CPACE Financing Structure and Repayment Terms 3

Question 1

Which financial metric is most commonly used to determine the maximum PACE financing amount relative to property value?

Accepted Answer

Loan-to-Value (LTV) ratio

Answer

Most PACE programs cap financing at a percentage of the property's appraised value, typically 10–25%, using an LTV-style test.

Question 2

What is the term for the annual PACE repayment amount divided by the expected annual energy cost savings?

Accepted Answer

Savings-to-Investment Ratio (SIR)

Answer

The Savings-to-Investment Ratio measures whether annual energy savings are sufficient to cover the annual PACE payment, a key underwriting benchmark.

Question 3

When a property's PACE assessment is transferred to a new owner, which action must typically occur?

Accepted Answer

The existing PACE assessment is automatically assumed with the property purchase

Answer

PACE assessments transfer automatically with property ownership because the obligation is tied to the land, not the borrower.

Question 4

Which type of interest rate structure is most common in commercial PACE financing?

Accepted Answer

Fixed rate for the full term

Answer

Commercial PACE assessments almost universally carry a fixed interest rate set at origination, providing payment certainty over the full term.

Question 5

Under most commercial PACE programs, what is the minimum eligible project cost threshold?

Accepted Answer

$100,000

Answer

Most commercial PACE programs set a minimum project size of approximately $100,000 due to the administrative costs of establishing a recorded assessment.

(CPACE) Commercial Property Assessed Clean Energy Practice Test

(CPACE) Commercial Property Assessed Clean Energy Practice Test

CPACE Financing Structure and Repayment Terms 3