access private-sector financing for the installation of building improvements that can reduce energy consumption and can increase the value of their property. With C-PACE, property owners can receive up to 100 percent financing with attractive repayment terms that are consistent with the useful life of the improvements (up to 25 years). In well-designed C-PACE projects, the energy cost savings may exceed the PACE payments, creating a cash-flow-positive project. The financing is secured with a voluntary benefit assessment that is recorded against the property and is repaid directly to the capital provider.

C-PACE is also available to developers with new construction projects if they design their building to exceed current energy codes.

C-PACE project financing is repaid via a voluntary benefit assessment (lien) that is placed on the property and assigned to the financial institution that provides financing for the project. Since the assessment has priority lien status, similar to a sewer assessment, the existing mortgage holder will be asked to consent to the C-PACE financing. Such consent is voluntary on the part of the mortgage holder.

There are multiple steps that will involve the mortgage holder:

1. Once a property owner determines that a building modernization project may enhance their building’s asset value (collateral) and cash flow (improved mortgage repayment ability), he or she will seek a preliminary meeting with the mortgage holder to review the opportunity.

2. At this first meeting, the owner and a representative of the C-PACE program administrator will describe the program’s requirements and answer any questions. In particular, they will discuss the 3rd party technical review process to validate the projected energy savings and related key financial metrics associated with the project.

3. Assuming the mortgage holder does not object, the C-PACE program administrator will collaborate with the owner and the owner’s C-PACE registered contractor to develop and optimize the project to ensure it meets program requirements. See C-PACE Program Guide for more information.

4. The project development and optimization process includes the creation of a C-PACE Project Finance Report. This report is the culmination of a comprehensive process that includes input and reviews by the owner, contractor and the program administrator. The end product is a carefully designed, optimized project that meets all the requirements of the program.

5. At a second meeting with the mortgage holder this Project Finance Report will be reviewed in detail and a formal request for consent will be made by the owner.

Many C-PACE projects generate positive cash flow based on the energy savings. Such projects can result in increased net operating income, increased debt coverage ratio, increased value, and a greater return on investment. In the event of a default, the assessment does not accelerate, only the amount in arrears is due. View a list of lenders who have consented to C-PACE projects nationwide.

Under the 2018 Delaware Energy Act, the voluntary benefit assessment may be neither extinguished nor accelerated in the event of default or bankruptcy; and shall be levied and collected as to assessment payments currently and past due in the same manner as the property assessments of the participating county government on real property; and shall not extinguish any superior liens, such as the lien for property taxes, and other governmental service assessments.

The benefit assessment may remain with the real property upon sale, including in the event of a foreclosure. In the event of default or delinquency, it may be pursued in the same manner as with other property assessments, including with respect to any penalties, fees and remedies and lien priorities; provided that a foreclosure sale brought with respect to C-PACE assessments shall not have the effect of extinguishing any subordinate mortgage liens against the qualifying commercial real property.

Notwithstanding any other provision of law: At the time of a transfer of property ownership including foreclosure, the past due balances of any special assessment shall be due for payment, but future payments shall continue as a lien on the property.

In the event of a foreclosure action, the past due balances shall include all payments on an assessment that are due and unpaid as of the date the action is filed, and all payments on the assessment that become due after that date and that accrue up to and including the date on which title to the property is transferred to the mortgage holder, the lien holder, or a third party in the foreclosure action. The person or entity acquiring title to the property in foreclosure shall be responsible for payments that become due after the date of such acquisition.

Energize Delaware administers the C-PACE program.

While many buildings need upgrading, until C-PACE there was no good way to pay for it. C-PACE solves the financial issues associated with a building modernization project by providing 100 percent financing that is long-term, non-recourse, and affordable. Since the financing is based on the building’s financial health, and not the owner’s creditworthiness, personal guarantees are not required. Once a project is complete, the property owner has a more valuable, more competitive building, lower utility bills, a more sustainable property, and, often, a higher net operating income if the project was designed to be cash-flow-positive.

No. C-PACE uses private capital to fund projects. View a list of capital providers that participate in the program.

Property owners are encouraged to consult their accountants on this matter.

There has been no specific ruling by the Financial Accounting Standards Board on this issue.

Upon closing of C-PACE financing.

Yes. Owners who choose not to participate remain unaffected.

Qualifying for C-PACE financing is based on the property, and not the owner. The capital provider will look at:

• The property’s estimated market value (assessed or appraised)
• The amount of the owner’s equity in the property
• The owner’s recent mortgage and property tax payment history
• The dollar value of the proposed eligible energy improvements

Visit the Participating Counties page for a current list of counties participating in the Delaware C-PACE program. C-PACE may only accept applications from property owners with properties located in counties that have joined the program by passing a simple opt-in resolution. Email info@DelawareCPACE.org if you have questions about getting a non-participating county to join C-PACE.

C-PACE projects typically range from $50,000 to multi-million dollars. Constraints on the amount are driven by the financial health of the building and include:

• Building financials
• Loan-to-value percentage (<80% LTV is preferred)
• Other considerations of the mortgage holder

To ensure the best possible terms, including interest rate and other fees, the property owner can review term sheets from multiple private capital providers, facilitated by the program administrator, to select the best fit.

Repayment periods span up to 25 years, depending on the owner’s preference, and are limited by the weighted average effective useful life (EUL) of the financed improvements.

Property owners are encouraged to pursue available federal investment tax credits (ITC), utility rebates, and all other available incentives. All or a portion of total incentives may be subtracted from the amount financed under the C-PACE program.

Each C-PACE capital provider set their own terms, including pre-payment, in its financing agreement with the property owner. It is common for C-PACE capital providers to include a pre-payment fee schedule.