PEA receives a lot of nuanced questions about the Philadelphia C-PACE program. Below are a few of the most common recent inquiries. As always, feel free to reach out to CPACE@philaenergy.org with any C-PACE questions you may have.
Q. How has the COVID-19 pandemic affected the Philadelphia C-PACE program?
A. As the COVID-19 situation continues to evolve, PEA recognizes that individuals and businesses are dealing with a variety of uncertainties and difficulties. PEA staff is working remotely, and the Philadelphia C-PACE program is fully operational. We’ve made some adjustments to our program administration processes to facilitate e-recording and remote closings of C-PACE deals. As always, our team is available to answer questions, review projects and process applications. Please feel free to reach out with any questions: CPACE@philaenergy.org
Q. Are multifamily properties eligible for C-PACE?
A. In Pennsylvania, residential and multifamily properties are not eligible for C-PACE financing. If you have a mixed-use property, you may use C-PACE on the commercial part of the property, as long as that part of the property has its own OPA Account number. See Sec. 4.1 of the Program Guidelines for more details.
Q. I finished an energy efficiency retrofit last year and didn’t know about C-PACE at the time. Can I refinance my project with C-PACE?
A. Yes, you can use C-PACE for retroactive financing on retrofit, gut rehab and new construction projects. The C-PACE financing must close within 730 days of project completion, and the project is subject to some additional requirements. Please see Sec. 11 of the Program Guidelines (link) for more details.
Q. Is the Philadelphia C-PACE Program similar to C-PACE programs in other parts of the state?
A. Yes. In 2018-2019, PEA partnered with the Sustainable Energy Fund, Keystone Energy Efficiency Alliance, Pittsburgh Office of Sustainability and Pennsylvania Department of Environmental Protection to help create a standard set of Pennsylvania Program Guidelines and C-PACE documents for use across the state. PEA based its Program Guidelines and application forms on these documents. The other counties with active C-PACE programs are Lebanon, Lehigh, Northampton and Wayne. They all use these standard documents as well.
Q. Can you explain how to apply C-PACE to mixed-use buildings given the restriction on using C-PACE for residential and/or multifamily properties?
A. If a mixed-use building has separate OPA Account numbers for its residential and commercial components, the commercial portion of the building is eligible for C-PACE. If a property owner currently has a mixed-use building with one OPA Account number, please contact the Philadelphia Office of Property Assessment to learn how to obtain separate OPA Account numbers for the commercial and residential portions.
C-PACE projects that are in the commercial portion of the mixed-use building and exclusively serve the commercial occupants are eligible for C-PACE funding under the Philadelphia program.
C-PACE projects that are physically located within the commercial portion and partially serve the commercial portion but also partially serve the residential/multifamily portion of the building are also eligible for C-PACE financing. In this instance, the cost of the C-PACE project should be apportioned in accordance with the percentage of the project’s output or efficiency being used by the commercial tenant compared to the total output or efficiency of the project. Property Owners may choose to do this allocation based on square footage or some other defensible measure. For example, in the case where 40% of the output from an HVAC system installed in the commercial portion of a mixed-use building is used by the commercial tenant and 60% of the HVAC system’s output is used by the residential tenants, then 40% of the cost of the HVAC system would be C-PACE-eligible because it is serving the commercial tenant and located in the commercial space.
Systems that are located in the residential space and serve the commercial and residential tenants are not eligible for the Philadelphia C-PACE program because the commercial property owner would not have the ability to do an assessment-based financing on the portion containing the installed system. For example, if a mixed-use building’s HVAC system is located in the residential portion, it is not C-PACE eligible. However, any ductwork and other system components that are located in and serve the commercial space are eligible.
Q. Are roof replacements considered energy efficiency measures in the Philadelphia C-PACE program?
A. Roof replacements are eligible under the Philadelphia C-PACE program so long as the replacements improve both the roof (membrane, coating, sealing, etc.) and the system below (insulation). In the case of new construction, the eligible roof work must exceed the baseline code requirements. In the case of a retrofit, an eligible roof replacement must result in a more efficient roof system than what is being replaced.
Q. Can an energy efficiency roof or rooftop solar project be eligible for C-PACE in mixed-use buildings?
A. If the commercial entity in a mixed-use building wants to use C-PACE to finance an energy-efficient roof (roof replacement, green roof, new insulation, etc.) but the commercial entity is not directly connected to the roof (e.g. the residential floors are above the commercial floors), it may be able to use C-PACE financing. To be eligible for C-PACE financing, the commercial portion of the building must be separately titled from the residential portion of the building, which could be accomplished by a subdivision of the building or creation of a condo. As a result, the two portions will have separate OPA Account numbers. (Both portions may have the same owner.) To use C-PACE financing for roof work, the roof must be included in the title for the commercial portion of the building.
If the commercial entity in a mixed-use building wants to use C-PACE to finance a solar array on the building roof, but the commercial entity is not directly connected to the roof (e.g. the residential floors are above the commercial floors), it may be able to use C-PACE financing. To be eligible for C-PACE financing, the commercial portion of the building must either: 1) have title to the roof as described above, or 2) enter into an appurtenant easement agreement (that runs with the title of the commercial portion) with the residential portion of the building giving the commercial portion full rights and access to the roof, preferably for the life of the building, or in any event at least the useful life of the equipment, and for no shorter than the term of the C-PACE financing.
Q. What kind of soft costs can be included in a C-PACE financing?
A. Eligible soft costs are those that are necessary to directly install the C-PACE project or for the C-PACE Capital Provider to perform their due diligence/underwriting. As such, eligible soft costs may include the cost of the following: Program Fees, energy or water survey, other required design and engineering, project development fees, permit fees, surveys, legal fees, other third-party reports, inspection fees, financing fees, fees associated with the issuance of bonds for the financing, any required reserves deposits, recordation fees, capitalized interest and commissioning. The applicant may request consideration of additional soft costs not listed above.
More questions? Feel free to contact us at CPACE@philaenergy.org.