Innovative Services in CRE: C-PACE Financing

C-PACE financing is gaining major traction in New York. What’s driving this surge in activity, and what kind of growth is PACE Loan Group seeing?

C-PACE activity is definitely heating up across New York, especially as building owners focus on meeting the Local Law 97 (LL97) energy efficiency requirements that went into effect in 2024. The recently released state C-PACE program guidelines have also given the market a real boost. At PACE Loan Group, we’re seeing a 115% year-over-year increase in new C-PACE origination inquiries, and we have significant New York deals currently in underwriting. We expect 2026 to be a very strong year for C-PACE production in the Empire State.

For those who may not be as familiar, what exactly is C-PACE financing, and what makes it such a unique tool in commercial real estate finance?

C-PACE, or Commercial Property Assessed Clean Energy financing, is a relatively new and flexible funding tool. It offers borrowers long-term, fixed-rate, low-cost capital that’s repaid through the property tax bill as a voluntary special assessment. The loans are assumable and can be prepaid without penalty, which makes them attractive for both owners and investors. We often call C-PACE the “chameleon of CRE finance” because of its ability to adapt to different capital structures and project needs.

How does C-PACE fit into a project’s capital stack, and what kinds of flexibility does it offer borrowers or mortgage bankers?

C-PACE can play multiple roles within the capital stack. It can help reduce the overall cost of capital, pay down maturing construction debt, or refinance recently completed CapEx improvements. As the market matures and larger deals close, more borrowers and mortgage bankers are recognizing the strategic advantages that C-PACE can provide.

What types of property upgrades can be financed through New York’s C-PACE program, and how can it help building owners comply with Local Law 97?

The New York C-PACE program allows property owners to finance a wide range of energy and water efficiency upgrades — things like HVAC systems, energy-efficient lighting, building envelope improvements, water conservation systems, and solar panels. For owners in New York City navigating LL97, C-PACE can be a critical tool. We can often finance 100% of these upgrades with terms up to 30 years, helping owners stay compliant with current regulations and the next round of requirements coming into effect in 2030.

You mentioned that PLG can often finance up to 100% of eligible upgrades — how does that work, and what advantages does it provide to owners facing 2030 compliance deadlines?

By financing 100% of the cost of qualifying upgrades, we remove the need for owners to come out of pocket for major energy-efficiency projects. That means they can make necessary improvements today and spread repayment over time through their tax bill, while immediately benefiting from lower operating costs and future compliance assurance. It’s a cost-effective and forward-looking approach for owners preparing for LL97’s 2030 benchmarks.

There have been recent updates to the New York C-PACE program. What are some of the key changes, and how are they helping to accelerate adoption and deal flow?

One of the biggest developments came in August of last year, when New York relaxed several program requirements. The state reduced savings-to-investment ratio thresholds and expanded eligibility to include both new construction projects and retrofits. These updates make it much easier for projects to qualify and have definitely helped accelerate adoption and deal activity across the state.

Opportunities abound for C-PACE in New York. PLG’s management team opened an office in the heart of NYC and built a formidable lending operation, including a capital markets team, as our transactions become more institutional. PLG is long on the Empire State, and you should be too!  

Let’s Talk. Contact Loren Biller, [email protected], (917) 346-1397