NYC Expands C-PACE Program (C-PACE) to Commercial Real Estate | Morrison & Foerster LLP


The New York Treasury Department recently released one Adoption Notice a new regulation to expand the scope of the financing program C-PACE (Commercial Property Assessed Clean Energy). The amended regulation, which comes into force on November 7, 2021, has two main components: It enables the use of C-PACE financing for the installation of energy efficiency improvements in new buildings and extends the creditworthiness of long-term leaseholders.

Originally published in 2019 as part of the Comprehensive New Yorker Climate Mobilization Act (CMA), the C-PACE program is designed to help property owners reduce energy consumption and operating costs, create a healthier living environment, add value to their buildings, and comply with city legislation setting greenhouse gas emission limits for buildings within the city City. Eligibility for C-PACE funding was originally restricted to existing buildings and eligibility to receive C-PACE loans through the Sustainable Energy Loan Program (the “Program”) was restricted to landowners.

The amended regulation allows the construction of new buildings as well as the refurbishment and renovation of existing buildings to participate in the program, and the program allows loans to be granted to eligible owners of leaseholds as well as to eligible owners of fee interests.

In addition, following a public hearing and statement, the Treasury Department has changed the rule to require the approval of the fee holder if the borrower owns a leasehold under a program loan. This consent is contained in a separate agreement in which the fee holder and the C-PACE borrower address each party’s responsibility for repaying the loan.

We will continue to monitor the implementation of the expanded C-PACE program.

Alyssa Cannizzaro, a trainee lawyer in our New York office, helped draft this warning.

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