In today’s competitive real estate environment, developers in New Jersey are striving to deliver both high-performing and financially savvy projects. Energy efficiency, renewables, and resiliency features make buildings more competitive—but they often come with upfront costs that can hamper budgets. This is where Commercial Property Assessed Clean Energy (C-PACE) financing becomes a game-changer.
What Makes C-PACE a Superior Financing Choice Compared to Bank Loans?
1. Low-Cost, Long-Term Financing
C-PACE offers long-term, low-interest financing—often at rates significantly below traditional commercial loans or mezzanine debt. Developers can secure up to 35% of the capital stack for new construction through C-PACE, while reducing operating expenses, as energy savings often exceed C-PACE payments.
2. Non-Recourse and Off-Balance-Sheet Structure
Technically structured as a special assessment attached to the property, C-PACE does not increase the owner’s liabilities—a crucial advantage over conventional financing. Repayments are treated as operating expenses and are typically off-balance-sheet.
3. Repays via Property Tax—Transfers with the Property
Repayment occurs through an additional line on the property tax bill, paid over 10–30 years. If the property is sold, the obligation automatically transfers to the new owner, making C-PACE especially appealing for long-term asset management.
4. No Capital Depletion for Developers
C-PACE enables developers to preserve their own capital, leveraging third-party investment (commonly from institutional investors like insurers or pension funds) to fund improvements. This structure reduces reliance on equity or mezzanine financing.
5. Boosts Asset Value and Market Competitiveness
C-PACE-financed upgrades—like energy efficiency and renewables—not only lower operating costs but also enhance building quality, comfort, and valuation. In a market that increasingly values green buildings, these enhancements provide a significant competitive advantage.
6. Refinancing Options for Recent Projects
Developers who have completed eligible projects in the past three years may qualify for refinancing via C-PACE, unlocking new capital and extending financial flexibility.
In Comparison: Bank Loans Fall Short
| Feature | C-PACE | Traditional Bank Loans |
|---|---|---|
| Interest Rates | Typically lower market-rate (half the cost of mezzanine) | Higher and vary |
| Repayment Term | Long, based on useful life (10–30+ years) | Shorter (5–20 years) |
| Balance-Sheet Impact | Off-balance-sheet, treated as operating expense | On-balance-sheet, increases liabilities |
| Recourse | Non-recourse, no personal guarantees (tied to property) | Typically full recourse to borrower |
| Transferability | Transfers with property upon sale | Usually must be repaid upon property sale |
Why New Jersey Developers Should Opt for C-PACE
- Capitalize on generous federal and state incentives while they last
Federal tax credits, including up to 30% Investment Tax Credit (ITC) plus bonus incentives, can be paired with C-PACE. Moreover, tax-exempt entities (e.g., nonprofits, schools, religious institutions) benefit from Direct Pay, receiving credit values in cash even if they don’t owe taxes. - Cash Flow Benefits
In many cases, energy cost savings outstrip C-PACE payments, enabling positive cash flows immediately. - Build Green, Increase Value
Enhancements financed via C-PACE raise both the utility performance and market desirability of properties. - Simplified, Long-Term Financing
C-PACE assessments are fixed-rate, long-term, patient capital. They’re non-accelerating and cannot be called early in default, making them predictable and developer-friendly. - Seamless Project Approval
Technical evaluation follows the Whole-Building Model; NJEDA administers the program and NJPACE assists with guidance and approval processes.
Conclusion
For New Jersey developers, C-PACE financing isn’t just a loan—it’s a strategic financial advantage. By unlocking low-cost, long-term capital tied to the property—and not the borrower—C-PACE empowers developers to deliver high-quality, energy-efficient, and resilient buildings, all while preserving liquidity, improving asset value, and staying competitive.
Whether you’re planning new construction or a gut rehab, it’s time to explore how C-PACE can augment your capital stack and advance your project—and the broader clean energy transition. Contact us if you want help with your project.