Ownership & finance
C-PACE
Also written: commercial property assessed clean energy
What C-PACE means
Commercial Property Assessed Clean Energy (C-PACE) is a financing mechanism that allows hotel owners to secure long-term, fixed-rate funding for energy efficiency, renewable energy, and water conservation building improvements, repaid through a voluntary capital assessment on the property's tax bill.
How it is used
Owners and developers use C-PACE to replace expensive equity or high-interest mezzanine debt in capital stacks for new construction, conversions, or major renovations. Because the assessment attaches to the land rather than the owner, the liability transfers upon sale, and repayment terms typically extend to 20 or 30 years. Mortgage lender consent is required because the tax assessment holds a senior lien position to the primary mortgage, but lenders frequently agree because the funded improvements increase property value and reduce operating utility expenses.
Worked example
A hotel owner executing a $20 million adaptive reuse project retrofits HVAC, lighting, and insulation costing $4 million. Instead of funding this via 10% mezzanine debt or limited partner equity, they secure 20-year C-PACE financing at 6.5% interest. The $360,000 annual assessment is added to the property tax bill and partially offset by $110,000 in yearly utility bill savings.
Common mistake
Failing to secure formal consent from the existing senior mortgage lender early in the underwriting process can completely derail C-PACE execution, as the assessment takes senior lien priority over the mortgage.
Related terms
C-PACE in our reporting
Recent stories where this term does real work.