Industry Voices Financing

Financing Green Initiatives

Randy Eckers

Going green — in whatever avenue one wishes to take — is a laudable goal in a world where environmental concerns become more and more pressing. But when it comes to the bottom line, every project has to make sense, which can make things a bit more complex. One approach that has grown in popularity is the Commercial Property Assessed Clean Energy (C-PACE) program. This financing structure allows building owners to borrow money to complete these projects with repayment made through an assessment on their property tax bill.

C-PACE programs are legislated at the state level, with 36 states and the District of Columbia currently offering them. (At least five other states are currently considering PACE-related bills.) With financing coming from private investors and/or government programs, C-PACE provides long-term loans at favorable rates. Randy Eckers, chair of the real estate finance practice for Akerman LLC, is looking to spread the gospel of C-PACE — especially as businesses look for creative financing options in the wake of the COVID-19 pandemic.

“One of the biggest problems with C-PACE is that there’s just a lack of awareness of it,” he says. “A lot of people in the target audience [are] not even aware that this could be used as rescue capital or that it even existed.”

In addition to the usual borrower and lender roles in a loan, C-PACE financing includes an administrator to oversee the project and ensure it meets local requirements. This role can be filled by a government employee or a third-party administrator.

While available to all sectors in CRE, ranging from oil and gas to seniors housing, C-PACE has been particularly beneficial to those in the hospitality sector. With hotels and vacation destinations seeing business disappear overnight during the initial outbreak of the pandemic, many owners, operators, and investors found C-PACE as a lifeline thanks to a specific detail in the legislation.

“It’s common to have a lookback period,” Eckers says. “Let’s say that the lookback period is three years. If you’re a hospitality owner and during the past three years you have constructed improvements at your property that would have been eligible for the C-PACE program, you can still go back and get a loan as if you were financing those components for the first time, even if projects are already complete.”

In addition to projects in existing properties, C-PACE is also an option for new developments. For an office building, for example, this additional financing could open doors to increased environmental efficiencies that would not be available to developers otherwise, Eckers says.

A lot of people [are] not even aware that [C-PACE] could be used as rescue capital or that it even existed.

Though the structure of the financing is outlined in a specific state’s legislation, C-PACE avoids many of the downsides that often come with a state program. 

“One obstacle [with C-PACE] is the misconception that this is a government program filled with red tape,” he says. “Our clients think it’s going to take nine months or a year to arrange financing, but they find the process much, much easier than expected.”

With climate risk and ESG initiatives here to stay, each developer, investor, owner, or operator in CRE needs to decide just how much energy efficiency and environmental considerations they will incorporate into their assets in the coming years.

“New York City is the most well-positioned market for C-PACE right now,” Eckers says. “If you look at the NYC Climate Mobilization Act, it requires buildings to reduce carbon emissions by 80 percent by 2050 and 40 percent by 2030. If you combine that with New York’s C-PACE program just coming online, there’s a lot of opportunity there.”

As for the future of such unorthodox means of financing environmental improvements, Eckers hopes C-PACE will become more of a fixture in the near future.

“In the next five years, I hope people will be much more aware of it,” he says. “And that this will be a nontraditional loan that is frequently seen in capital stacks. I’m extremely bullish on C-PACE — I just think people need to know about it and understand the misconceptions, which can be overcome.”

Nicholas Leider

Nicholas Leider is senior content editor for Commercial Investment Real Estate. Contact him at

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