Commercial-PACE Financing Moves Forward

Laura Richardson

The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.

New Hampshire’s legislature overwhelmingly supported improvements to existing but ineffective enabling legislation originally passed in 2010, and in statute under RSA 53-F. Many believe that House Bill (HB) 532, relative to energy efficiency and clean energy districts, will provide a much-needed tool for businesses to invest in energy efficiency and renewable energy projects.

Called C-PACE financing, for Property Assessed Clean Energy in Commercial Buildings, this enabling legislation allows municipalities to create PACE districts and for building owners to finance energy efficiency and/or renewable energy projects, repaying their loans through property tax assessments, similar to water, sewer, or sidewalk special assessments.

Municipalities currently have various other tools to woo and support businesses within their districts, recognizing that occupied buildings provide strong tax and employment bases, which provide public benefits in numerous ways. Additionally, RSA-53:F states that PACE is found “To achieve the public benefits of protecting the economic and social well-being by reducing energy costs in the community and risks to the community associated with future escalation in energy prices, and addressing the threat of global climate change … that the energy conservation and efficiency and clean energy improvements … will serve the public purposes as set forth in this chapter and not primarily be for the benefit of private persons or uses even though such private benefits and uses may incidentally result…”

Unlike traditional bank loans, C-PACE financing is tied to the commercial building, not the building owner. Loans are paid back through the conduit of a municipal tax assessment and over a long-enough period of time so that the projects are cash positive – where the energy savings are greater than the loan payment. Moreover, there is no up-front fee or down payment and loans do not accelerate at the time of ownership change or default. This allows the building owner to pay for the energy efficiency that they “use” and subsequent owners pay for those savings until the loan is fully paid.

Lien position is negotiated between municipality and lender to determine best comfort level for each project. Municipalities that adopt PACE typically receive a fee to cover their administrative costs. Projects that are financed by private entities and are in first lien position have no cap on the dollar-size of the project. Those projects financed through municipalities are capped at 35% of the assessed value of the building and property plus any existing mortgages, or $1,000,000, whichever is greater. Additionally, municipalities that self-fund projects must have a loan-loss reserve that is not capitalized through their general fund.

C-PACE financing is completely voluntary. Municipalities/voters choose to designate the district and adopt the tool, and municipal officials can nix a project; lenders determine if projects are viable and worthy of investment; building owners decide if C-PACE and the project meets their needs. If all three of these groups conclude that there is a win-win-win fit, the project may proceed.

This financing tool is available for office buildings, hotels and convention centers, manufacturing facilities, small retail, malls, and big box stores, heated warehouses, historic buildings, health clubs and athletic facilities, agricultural buildings, restaurants, as well as buildings owned by non-profit organizations. Multi-family buildings of four or more units can participate. Publicly-owned buildings and residential buildings of less than four units are not included.

Energy projects must demonstrate an energy-cost savings-to-investment ratio of greater than one as determined by an independent third party through an energy audit which includes energy and financial modeling. Projects should also include building commissioning and energy monitoring and verification to assure the lender that the financed project performs as designed. C-PACE projects can include:

Heating, Ventilation, Air-conditioning (HVAC) Systems

Controls and heat distribution


Solar – photovoltaic, hot water, hot air

Biomass heating – pellets or chips

Airsealing and Insulation – walls, basements, crawlspaces, attics, roofs

Combined heat and power

Recognizing that many municipalities are stretched thin with staffing capacity, HB 532 allows municipalities to designate another entity to administer the C-PACE program, thus significantly reducing the challenges of tying together financing, energy-project vetting, project management, and administration.

The Jordan Institute, a New Hampshire based non-profit organization that focuses on improving the energy efficiency in buildings, has been the lead voice on C-PACE and is developing a statewide C-PACE program without public funds or a “green bank”. Jordan Institute and its program partners will streamline this process, deploy best-practice standards and protocols, and bring together the necessary teams to develop and launch a sustainable program in the coming months.

Pioneer C-PACE projects in the statewide program are expected to launch in late 2014 and early 2015, with a significant scale-up of projects anticipated in 2015 and 2016. Municipalities and others can learn more at

Laura Richardson is the Executive Director of the Jordan Institute.