About PACE

WHO IS C-Change?

You already know about PACE so let's start by explaining why you should care about C-Change. As experts in PACE, C-Change brings PACE in-house for Lenders as a partner. C-Change handles all PACE inquiries from your team and borrowers. We enhance liquidity through a direct sale and coordinate with a rating agency for future securitizations and “Green Bond” qualifications. We partner with you to bring PACE expertise to your originators, underwriters, and servicers. This is what we call Lender PACE.

WHAT IS PACE?

Property Assessed Clean Energy (PACE) is a financing mechanism that enables low-cost, long-term funding for energy efficiency, renewable energy, and water conservation projects. PACE financing is repaid as an assessment on the property’s regular tax bill and is processed the same way as other local public benefit assessments (streetlights, schools, etc.) have been for decades. Commercial

PACE can be used for any type of commercial property including industrial, multi-family, and non-profits. Residential “R”-PACE is for single-family homes and has other restrictions.

HOW DOES IT WORK?

PACE must be first enabled by state legislation. Each municipality can then pass an ordinance to create a PACE program. This ordinance will usually identify a PACE Administrator who will be responsible for assuring that funding meets state and local laws.

The PACE Administrator will approve eligible "Capital Providers" and work with the property tax collectors. C-Change is both a PACE Administrator and a Capital Provider. We partner with the mortgage lender to use their funds if that is desired.

PACE terms and conditions are negotiated between the Capital Provider and the real estate owner in the same way that mortgage rates are agreed.

Instead of a mortgage agreement, the real estate owner sings an Assessment Contract with C-Change as the PACE Administrator. The Assessment Contract is filed with the local municipality as a property tax lien.

The additional property tax assessment is a new line item on the regular property tax bill and is collected by the property tax collector along with all other taxes.

Future property taxes do not accelerate even upon a delinquency or default.

The obligations automatically transfer to a new owner upon any sale.

Financing can cover up to 100% of a project’s hard and soft costs.

Long financing terms up to 30 years generally with negotiated interest rates.

Prepayment premiums vary and often depend on the interest rate.

WHO BENEFITS FROM PACE?

Mortgage lenders can package PACE with their senior debt or allow PACE from other capital providers to the extent that it improves the value of their own collateral. The PACE portion will be 100% qualified for ESG and will lead to ESG credits for their senior loan when a borrower completes clean energy improvements. Lenders may escrow tax payments and hold reserves to reduce risk. There are no intercreditor agreements or covenants so PACE is a passive kind of financing that will never accelerate on a default. PACE can be used to optimize the capital stack for borrowers. PACE financing is more profitable than senior debt because of the seniority and call protection.

Local governments approve PACE because it attracts PRIVATE capital to make environmental and economic progress. PACE projects have a positive impact on climate change allowing real estate owners to meet or exceed increasingly stringent environmental codes. PACE is also an Economic Development initiative that lowers the cost of doing business in their community. It encourages business owners to invest in the area and creates jobs and the tax base using the local workforce.