Displayed below is a list of Frequently Asked Questions (FAQs). Click on the “>” icon associated with each question to view the answer.
Arlington C-PACE is a program that helps building owners access private-sector financing to upgrade their building with energy efficiency, clean energy, and water efficiency improvements. With C-PACE, building owners receive up to 100 percent financing with attractive repayment terms consistent with the useful life of the improvements (up to 25 years). This typically enables them to undertake large building modernization projects that addresses multiple deficiencies.
In well-designed C-PACE projects, the energy cost savings exceed the PACE payments, creating a cash-flow-positive project. By using C-PACE, building owners can reduce their operating costs, improve the value and competitiveness of their building, meet energy performance goals, and increase their cash flow. C-PACE is also available to developers with new construction projects if they design their building to exceed current energy codes.
Repayment is secured by a voluntary special assessment, similar to a sewer assessment, that is recorded on the improved property and repaid to the private capital provider over the financing term (up to 25 years). In most cases, the energy cost savings exceed the assessment payment, thereby enabling capital-intensive equipment upgrades and cash-flow-positive projects. Because the C-PACE assessment obligation remains with the property, the assessment can transfer to the next owner when the property is sold.
After a competitive bidding process, Arlington County selected Sustainable Real Estate Solutions, Inc. (SRS) to serve as the Arlington C-PACE program administrator.
The Arlington County Department of Environmental Services’ Arlington Initiative to Rethink Energy (AIRE) team is spearheading the C-PACE program.
Arlington County’s C-PACE program benefits multiple stakeholders.
- Building owners reduce their energy costs, increase their cash flow, and improve the value of their building—all with no upfront, out-of-pocket costs
- Contractors grow their business by closing more projects
- Capital providers receive more opportunities to fund attractive, finance-ready projects
- Developers can reduce their equity contribution or other forms of high-cost capital with no upfront, out-of-pocket expense
- Mortgage holders benefit from an improved asset; plus, the increased cash flow strengthens the owner’s repayment ability and reduces mortgage default risk
- Communities enjoy local job growth, improved building stock, and reduced greenhouse gas emissions—all financed with private capital, and not taxpayer dollars.
Arlington County is responsible for program oversight in collaboration with the program administrator, SRS.
C-PACE solves the financial issues associated with building modernization projects by providing non-recourse, long-term financing that covers up to 100 percent of the project’s cost. (The long term makes the financing affordable, while the 100 percent financing means there is no upfront, out-of-pocket expense for the building owner.) Since the financing is based on the building’s financial health, and not the owner’s creditworthiness, the owner is not required to sign a personal guarantee. Once a project is complete, the building owner has a more valuable, more competitive building, lower utility bills, a more sustainable property, and, often, a higher net operating income (if the project was designed to be cash-flow-positive, as the program encourages).
Yes, because mortgage holders have two main concerns: 1) the borrower’s ability to repay the loan and 2) the value of the collateral, and C-PACE positively impacts them both. Since most C-PACE projects not only generate positive cash flow from the energy savings, but also increase the value of the building, well-designed projects typically gain mortgage holder consent.
View a list of lenders who have consented to C-PACE.
No. It is free to apply for Arlington C-PACE financing.
The Arlington C-PACE program will be self-financed thorugh program fees charged to participating property owners. A one-time program administration fee, equal to 2.5 percent of the project finance amount, not to exceed $75,000 per project, is applied to each financed project.
No. Arlington C-PACE uses private capital to fund projects. Visit the Capital Providers page to see a list of qualified capital providers that participate in the program.
Yes. Arlington C-PACE financing is completely voluntary. Owners who choose not to participate in the program remain unaffected.
Qualifying for C-PACE financing is based on the property, and not the owner. The C-PACE program administrator will look at:
- The property’s estimated market value (assessed or appraised)
- The amount of the property owner’s equity in the property
- The owner’s recent mortgage and property tax payment history
- The dollar value of the proposed energy and/or water-saving improvements.
After finance closing, at which time the capital provider, as authorized by the county, will request that the county record a voluntary special assessment in the county land records. The capital provider, as authorized by the county, will then request that the county assign the special assessment to the capital provider to secure the loan repayment.
Building owners are encouraged to consult their accountants or CPA on this matter.
There has been no specific ruling by the Financial Accounting Standards Board on this issue.
Arlington C-PACE projects can range from $50,000 to $25 million. Constraints on the amount are driven by the financial health of the building and include the building’s financials, the loan-to-value percentage, and other considerations of the mortgage holder.
Interest rates are commensurate with term length. To ensure the best possible terms, including interest rate and other fees, the building owner will typically review term sheets from multiple participating private capital providers. After reviewing the term sheets, the building owner can select the capital provider that offers the best fit for his or her project.
Repayment periods can span up to 25 years, depending on the owner’s preference, and are limited by the weighted average effective useful life (EUL) of the financed improvements.
Property owners are encouraged to pursue available federal investment tax credits (ITC), utility rebates, and other available incentives. All or a portion of the total incentives may be subtracted from the amount financed under the Arlington C-PACE program. Click here for Washington Gas rebates and here for Dominion programs.
Each private capital provider participating in C-PACE sets its own terms, including pre-payment, in its financing agreement with the building owner. It is common for C-PACE capital providers to include a pre-payment fee schedule.
The following list of typical, long-standing, proven renewable energy production/distribution, energy efficiency, and water usage efficiency improvements is intended as a reference list for applicants. If a specific improvement is not included on this list, send it to the program administrator, who will review it on a case-by-case basis.
- Automated building controls (BMS, EMS)
- Boilers, chillers and furnaces
- Building envelope (insulation, glazing, windows, etc.)
- High efficiency lighting
- New roof (if it will result in energy savings)
- Water heating systems
- Combined heat and power (CHP) systems
- Fuel cells
- Geothermal systems
- Hydroelectric systems
- Roof (if used to support a solar PV system)
- Small wind systems
- Solar PV
- Solar thermal
- Irrigation systems
- Low-flow fixtures
Other eligible expenses
- Commissioning costs
- Construction costs
- Energy audits
- Engineering and design expenses
- Measurement & verification costs
- Permit fees
- Renewable energy feasibility studies.
This list is not comprehensive. Any improvements that result in utility cost savings and meet other program criteria will be considered. See the User Guide for more information.
To ensure the best possible terms, including interest rate and other fees, the building owner can review term sheets from multiple qualified private capital providers, facilitated by the program administrator, to select the best fit.