For C-PACE financing to go forward for a prospective borrower, the mortgage holder must agree to allow the C-PACE Benefit Assessment, which takes a senior position to their mortgage, to be levied on the property.
This allows the borrower to pursue energy efficiency or renewable energy improvements using C-PACE, which will be repaid through the Benefit Assessment and collected in installments on their property tax bill.
By completing a Lender Consent form, mortgage holders indicate their understanding that the C-PACE Benefit Assessment will be collected in the same manner as and subject to the same penalties, and remedies as real property taxes. By statute, C-PACE Benefit Assessments are senior liens, subordinate only to real property tax liens.
Mortgage holders can be confident about C-PACE green energy financing because it enhances a borrower’s ability to meet their financial obligations. This is what makes consenting to C-PACE financing a fundamentally sound business decision. Here’s why:
- C-PACE assessments do not accelerate. This means that in the unlikely event of foreclosure, only the amount of the C-PACE assessment currently due (and/or in arrears) would be collected and extinguished through such foreclosure action.
- Better cash flow for borrowers. C-PACE offers 100% financing for green energy upgrades up to 25 years, increasing the borrower’s cash flow and maintaining their ability to repay their mortgage.
- Permanent, affixed improvements. Building owners make permanent energy improvements affixed to the structure, improving the building’s value for current and prospective investors.
- Increased asset value. C-PACE increases building value, meaning stronger assets on a mortgage holder’s balance sheets. It’s a win for the borrower, who builds a better business. It’s a win for mortgage holders whose investment becomes more valuable. Plus, it’s a win for the community as it builds a better business environment.
- Transferable liens. C-PACE is transferable and in the event of a property sale, C-PACE assessments automatically transfer to the new property owner (unless the buyer or seller decides to prepay the assessment).
- Projected savings. Mortgage holders can be confident in their support of C-PACE because the Connecticut statutes require C-PACE projects to have a Savings to Investment Ratio (SIR) greater than 1, meaning that projected lifetime savings from the improvements must exceed the total investment (including financing costs).
- Trusted Ally. The Connecticut Green Bank (which administers the C-PACE program) is the nation’s first green bank and deeply experienced in the administration and processing of C-PACE financing. This is what makes the Green Bank, a quasi-public agency whose mission is to accelerate the growth of green energy, such a trusted partner to the stakeholders it serves.