Petros PACE Finance, a leading commercial property assessed clean energy (C-PACE) lender, closed the first New York City C-PACE financing in early June. The C-PACE loan of $89 million on an existing building in the Wall Street area will be used to make the building more energy efficient.

By way of background, C-PACE is a type of financing for energy efficiency improvements that has several unique characteristics. First, there is no upfront payment by the property owner for the installation of the energy efficiency improvements. Instead, the property owner repays an assessment levied by the state or local government over the course of 10, 15 or 20 years at the same time it pays its property taxes. Second, in the event of a payment default, only defaulted annual or semi-annual C-PACE assessment installments can be accelerated. The remaining principal balance of the C-PACE assessment cannot be accelerated. Third, a C-PACE assessment travels with the related property when the property is sold in that the new owner of the property is liable for the remaining C-PACE assessment installment payments (unless the C-PACE assessment is paid off at the time of the property sale). Finally, by statute in most states that provide for C-PACE, the consent of any first mortgage lender on the property to the C-PACE assessment must be obtained before the C-PACE financing closes (unlike in the case of residential PACE assessments). At least 35 states and the District of Columbia allow some form of C-PACE financing.