C-PACE as rescue capital

• Current legislative mandates compel property owners/developers to cut carbon emissions when developing ground up buildings and renovating older ones.

• Corporations worldwide have a hyper focus on ESG. Consumers are making buying choices based on the environmental impact of their purchase. Commercial and residential tenants will have the same behavior.

• Inflation, rising costs, and rising interest rates have put many developments on hold or slowed construction. Combined with the current landscape of supply chain and labor shortages, timelines for construction and development are uncertain.

According to JLL’s 2022 US Construction Outlook report, this landscape will tighten. Several major sources of uncertainty amid high demand are likely to keep construction costs growing at a rapid pace over the course of 2022. Construction labor costs will continue to grow at an elevated rate. Continued labor shortages, heightened demand and elevated inflation are likely to drive wage increases in the 4 to 6 percent range.

C-PACE financing can be used retroactively in many states as rescue capital. Generally, with retroactive C-PACE, property owners/developers can reimburse themselves for work they’ve already started or completed over the past 1-3 years, depending on eligibility. This funding reimbursement can be applied directly to budget overages and capitalize reserves.

For example, a retroactive C-PACE loan could be used on a project with a major cost overrun due to supply chain shortages and construction delays. In this hypothetical project, applying C-PACE to already installed energy efficient measures (typically included in all buildings built to code), could return up to 30% of the project’s cost back to the developer. The resulting funds would fund interest reserves, pay unforeseen escalation of construction costs, and balance the budget, keeping the project on track for an