Frequently Asked Questions

How C-PACE Fits in the Capital Stack 

How does C-PACE fit with the existing financing currently on my project? 

C-PACE is a flexible capital stack tool that can be used to reduce cost of capital and increase leverage without diluting ownership.  It is commonly used to: 

• Supplement mortgage debt when lenders are tapped out 

• Replace higher-cost mezzanine debt or preferred equity  

• Recapitalize projects by refinancing upgrades completed in the past one to three years 

 

How can C-PACE be utilized retroactively?

C-PACE can be used retroactively to refinance recently completed improvements and return capital to the project. 

• In most states, eligible improvements completed within the past 1–3 years may qualify

• Provides liquidity infusion to payoff mezz or pref equity 

• Injects liquidity for mortgage paydown and amend/extend strategy 

• Payoff maturing debt and lower cost of recap funds 

• Provide capital for acquisition cap stack 

How is C-PACE different from a traditional loan?

C-PACE differs from a traditional loan primarily in how it is secured, repaid, and structured within the capital stack.

• Repayment: Through a property tax assessment rather than direct loan payments

• Collateral: Secured by a tax assessment lien on the property 

• Transferability: May transfer with the property upon sale  

• Term: Typically longer (up to 30 years) 

• Rate structure: Fixed  

How Is C-PACE Different From a Mezzanine Loan?

Unlike mezzanine debt, C-PACE is tied to a property tax assessment and typically offers lower fixed rates, longer terms, and fully amortizing repayment. Many borrowers use C-PACE to reduce higher-cost subordinate debt and lower their overall cost of capital. 

Does C-PACE work with agency financing?

C-PACE can work alongside agency and government-backed financing in particular situations, primarily as part of the construction capital stack.

• Fannie Mae / Freddie Mac: C-PACE serves as construction financing but does not remain as permanent debt if Fannie or Freddie is the post-construction takeout 

• HUD financing: Available in certain states, depending on program guidelines 

• SBA financing: Works with SBA 7(a), but not SBA 504 structures