CCIA member company Lever Energy Capital is a leading national provider of C-PACE capital and project origination. We asked Kevin Morse of Lever to write a blog post describing the C-PACE program, which is new financing model for energy efficiency building upgrades. You can also learn more about Colorado’s program at

By Kevin Morse, Lever Energy Capital

A game-changing innovation in energy efficiency upgrades to commercial buildings is beginning to take off.

This innovation involves no technological breakthroughs, and requires no government subsidies. Instead, it is a creative and effective finance structure called Commercial Property Assessed Clean Energy (C-PACE), which represents a tipping point in modernizing commercial real estate assets.

Prior to the creation of C-PACE, commercial building owners had little incentive to invest in energy efficiency (EE) measures for their properties – such as modern HVAC systems, lighting, controls, windows, and roofs.

Traditionally, owners have faced several hurdles toward EE investment. Often, they do not benefit directly from the energy cost savings achieved — what’s referred to as “split incentives,” where tenants pay the energy bills and benefit solely from increased building efficiency. Sometimes, owners don’t own the property long enough to recoup their investment. Or, in some cases, they simply perceive that they have better uses for their capital.

C-PACE overcomes and eliminates all of those objections and hurdles.

Through C-PACE, commercial building owners can finance 100% of all building capital expenditures associated with energy and water efficiency, requiring no capital investment by the owner. The loan is repaid through a special assessment on the property and has terms up to  20-years, providing very low annual payments. (Traditional bank financing would require a down payment and not extend beyond 5 to 7 years.)

The truly innovative piece of C-PACE is that it is secured and collected through a property tax assessment which is tied to the property, not the owner. This means that repayment automatically transfers to the new owner upon sale – just like regular property taxes.

In addition, because C-PACE payments take the form of property taxes (included on the regular property tax bill, and due and payable with regular property taxes), owners can pass through the C-PACE payments to their tenants under most triple net lease agreements, solving the issue of split incentives.  

Most C-PACE projects are existing building retrofits. This type of financing is commonly used for lighting, HVAC, controls, windows, and roofing upgrades and replacements. In many cases, savings generated from the measures are greater than the financing costs, resulting in increased profit. In other cases, C-PACE is used as an efficient means to pay for needed maintenance work, like a roof or boiler replacement.

C-PACE may also be used to fill the capital stack for new construction projects, usually replacing mezzanine debt. Developers see C-PACE as a tremendous value-add to a project, as it carries an interest rate in the 6-7% range, versus 15-20% for mezzanine debt.

Who is eligible? Any type of owner — investor-owned, owner-occupied, or tax-exempt entity — and commercial property class (effectively meaning non-residential) — office, industrial, multi-family, retail, hospitality, etc. — can take advantage of C-PACE.

Additionally, since C-PACE financing utilizes the property tax collection system, each program is legislatively enabled by the state. Currently, there are 33 states with approved C-PACE legislation, and, of those, 19 states have active programs, including Colorado.

So it’s no wonder C-PACE financing is beginning to take off. Illustrated by the chart below, the growth in C-PACE financings continues at a rapidly accelerating rate. The end of 2017 saw $583 million of total C-PACE financings to date – a 70% growth rate year-over-year. Momentum is building!


For more information on how your real estate asset could benefit from C-PACE financing, or how you can get involved, CCIA recommends Denver-based Lever Energy Capital, a leading national provider of C-PACE capital and project origination, at (303) 390-1655 or