CPACE Program Structure 2 — Questions and Answers
Question 1: Which entity typically administers a C-PACE program at the local level?
- A private equity firm
- A state-chartered special assessment district or program administrator (Correct answer)
- The federal Small Business Administration
- The property owner's primary mortgage lender
Correct answer: A state-chartered special assessment district or program administrator
C-PACE programs are administered through state-chartered special assessment districts or designated program administrators authorized by state enabling legislation.
Question 2: What role does a 'program administrator' play in C-PACE financing?
- They provide the actual loan capital to property owners
- They oversee program compliance, coordinate between parties, and manage the assessment process (Correct answer)
- They approve all contractor bids for eligible improvements
- They set the federal guidelines for energy efficiency standards
Correct answer: They oversee program compliance, coordinate between parties, and manage the assessment process
The program administrator coordinates between lenders, property owners, and local governments while ensuring compliance with program requirements.
Question 3: In a C-PACE transaction, who typically holds the lien on the property?
- The C-PACE lender
- The local government or assessment district (Correct answer)
- The state energy office
- The title insurance company
Correct answer: The local government or assessment district
The C-PACE assessment lien is held by the local government or assessment district, similar to a property tax lien.
Question 4: What is the typical maximum term for a C-PACE financing agreement?
- 5 years
- 10 years
- 25–30 years (Correct answer)
- 50 years
Correct answer: 25–30 years
C-PACE financing terms typically range up to 25–30 years, allowing repayment periods that align with the useful life of improvements.
Question 5: Which of the following correctly describes the 'voluntary assessment' nature of C-PACE?
- Local governments can impose C-PACE assessments on any commercial property
- Property owners opt in voluntarily; no assessment is placed without owner consent (Correct answer)
- Lenders select properties for C-PACE assessments based on creditworthiness
- State laws mandate C-PACE assessments for buildings over a certain age
Correct answer: Property owners opt in voluntarily; no assessment is placed without owner consent
C-PACE is strictly voluntary — property owners must apply and consent before any special assessment is placed on their property.
Question 6: How does a C-PACE program typically handle the transfer of the assessment obligation when a property is sold?
- The original borrower retains full repayment responsibility after sale
- The assessment obligation transfers automatically with the property to the new owner (Correct answer)
- The C-PACE balance must be paid off in full at closing
- The new owner must reapply for C-PACE financing from scratch
Correct answer: The assessment obligation transfers automatically with the property to the new owner
Like other property tax assessments, the C-PACE obligation runs with the land and transfers to subsequent property owners at sale.
Question 7: What document formally establishes the terms of a C-PACE financing and triggers the special assessment?
- A federal grant agreement
- A C-PACE assessment agreement or financing agreement recorded against the property (Correct answer)
- An unsecured promissory note signed by the borrower
- A municipal bond indenture
Correct answer: A C-PACE assessment agreement or financing agreement recorded against the property
A recorded C-PACE assessment or financing agreement is the legal instrument that establishes the special assessment lien and financing terms.
CPACE Program Structure 2
Which entity typically administers a C-PACE program at the local level?