Capital Providers

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.

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.

Arlington C-PACE has an open-source funding model that allows for any qualified capital provider to fund eligible projects. To participate, fill out and submit the Lender Application.

No. It is free to apply for Arlington C-PACE financing.

Commercial, industrial, agricultural, nonprofit and multifamily properties with five or more units that are located in Arlington County and are subject to, or eligible to be subject to, taxation by the county are eligible for Arlington C-PACE.

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.

Funding for Arlington C-PACE financing is provided by pre-qualified private capital providers, which may include banks, specialty financiers, institutional investors, insurance companies, and others. No state or county funds are anticipated to be made available to fund Arlington C-PACE projects.

The minimum amount that may be financed for each project is $50,000. The maximum amount is $25,000,000.

Repayment is secured by a voluntary special assessment that is recorded against the eligible property in the land records of the county. The special assessment is similar to a sewer district or business improvement district assessment, except that it’s voluntary.

Repayments are made by the property owner to the capital provider directly, as outlined in the Financing Agreement.

Defaults on C-PACE project repayment obligations do not impose any direct liabilities on the county. Rather, the private capital provider financing the project has the responsibility and right, per the Finance Agreement with the building owner, to initiate collection efforts to recover delinquent payments from the owner and, if necessary, to initiate foreclosure proceedings. A capital provider can foreclose on the special assessment lien without accelerating the future unpaid amounts. It may also consider, as a contractual matter, declaring due all unpaid principal and accrued interest, as contemplated in Section 6.2 of the Financing Agreement template. Moreover, if a capital provider possesses other collateral, it may pursue remedies against that collateral in accordance with the terms of any document governing such collateral.  Note that, as reflected in the County’s C-PACE documents, no capital provider inherits any special enforcement powers of the County by virtue of the special assessment lien.

The program recommends that every capital provider review the applicable laws of the Commonwealth of Virginia.

Read more on this topic here.

Because the Arlington C-PACE repayment obligation runs with the property, the special assessment can transfer to the next property owner if the property is sold.

If a building owner is deficient or delinquent on his or her special assessment payments, Arlington C-PACE is not responsible to cover the shortfall. Because the special assessment is associated with the property, in the case of a non-payment, the assessment (which is a priority lien) will fall into arrears and will have the same priority status as a real property tax lien, except that the lien will have priority over any previously recorded mortgage or deed of trust lien on the property only if a written consent agreement is executed by the holder of each such previously recorded lien.

Read more on this topic here.

To apply for Arlington C-PACE financing, download the Application Form  from the building owners’ “How it Works”  page of this website. Submit the completed application and all attachments via email to va@paceworx.com.

The Arlington C-PACE program administrator will actively engage with building owners, real estate developers, contractors, mortgage holders, and capital providers to raise awareness about the program.

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.

See page 2 of this document.