Money & Finance › Commercial real estate lending › Other ways to finance a building: seller notes, leasebacks, PACE
C-PACE: green-upgrade loans repaid on the property-tax bill
PACE since 2008 (Berkeley, CA)· Asset or instrument
Fact, law or dataA rule, statute, definition or measured number.
Financing for energy, water, seismic and EV-charging upgrades, repaid as a special assessment on the property-tax bill for up to 20–30 years.
See it on the Money & Finance map →How it works
A county or city opts into a state PACE law; a private lender funds the project; the county places an assessment on the parcel and collects installments with property taxes. Rates are fixed, roughly 6.5–8.5% in 2025, terms match the upgrades' useful life, and the debt is non-recourse and passes to a buyer on sale. Only overdue installments rank ahead of the mortgage, and most states, California included, require the mortgage lender's consent. Volume reached about $3.6 billion in 2025 (industry estimates).
Why it matters
It can fund upgrades with no money down and no new mortgage, and some net leases let the cost pass to tenants, but it adds a senior lien to the building.
Facts, rules and data
State PACE laws (California's AB 811 of 2008), county assessment rolls, PACENation and lender market reports; Berkeley's 2008 pilot was the first PACE program.
Debates and risks
Whether C-PACE upgrades deliver the promised energy savings and value over full 20–30-year terms is not yet well measured.
Connections (2)
▸C-PACE: green-upgrade loans repaid on the property-tax bill takes a tax lien that outranks Senior debt: the first-lien mortgage, paid firstFact, law or data
The connection
C-PACE is a special tax assessment, so its unpaid installments share the property-tax lien's priority, ahead of the first mortgage. Only overdue installments, not the whole balance, are senior. Because that would surprise an existing lender, California and most other states require the mortgage lender's written consent before the assessment is placed.
When and why
In states with C-PACE laws, about 40 including California; the consent is usually signed at closing.
How we know
State PACE statutes, county assessment records, and mortgage lenders' consent and acknowledgment agreements.
Debates and risks
How C-PACE liens fare when a building is foreclosed, and whether lenders should refuse consent more often, is still being tested in practice.
▸C-PACE: green-upgrade loans repaid on the property-tax bill can replace part of Construction loans and mini-permsFact, law or data
The connection
For new buildings or big renovations, developers can fund the energy, water and resiliency parts of a project, often 10–25% of total cost, with C-PACE instead of costlier mezz or equity. The construction lender makes a smaller loan, and the C-PACE financing stays on as a long fixed-rate assessment after completion.
When and why
Growing since the late 2010s in hotel, apartment and office projects in states that allow C-PACE for new construction.
How we know
Lender deal announcements, state rules allowing new-construction C-PACE, and county assessment records.
Debates and risks
How construction lenders and C-PACE lenders share control if a project stalls is still being worked out deal by deal.