CPACE CPACE Stakeholders and Participants 2

Question 1

What is the typical minimum credit requirement for a property owner to qualify for CPACE financing?

Accepted Answer

Demonstrated property equity and debt service coverage from the property

Answer

CPACE underwriting focuses on property equity and the property's ability to service the assessment debt, not the owner's personal credit score.

Question 2

Which investor type most commonly purchases CPACE bonds in the secondary market?

Accepted Answer

Institutional investors such as insurance companies and pension funds

Answer

Insurance companies and pension funds are common buyers of CPACE bonds because they offer long-term, predictable, tax-lien-secured cash flows.

Question 3

What obligation does a property owner's tenant generally NOT have regarding a CPACE assessment?

Accepted Answer

Directly repaying the CPACE assessment obligation

Answer

The CPACE assessment is the property owner's obligation as a tax lien; tenants are not directly liable for repaying the financing.

Question 4

What happens to a CPACE assessment obligation when a commercial property is sold?

Accepted Answer

The assessment transfers with the property to the new owner

Answer

Because CPACE is a tax assessment lien on the property, the obligation transfers to the new owner upon sale unless paid off at closing.

Question 5

Which government entity authorizes CPACE programs in the United States?

Accepted Answer

State governments through enabling legislation

Answer

CPACE programs must be authorized by state enabling legislation, which defines the framework for local governments to create and administer programs.

(CPACE) Commercial Property Assessed Clean Energy Practice Test