Non-recourse, long-term financing tied to property improvements. Reduce your capital stack cost and replace higher-cost layers.
C-PACE — Commercial Property Assessed Clean Energy — is a financing mechanism that allows commercial property owners to fund energy efficiency, renewable energy, water conservation, and resiliency improvements through a voluntary property tax assessment. Unlike traditional mortgages or mezzanine financing, C-PACE is repaid as a line item on the property tax bill over a term of up to 30 years. The financing is secured by a special assessment lien on the property, is non-recourse to the borrower, carries a fixed interest rate, and amortizes fully over the term — making it a uniquely attractive tool for reducing capital stack costs on qualifying projects.
George Smith Partners deepened its C-PACE capabilities through the acquisition of Clearwater Capital Management, specifically recognizing the growing importance of C-PACE as a capital stack optimization tool for both new construction and major renovation projects. C-PACE availability has expanded rapidly, with enabling legislation in over 30 states plus the District of Columbia. The product has evolved from a niche retrofit financing tool into a mainstream capital source that regularly replaces mezzanine debt or developer equity at a significantly lower cost of capital.
A critical distinction in how C-PACE interacts with the capital stack: the assessment lien is not equivalent to a first mortgage. Only delinquent C-PACE payments — not the full assessment balance — hold priority over the first mortgage lender. This structure has enabled growing lender acceptance, as first mortgage lenders understand that their recovery position is not materially impaired by a performing C-PACE assessment. In practice, C-PACE can fund 20% to 35% of eligible project costs, covering qualifying components including HVAC systems, building envelope, electrical systems, lighting, renewable energy installations, water conservation measures, and seismic resiliency upgrades.
C-PACE is not a standalone financing tool — it is a capital stack strategy. The value of C-PACE is realized when it is structured in coordination with the first mortgage and any other capital layers, reducing the blended cost of capital and the developer's equity requirement. George Smith Partners approaches C-PACE as an integrated component of every qualifying capital stack, evaluating eligibility and sizing at the same time we structure the senior debt.
Our C-PACE expertise spans the full execution process: identifying qualifying improvements, coordinating energy audits and technical assessments, sourcing competitive C-PACE capital from a growing pool of private and institutional PACE providers, and — critically — securing first mortgage lender consent. Lender consent remains the key execution hurdle for most C-PACE transactions, and our approach of structuring C-PACE alongside the first mortgage from day one (rather than layering it on after the fact) dramatically improves the probability and speed of closing.
George Smith Partners has structured C-PACE financing for new construction, major renovations, and building repositioning projects across multiple states. Our team understands the program mechanics in each jurisdiction, the underwriting requirements of each C-PACE capital provider, and how to present C-PACE to first mortgage lenders in a way that secures consent without delaying the broader financing process.
C-PACE is best suited for new construction, major renovations, energy retrofits, and building upgrades that include qualifying energy efficiency, renewable energy, water conservation, or resiliency improvements. Common examples include HVAC system replacements, building envelope upgrades, solar installations, LED lighting conversions, and seismic resiliency improvements. C-PACE is increasingly used in ground-up development projects where the energy-efficient components of construction represent a significant share of total hard costs — allowing developers to replace more expensive mezzanine debt or equity with long-term, fixed-rate C-PACE capital.
C-PACE (Commercial Property Assessed Clean Energy) is a financing mechanism that allows commercial property owners to fund energy efficiency, renewable energy, water conservation, and resiliency improvements through a voluntary property tax assessment. The financing is repaid over up to 30 years as a line item on the property tax bill, secured by a special assessment lien on the property. C-PACE is non-recourse to the borrower, fixed-rate, and fully amortizing — making it one of the most cost-effective and flexible tools available for reducing capital stack costs on qualifying projects.
C-PACE financing sits in the capital stack as a replacement for more expensive capital layers — typically mezzanine debt, preferred equity, or a portion of the developer's equity contribution. Because C-PACE is secured by a property tax assessment (not a mortgage lien), it does not directly compete with the first mortgage. Only delinquent C-PACE payments — not the full assessment balance — are senior to the first mortgage, a distinction that has enabled growing lender acceptance. In practice, C-PACE can cover 20-35% of eligible project costs, significantly reducing the borrower's required equity or subordinate debt.
C-PACE enabling legislation has been adopted in over 30 states plus the District of Columbia, with active programs in most major commercial real estate markets including California, New York, Texas, Florida, Colorado, Connecticut, Ohio, and Maryland. However, the availability and maturity of C-PACE programs varies significantly by jurisdiction. Some states have robust, well-established programs with standardized processes, while others have enabling legislation but limited program infrastructure. George Smith Partners evaluates C-PACE availability and program mechanics as part of every capital stack analysis for qualifying projects.
Yes, in most jurisdictions the first mortgage lender must provide written consent for C-PACE financing to be placed on a property. This requirement — often called "lender acknowledgment" or "lender consent" — has historically been the primary hurdle for C-PACE adoption. However, lender acceptance has increased substantially as the product has matured, PACE assessment structures have been clarified (only delinquent payments are senior), and the financial benefits to both borrowers and lenders have become well understood. George Smith Partners structures C-PACE alongside first mortgage financing from the outset, securing lender consent as an integrated part of the capital stack process.
Yes, C-PACE is increasingly used for new construction projects — not just energy retrofits. New construction C-PACE finances the energy-efficient and sustainability-related components of a building — HVAC systems, building envelope, lighting, solar installations, water conservation systems, and other qualifying improvements. For ground-up development, C-PACE can represent a significant portion of total hard costs, effectively replacing mezzanine debt or equity at a lower cost of capital with longer amortization. George Smith Partners' acquisition of Clearwater Capital Management was driven specifically by the growing importance of C-PACE as a capital stack tool for development projects.