News & Insights

Key Takeaways for NYC’s C-PACE Program Guidelines

1. C-PACE loans are capped at 30% of the total construction costs, excluding land or property acquisition costs.
2. There is no required Savings-to-Investment (SIR) ratio for projects involving new construction or comprehensive rehabilitation.
3. The loan term under C-PACE financing has no specified limit.
4. Projects must qualify as “Low Carbon Buildings” (further defined below), designed to emit no more than 25 kg of CO2 per million BTU.
5. All installed devices must adhere to the specified carbon emission limit, except those not connected to the building’s gas or fuel oil systems, those used for manufacturing or commercial kitchen operations, or those providing emergency or standby power.

Eligible Costs for PACE Financing: PACE loans can fund various improvements, but are strictly limited to eligible costs. These include energy-efficient improvements, energy audits, feasibility studies, and related soft costs. It’s important to note that these expenses are capped at 30% of the total project costs. This ensures that PACE financing is explicitly used for energy-related enhancements that align with the program’s goals.

Low-Carbon Building Requirement: Projects involving major renovations or new construction must adhere to low-carbon building standards to qualify for PACE financing. This requirement minimizes the building’s emissions, supporting broader environmental goals.

What Defines a Low-Carbon Building? A low-carbon building is engineered and operated to minimize emissions. Specifically, any device, machinery, or system installed in the building must not emit more than 25 kilograms of carbon dioxide per million British thermal units (BTU) of energy. The United States Energy Information Administration established this standard. However, there are essential exclusions to this definition, including:

1. Devices not connected to the building’s gas or fuel oil systems, used intermittently, or not for heating or hot water supply.
2. Buildings emitting more than the specified carbon dioxide limit due to necessary activities such as manufacturing, laboratory operations, hospital functions, crematoriums, or commercial kitchens.
3. Excessing the emission limit is necessary when providing emergency or standby power or other uses permitted by specific rules from the Department of Buildings.

Understanding these requirements is crucial for developers and property owners who leverage PACE financing. By adhering to these standards, projects can secure the necessary funding while contributing to a more sustainable future.

More information

NYC C-PACE: One-Pager 

NYC C-PACE: Program Guidelines

ABOUT CLEARWATER

Clearwater is a New York-based national direct lender specializing in C-PACE Financing for Commercial Real Estate, spanning all asset types and geographies across the U.S. We offer low-cost, fixed-rate, long-term loans ideal for new construction or recapitalizations of recently completed projects. Our team of seasoned real estate investment professionals, with extensive expertise in structured finance, crafts tailored solutions that align with the Sponsor’s needs, including hedging away negative arbitrage and flexible prepayment options.

For more information, please visit us at www.c-pace.com or email us at info@c-pace.com. 

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