CPACE CPACE Market Development and Transactions 2

Question 1

What is a CPACE 'assessment bond' or 'C-PACE bond'?

Accepted Answer

A fixed-income security backed by the CPACE tax assessment lien, sold to investors to raise project capital

Answer

A CPACE bond is a fixed-income security whose repayment is secured by the tax assessment lien on the commercial property, sold to institutional investors to fund the project.

Question 2

Which of the following best describes the typical term length for a CPACE financing?

Accepted Answer

5 to 30 years, aligned with the useful life of the improvements

Answer

CPACE financing terms typically range from 5 to 30 years, structured to match the useful life of the installed improvements so that owners pay during the period they benefit.

Question 3

Why are hotels and hospitality properties considered attractive candidates for CPACE financing?

Accepted Answer

Hotels have high energy consumption, significant improvement potential, and long useful-life assets

Answer

Hotels are attractive CPACE candidates because their high energy usage creates large savings opportunities, and their long-lived physical assets align well with CPACE's extended terms.

Question 4

What does 'seasoning' refer to in the context of a CPACE assessment bond's performance?

Accepted Answer

The track record of on-time assessment payments over time that builds investor confidence

Answer

Seasoning refers to the payment history of a CPACE assessment over time — a bond with several years of on-time payments is considered more creditworthy by investors.

Question 5

What is the typical security priority of a CPACE assessment relative to a first-position commercial mortgage in a foreclosure scenario?

Accepted Answer

CPACE, as a tax assessment lien, is senior to or pari passu with the first mortgage depending on state law

Answer

Because CPACE assessments are structured as tax liens, they are typically senior to or equal with first mortgage debt depending on the specific state's enabling legislation.

(CPACE) Commercial Property Assessed Clean Energy Practice Test

(CPACE) Commercial Property Assessed Clean Energy Practice Test

CPACE CPACE Market Development and Transactions 2