FAQs

General Program FAQs

How has the COVID-19 pandemic affected the Philadelphia C-PACE program?

The Philadelphia C-PACE program is fully operational. PEA staff is working remotely and we’ve made some adjustments to our processes to facilitate e-recording and remote closings. As always, PEA is available to answer questions, review projects and process applications. Please feel free to reach out with any questions: CPACE@philaenergy.org

Are multifamily properties eligible for C-PACE?

In Pennsylvania, residential and multifamily properties are not eligible for C-PACE financing. If you have a mixed-use property, you may use C-PACE on the commercial part of the property, as long as that part of the property has its own OPA Account number. See Sec. 4.1 of the Program Guidelines for more details (accessible in Program Resources).

Is it possible to use C-PACE financing retroactively?

Yes, you can use C-PACE for retroactive financing on retrofit, gut rehab and new construction projects. The C-PACE financing must close within 730 days of project completion, and the project is subject to some additional requirements. Please see Sec. 11 of the Program Guidelines for more details (accessible in Program Resources).

Is the Philadelphia C-PACE Program similar to C-PACE programs in other parts of the state?

Yes. In 2018-2019, PEA partnered with the Sustainable Energy Fund, Keystone Energy Efficiency Alliance, Pittsburgh Office of Sustainability and Pennsylvania Department of Environmental Protection to help create a standard set of Pennsylvania Program Guidelines and C-PACE documents for use across the state. PEA based the Philadelphia program’s documents and guidelines on these documents, while making some material adjustments to account for unique characteristics of running C-PACE in Philadelphia.

Several other Pennsylvania counties have active C-PACE programs, including Lebanon, Lehigh, Northampton, and Wayne counties. Each uses a set of standardized documents. For a complete list of Pennsylvania counties with active C-PACE programs, visit Pennsylvania PACE.

How do you use C-PACE on mixed-use buildings given the restriction on using C-PACE for residential and/or multifamily properties?

If a mixed-use building has separate OPA Account numbers for its residential and commercial components, the commercial portion of the building is eligible for C-PACE. If a property owner currently has a mixed-use building with one OPA Account number, please contact the Philadelphia Office of Property Assessment to obtain separate OPA Account numbers for the commercial and residential portions.

C-PACE projects that are in the commercial portion of the mixed-use building and exclusively serve the commercial occupants can use C-PACE to cover 100% of a project’s hard and soft costs.

C-PACE projects that are physically located within the commercial portion and partially serve the commercial portion but also partially serve the residential/multifamily portion of the building are also eligible for C-PACE financing.  In this instance, the cost of the C-PACE project should be apportioned in accordance with the percentage of the project’s output or efficiency being used by the commercial tenant compared to the total output or efficiency of the project. Property Owners may choose to do this allocation based on square footage or some other defensible measure. For example, in the case where 40% of the output from an HVAC system installed in the commercial portion of a mixed-use building is used by the commercial tenant and 60% of the HVAC system’s output is used by the residential tenants, then 40% of the cost of the HVAC system would be C-PACE-eligible because it is serving the commercial tenant and located in the commercial space.

Systems that are located in the residential space and serve the commercial and residential tenants are not eligible for the Philadelphia C-PACE program because the commercial property owner would not have the ability to do an assessment-based financing on the portion containing the installed system. For example, if a mixed-use building’s HVAC system is located in the residential portion, it is not C-PACE eligible. However, any ductwork and other system components that are located in and serve the commercial space are eligible.

Are roof replacements considered energy efficiency measures in the Philadelphia C-PACE program?

Roof replacements are eligible under the Philadelphia C-PACE program so long as the replacements improve both the roof (membrane, coating, sealing, etc.) and the system below (insulation). In the case of new construction, the eligible roof work must exceed the baseline code requirements. In the case of a retrofit, an eligible roof replacement must result in a more efficient roof system than what is being replaced.

Structural roof improvements that facilitate the installation of rooftop solar are considered ancillary costs that are also eligible for C-PACE.

Can an energy efficiency roof or rooftop solar project be eligible for C-PACE in mixed-use buildings?

If the commercial entity in a mixed-use building wants to use C-PACE to finance an energy-efficient roof (roof replacement, green roof, new insulation, etc.) but the commercial entity is not directly connected to the roof (e.g. the residential floors are above the commercial floors), it may be able to use C-PACE financing. To be eligible for C-PACE financing, the commercial portion of the building must be separately titled from the residential portion of the building, which could be accomplished by a subdivision of the building or creation of a condo. As a result, the two portions will have separate OPA Account numbers. (Both portions may have the same owner.) To use C-PACE financing for roof work, the roof must be included in the title for the commercial portion of the building.

If the commercial entity in a mixed-use building wants to use C-PACE to finance a solar array on the building roof, but the commercial entity is not directly connected to the roof (e.g. the residential floors are above the commercial floors), it may be able to use C-PACE financing. To be eligible for C-PACE financing, the commercial portion of the building must either: 1) have title to the roof as described above, or 2) enter into an appurtenant easement agreement (that runs with the title of the commercial portion) with the residential portion of the building giving the commercial portion full rights and access to the roof, preferably for the life of the building, or in any event at least the useful life of the equipment, and for no shorter than the term of the C-PACE financing.

What kind of soft costs can be included in a C-PACE financing?

Eligible soft costs are those that are necessary to directly install the C-PACE project or for the C-PACE Capital Provider to perform their due diligence/underwriting. As such, eligible soft costs may include the cost of the following: Program Fees, energy or water survey, other required design and engineering, project development fees, permit fees, surveys, legal fees, other third-party reports, inspection fees, financing fees, fees associated with the issuance of bonds for the financing, any required reserves deposits, recordation fees, capitalized interest and commissioning. The applicant may request consideration of additional soft costs not listed above.

Property Owners

What are the benefits of using C-PACE for my project?

  • C-PACE financing can cover 100% of hard and soft costs, which limits upfront cash out of pocket.
  • Many C-PACE projects result in utility bill savings that exceed the annual C-PACE repayment amount, producing positive net operating income.
  • Competitive interest rates are especially helpful for displacing mezzanine debt and equity
  • Long financing terms (up to 30 years) can allow Property Owner to match project payback period to useful life
  • Under certain leases, building owner can pass through C-PACE repayment obligation to tenants
  • If sale of property occurs, C-PACE repayment obligation transfers to the new owner

How do I find a C-PACE Capital Provider?

Philadelphia C-PACE operates an “open market” program so that Property Owners can select their preferred C-PACE Capital Provider. The open market model gives eligible Property Owners access to a range of private C-PACE Capital Providers that offer competitive rates and financing terms and conditions. Please visit the Capital Providers List page for more details on firms registered as C-PACE Capital Providers in Pennsylvania.

How do I find a firm to perform an energy survey for my project?

The Pennsylvania C-PACE Statute states that a “program shall require for each proposed qualified project a scope of work, energy baseline or water usage baseline, and the projected energy savings or water usage reductions in order to establish the viability of the qualified project and the projected energy savings or water usage reductions.”

To implement this provision, Philadelphia C-PACE program requires that a Property Owner obtain an Energy Conservation Measures (ECM) Survey performed by a Qualified Engineering Professional.

Recognizing that not all Property Owners are familiar with Qualified Engineering Professionals capable of producing an ECM Survey, the Program Administrator compiled a list of firms who self-certified their credentials (accessible on the Engineers List page).

Please note the Program Administrator does not verify, vet, endorse, or rank Qualified Engineering Professionals.

Capital Providers

What are the minimum and maximum financing amounts allowed in the Philadelphia C-PACE Program?

The minimum financing amount in the Philadelphia C-PACE program is $100,000. Smaller projects may be considered on a case-by-case basis at the discretion of the Program Administrator and may be subject to additional diligence requirements.

There is no absolute maximum financing amount, however there are two limitations that apply. First, the amount financed cannot exceed the sum of hard and soft costs of the C-PACE project. Second, the C-PACE financing amount, when combined with existing mortgage and other lien obligations, shall not exceed 95% of the assessed or appraised value of the property. New construction and gut rehab projects may use post-construction appraised value.

What kind of soft costs can be included in a C-PACE financing?

Eligible soft costs are those that are necessary to directly install the C-PACE project or for the C-PACE Capital Provider to perform their due diligence/underwriting. As such, eligible soft costs may include the cost of the following: Program Fees, energy or water survey, other required design and engineering, project development fees, permit fees, surveys, legal fees, other third-party reports, inspection fees, financing fees, fees associated with the issuance of bonds for the financing, any required reserves deposits, recordation fees, capitalized interest and commissioning. The applicant may request consideration of additional soft costs not listed above.

Does the Philadelphia C-PACE Program have a savings-to-investment ratio (SIR) requirement?

No, the Philadelphia C-PACE Program does not have an SIR requirement. All C-PACE projects must generate measurable energy savings or reductions in water usage according to the Pennsylvania C-PACE Statute (accessible on the Program Resources page). But Capital Providers do not have to size the financing amount based on the expected savings of the project.

When are C-PACE assessments paid?

The C-PACE program and C-PACE Special Assessment payment schedule follow the City of Philadelphia’s real estate taxes and enforcement schedule.

As such, PEA will invoice the Property Owners in December of each year. The payments will be due on March 31 of the following calendar year, in line with the City’s property tax payment schedule. PEA has engaged a paying agent to collect payments and remit funds to the Capital Providers. The paying agent distributes funds on the 1st and 15th of each month.

Any unpaid assessments as of April 1 are considered past due and subject to a 1.5% penalty per month. In the January following the missed payment, PEA can pursue a lien on properties with overdue C-PACE Special Assessment payments from previous calendar year.

In the event the City changes its real estate tax schedule in a given year, the C-PACE repayment schedule will change accordingly.

How does PEA enforce a lien on a property with a delinquent C-PACE assessment payment?

In the event the Property Owner fails to make the C-PACE Special Assessment payment, funds recovered either from delinquent payment by Property Owner or in the event of a Sheriff’s sale shall be paid to the Capital Provider (up to the amount owed). The process for pursuing a Sheriff’s sale is described in the Lien Enforcement Memo (accessible on the Program Resources page).

Pursuant to the Philadelphia C-PACE Statute and the Statement of Levy and Lien Agreement, in any action to collect delinquencies owed to the Capital Provider, the proceeds of any sale of the property are first to be distributed to pay any outstanding municipal liens before the Capital Provider recoups its debts.

Engineers

Which certifications or licenses make a firm eligible to perform ECM Surveys in the Philadelphia C-PACE Program?

All ECM Surveys for Energy Efficiency Improvements and/or Water Conservation Projects must be prepared and submitted by a Qualified Engineering Professional who holds at least one of the following certifications or licenses:

• Certified Building Energy Assessment Professional (BEAP)
• Certified Energy Auditor (CEA)
• Certified Energy Manager (CEM)
• Certified High-Performance Building Design Professional (HBDP)
• Certified Measurement and Verification Professional (CMVP)
• Licensed Professional Engineer (P.E.)
• Investor Confidence Project (ICP) Quality Assurance Assessor
• Investor Confidence Project (ICP) Project Developer
• Certified Passive House Consultant (CPHC)

Can the cost of the ECM Survey be included in the C-PACE financing amount?

Yes, the ECM Survey is a soft cost eligible for inclusion in the C-PACE financing. For more information on eligible soft costs, see Section 4.4.1 of the Program Guidelines (accessible in the Program Resources page).

How should I establish the baseline and expected savings in a new construction project?

The ECM Survey for a new construction project may demonstrate expected energy and/or water savings over this baseline in one of two ways:

• New construction ECM Surveys may itemize energy- or water-related measures and describe each ECM’s characteristics. The Survey must provide supporting documentation showing the extent to which each ECM exceeds minimum code requirements using the prescriptive path to code compliance per the 2018 IECC.
• New construction ECM Surveys may demonstrate overall savings on a whole building level, following a methodology consistent with ASHRAE 90.1 Appendix G guidelines. Estimated whole-building energy savings above the minimum baseline should be calculated using a DOE-approved building energy modeling software or detailed engineering calculations. Building-level savings calculations shall state the building’s total anticipated performance that is better than the building code (baseline) with a summary percentage of the performance of the whole building that is above the code baseline.

Developers

How can a new construction building qualify for C-PACE financing?

New construction projects that exceed the minimum code requirements in Philadelphia (IECC-2018) are eligible for C-PACE Financing. One hundred percent (100%) of the cost of the outlined ECMs will be eligible, including soft costs.

The ECM Survey for a new construction project may demonstrate expected energy and/or water savings over this baseline in one of two ways:

• New construction ECM Surveys may itemize energy- or water-related measures. The ECM Survey must describe each ECM’s characteristics and provide supporting documentation showing the extent to which each ECM exceeds minimum code requirements using the prescriptive path to code compliance per the 2018 IECC. One hundred percent (100%) of the C-PACE Project Costs of each water or energy-related measure that demonstrably exceeds minimum code requirements can be financed through C-PACE.
• New construction ECM Surveys may demonstrate overall savings on a whole building level, following a methodology consistent with ASHRAE guidelines. Estimated whole-building energy savings above the minimum baseline should be calculated using a DOE-approved building energy modeling software or detailed engineering calculations. Building-level savings calculations shall state the building’s total anticipated performance that is better than the building code (baseline) with a summary percentage of the performance of the whole building that is above the code baseline. One hundred percent (100%) of the C-PACE Project Costs of all water or energy-related measures in new construction projects that demonstrate a whole-building summary performance above the minimum code baseline are financeable through C-PACE.

Can mixed-use new construction or gut rehab projects also use C-PACE financing?

For new construction projects or gut rehabs of mixed-use buildings, C-PACE can be used on the commercial portion of the building if the building has separate OPA Account numbers for its residential and commercial components. If a property owner currently has a mixed-use building with one OPA Account number, please contact the Philadelphia Office of Property Assessment to learn how to obtain separate OPA Account numbers for the commercial and residential portions.

C-PACE projects that are in the commercial portion of the mixed-use building and exclusively serve the commercial occupants are eligible for C-PACE funding under the Philadelphia program.

C-PACE projects that are physically located within the commercial portion and partially serve the commercial portion but also partially serve the residential/multifamily portion of the building are also eligible for C-PACE financing.  In this instance, the cost of the C-PACE project should be apportioned in accordance with the percentage of the project’s output or efficiency being used by the commercial tenant compared to the total output or efficiency of the project. Property Owners may choose to do this allocation based on square footage or some other defensible measure. For example, in the case where 40% of the output from an HVAC system installed in the commercial portion of a mixed-use building is used by the commercial tenant and 60% of the HVAC system’s output is used by the residential tenants, then 40% of the cost of the HVAC system would be C-PACE-eligible because it is serving the commercial tenant and located in the commercial space.

Systems that are located in the residential space and serve the commercial and residential tenants are not eligible for the Philadelphia C-PACE program because the commercial property owner would not have the ability to do an assessment-based financing on the portion containing the installed system. For example, if a mixed-use building’s HVAC system is located in the residential portion, it is not C-PACE eligible. However, any ductwork and other system components that are located in and serve the commercial space are eligible.

Please see Section 4.1 of the Program Guidelines (accessible on the Program Resources page) for more information about determining the eligible C-PACE Project Costs.

Can an energy efficiency roof or rooftop solar project be eligible for C-PACE in mixed-use buildings?

If the commercial entity in a mixed-use building wants to use C-PACE to finance an energy-efficient roof (roof replacement, green roof, new insulation, etc.) but the commercial entity is not directly connected to the roof (e.g. the residential floors are above the commercial floors), it may be able to use C-PACE financing. To be eligible for C-PACE financing, the commercial portion of the building must be separately titled from the residential portion of the building, which could be accomplished by a subdivision of the building or creation of a condo. As a result, the two portions will have separate OPA Account numbers. (Both portions may have the same owner.) To use C-PACE financing for roof work, the roof must be included in the title for the commercial portion of the building.

If the commercial entity in a mixed-use building wants to use C-PACE to finance a solar array on the building roof, but the commercial entity is not directly connected to the roof (e.g. the residential floors are above the commercial floors), it may be able to use C-PACE financing. To be eligible for C-PACE financing, the commercial portion of the building must either: 1) have title to the roof as described above, or 2) enter into an appurtenant easement agreement (that runs with the title of the commercial portion) with the residential portion of the building giving the commercial portion full rights and access to the roof, preferably for the life of the building, or in any event at least the useful life of the equipment, and for no shorter than the term of the C-PACE financing.

Mortgage Holders

Why should your Financial Institution consent to the C-PACE Special Assessment?

Projects financed through C-PACE generally reduce building operating costs and therefore increase a property’s collateral value. Under the Philadelphia C-PACE eligibility requirements, a proposed project must include a scope of work, an energy baseline or water usage baseline, and the projected energy savings or water usage reductions. A third party Qualified Engineering Professional will confirm the energy savings assumptions prior to closing the financing. Lower operating costs typically raise a property’s value, improving its collateral value for your Financial Institution’s mortgage.

C-PACE payments do not accelerate. In the event a mortgage holder or lienholder forecloses on the property for any reason, only the C-PACE payments currently due and in arrears would be payable, which is likely a relatively small proportion of the total amount financed. In the event of a property sale, the remaining C-PACE Financing runs with the land and would be paid by the new property owner as property taxes are due.

Projects financed through C-PACE often reduce maintenance and repair costs, and improve a building’s health and comfort, making it more attractive to tenants and future owners.

Have other financial institutions already consented to C-PACE financings?

Yes, over 200 financial institutions nationwide have already consented to C-PACE financings. Please see the Lender Consent Guide on the Program Resources page for more information.

Is there a form of Mortgage Holder consent?

Applicants are welcome to use their own Mortgage and lienholder notice and consent forms, but PEA has provided templates. Please see Appendix J of the Program Guidelines (accessible on the Program Resources page).