CPACE Risk Management and Underwriting 2

Question 1

In the event of a CPACE payment default, what collection mechanism is typically used?

Accepted Answer

The same tax lien enforcement process used for delinquent property taxes

Answer

CPACE assessments are collected through the property tax system, meaning default triggers the same enforcement remedies as delinquent property taxes, including potential tax sale.

Question 2

What is an 'independent technical review' (ITR) in the CPACE underwriting process?

Accepted Answer

A third-party engineering evaluation of project design, costs, and savings projections

Answer

An ITR is performed by an independent engineering firm to objectively verify that project designs are sound, costs are reasonable, and energy savings projections are credible.

Question 3

Why is an energy audit critical to the CPACE underwriting process?

Accepted Answer

It provides baseline consumption data and projected savings that underwriters rely on to assess project viability

Answer

The energy audit supplies the essential data underwriters need to evaluate whether the proposed improvements will generate sufficient savings to support the CPACE investment.

Question 4

What does 'capital stacking' mean in a CPACE financing context?

Accepted Answer

Combining CPACE financing with other sources such as equity, traditional debt, and tax incentives

Answer

Capital stacking combines multiple financing sources, with CPACE often filling a mezzanine role alongside equity, first mortgage debt, and available incentives to optimize project economics.

Question 5

What is a 'special assessment district' in relation to CPACE financing?

Accepted Answer

A defined governmental area where authorities levy special charges on properties for specific public purposes

Answer

CPACE programs use special assessment districts as the legal framework to place the CPACE charge on the property's tax bill, granting it the priority and enforceability of a tax lien.

(CPACE) Commercial Property Assessed Clean Energy Practice Test

(CPACE) Commercial Property Assessed Clean Energy Practice Test

CPACE Risk Management and Underwriting 2