CPACE Property Evaluation 2 — Questions and Answers
Question 1: When conducting a CPACE property evaluation, which document most directly establishes the baseline energy consumption before improvements?
- Property tax assessment records
- Utility bills from the prior 12–24 months (Correct answer)
- The county parcel map
- Mortgage origination documents
Correct answer: Utility bills from the prior 12–24 months
Utility bills from the prior 12–24 months establish the baseline energy or water consumption used to project savings from CPACE-funded improvements.
Question 2: A CPACE lender orders a Property Assessed Value report. What is the PRIMARY purpose of this report in the underwriting process?
- Verify the property's zoning classification
- Confirm the property generates sufficient assessed value to support the CPACE lien (Correct answer)
- Determine the owner's personal credit score
- Set the repayment term length
Correct answer: Confirm the property generates sufficient assessed value to support the CPACE lien
CPACE financing is underwritten against the property's assessed value, so lenders confirm there is adequate value to secure the special tax assessment.
Question 3: Which metric is typically used to express the relationship between projected annual energy savings and annual CPACE assessment payments?
- Loan-to-Value Ratio (LTV)
- Savings-to-Investment Ratio (SIR) (Correct answer)
- Net Operating Income (NOI)
- Debt Service Coverage Ratio (DSCR)
Correct answer: Savings-to-Investment Ratio (SIR)
The Savings-to-Investment Ratio (SIR) compares projected annual savings to the annual cost of the CPACE assessment, confirming economic viability.
Question 4: An energy auditor classifies a commercial building as ASHRAE Level 2. What does this signify for the CPACE property evaluation?
- Only visual inspection of building systems was conducted
- A detailed energy analysis with capital cost estimates was performed (Correct answer)
- The building passed federal energy code compliance
- Renewable energy generation was measured on-site
Correct answer: A detailed energy analysis with capital cost estimates was performed
An ASHRAE Level 2 audit provides detailed engineering analysis and capital cost estimates for recommended energy conservation measures.
Question 5: How does a senior mortgage lender's consent requirement affect the CPACE property evaluation timeline?
- It eliminates the need for an independent energy audit
- It can delay closing if the lender requires additional property appraisal or legal review (Correct answer)
- It automatically increases the eligible CPACE amount
- It removes the property from the tax roll during review
Correct answer: It can delay closing if the lender requires additional property appraisal or legal review
Many states require senior lender consent before a CPACE lien can be placed, and the lender's review process can extend the overall evaluation and closing timeline.
Question 6: In CPACE underwriting, what does 'improvement-to-value' (ITV) ratio measure?
- The ratio of construction cost to projected energy savings
- The CPACE financing amount divided by the assessed value of the property (Correct answer)
- The percentage of the building improved by the project
- The ratio of grant funding to total project cost
Correct answer: The CPACE financing amount divided by the assessed value of the property
ITV measures the CPACE loan amount as a fraction of the property's assessed value, similar to LTV in conventional lending, and most programs cap it at 10–25%.
Question 7: A commercial property owner wants to include a rooftop solar PV system in a CPACE application. Which element of property evaluation is MOST critical for sizing the system?
- The age of the building's HVAC system
- The property's electricity load profile and roof structural capacity (Correct answer)
- The owner's federal tax credit eligibility
- The municipality's property tax rate
Correct answer: The property's electricity load profile and roof structural capacity
Proper solar sizing depends on the building's electricity consumption load profile and whether the roof structure can support the panels.
CPACE Property Evaluation 2
When conducting a CPACE property evaluation, which document most directly establishes the baseline energy consumption before improvements?