When to Use PACE

PACE financing for commercial properties adds value across many property strategies and situations:

  • Routine Improvements for Single or Multiple Properties
  • Recent Property Acquisitions
  • Large Tenant Improvement Projects
  • Renewable Energy Projects (Solar & Storage)
  • Seismic Strengthening
  • New Construction and Redevelopment

 

Which property types qualify for PACE financing?

CleanFund Commercial PACE financing can be used for any non-residential property, including commercial office, retail, industrial, hospitality, schools, healthcare, agriculture, non-profits, specialty owner-operators, and multifamily (>5 units).

 

What improvements are eligible for PACE financing?

Any improvement that is permanently affixed to the property and reduces the energy or water usage of the building qualifies for PACE financing. Eligible improvements include, but are not limited to: energy efficiency, renewable generation, water conservation, and seismic strengthening. Click Here for a more robust list of eligible improvements.

 

Can PACE financing be used to reimburse previous work?

Yes, PACE can be used to finance improvements that are already installed and in operation should there be written acknowledgement of PACE as a financing option. CleanFund’s Initial Questionnaire includes a clause on intention to reimburse prior to the start of construction, which preserves the Owner’s right to be remunerated for work that has already been completed. This might include engineering studies, energy audits, and other soft costs.

 

How does PACE work with existing lease structures for multi-tenant properties?

Typically, this will be spelled out in each lease.  Under a triple-net lease, tenants will pay for their share of increase in building expenses so the cost of PACE improvements can be passed through to tenants.  Some leases will have restrictions on increases in property taxes but these are generally only with respect to increases which come as a result of new property taxes related to a sale in CA.

 

How does PACE address the issue of split incentives? 

Property Owners will benefit from PACE financing to the extent that improvements increase the value of the property by replacing or retrofitting outdated building systems.  The savings for Owners will also materialize in the form of higher lease rates.  Lastly, PACE improvements tend to improve lease-up rates and increase tenant retention.

 

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