Colorado’s C-PACE Program

Building Energy PerformanceColorado’s Commercial Property Assessed Clean Energy program (C-PACE) provides a simple way for the State of Colorado to help building owners make energy efficiency improvements to their buildings. This is done by taking a loan or mortgage for an energy efficiency retrofit off the balance sheet of the company or building owner and instead assigning it to the building, to be collected through a property tax assessment over a period of up to 20 years. For the most comprehensive explanation of the C-PACE program, visit https://copace.com.

Building owners voluntarily agree to have assessments levied against their property in exchange for receiving the up-front capital for the energy efficiency improvements.

The C-PACE program has many advantages:

  • It uses your energy savings to pay for your energy retrofit
  • 100% of project costs can be financed through the C-PACE program
  • Requires no down payment, owner’s equity, or personal guarantee
  • Does not impact your balance sheet
  • Results in immediate cash flow improvement
  • Increases your property value
  • Mortgage is tied to the building, not you or your business, and it transfers to the new owner if the building is sold
  • Its a non-accelerating loan
  • C-PACE financing can use it for all energy efficiency, renewable energy, and water conservation improvements
  • Funded over 20 years or the useful life of the upgrade
  • Suitable for various property types, such as commercial, industrial, non-profit, and multi-family residential
The criteria for eligibility is quite straightforward:
  • Your loan to value needs to be < 20% of improved value.
  • Your project must achieve a Savings to Investment Ratio (SIR) greater than 1.
  • You will need an energy audit but this cost can be wrapped into the C-PACE financing package.
  • Your existing mortgage holder will need to subordinate their mortgage to the C-PACE lien. Note that the mortgage holder is likely to support the upgrade and the finance approach as it increases the value of the building.

To see if your county participates in the C-PACE program, visit https://copace.com/participating-counties.

What Happens When I Sell My Property
In the event of a sale or transfer, the lien securing the assessment remains on the property, becoming an obligation of the next property owner. Thus, the repayment obligation is tied to the entity benefiting from the energy savings achieved by the building. As with other tax and government assessment liens, liens used to secure C-PACE assessments are senior to privately held liens, such as mortgages, so one of the important roles of Building Energy Performance and the C-PACE program is to help building and business owners through the process of subordinating existing private liens.

It is important to note, however, that as with property taxes, in the event of foreclosure, only the past due assessments are paid out of the proceeds of a sale ahead of the first mortgage. This feature is often referred to as “non-acceleration.”