Garden State Commercial Property Assessed Clean Energy (C-PACE) Program
Preliminary draft Guidelines for the Garden State C-PACE Program are now available. Please access the draft Guidelines via the “Draft Documents” dropdown on the right-hand side of this page. Comments will continue to be accepted until further notice.
Note: The current Clean Energy Special Assessment program administered by the Department of Community Affairs (DCA) will stop accepting applications after the date NJEDA obtains its Board approval and publishes on its website all of the statutorily mandated items required to be published pursuant to N.J.S.A. 34:1B-278(a). Applications submitted prior to that date will be processed.
The Garden State Commercial Property Assessed Clean Energy (C-PACE) Program is a voluntary financing tool which allows qualifying commercial real property owners to access financing to undertake qualifying energy efficiency, renewable energy, water conservation, and resiliency improvements on their buildings and repay the investment through an additional charge/assessment similar to their real property tax bill.
Garden State C-PACE Overview
The Garden State Commercial Property Assessed Clean Energy (“C-PACE”) Program will provide a new form of financing for renewable energy, energy efficiency, water conservation, and certain types of resiliency-related improvements for New Jersey. The Program works by enabling eligible commercial, industrial, agricultural, and certain multi-family residential real property owners to access financing to undertake these kinds of improvements on their properties and repay the financing through the payment of an additional assessment to their municipality, similar to their real property tax. Projects financed through the Program will be secured by a special assessment lien on the improved real property. Like other benefit assessments, a C-PACE Assessment is a non-accelerating, senior lien secured by the property. The repayment obligation transfers automatically to the next owner if the property is sold and, in the event of default, only the payments in arrears are due, I.e., the underlying loan cannot be accelerated. In addition, the Program will require that any holder of a mortgage lien on the applicable property must consent to the C-PACE financing before it may be implemented.
Because the payment is secured by a senior lien, C-PACE projects are seen as less risky than typical loans, allowing capital providers to lend at lower interest rates than would otherwise be the case. Moreover, due to the security arrangements for the loan, capital providers are willing to extend loans that are longer in duration, typically tying the loan term to the expected life of the C-PACE project and its associated improvements. The longer loan terms result in lower periodic debt service payments, making it easier for energy efficiency, water conservation and renewable energy-related C-PACE projects to be cashflow- positive from the outset.
Assessments are a tool which municipalities levy on real estate parcels to serve valuable public purposes. C-PACE builds on a long history of using such assessments and serves a public purpose through reducing energy costs, stimulating the economy, potentially improving property valuation, reducing greenhouse gas emissions, and creating jobs. Over the past decade, C-PACE programs in more than two dozen states around the country have proven an effective tool to attract private capital into the renewable energy, energy efficiency, and resiliency markets.
Garden State C-PACE Background
In August 2021, Governor Murphy signed into law P.L. 2021, c. 201 authorizing the establishment of a C-PACE program in New Jersey. This legislation directed NJEDA to develop guidelines for Garden State C-PACE, including the standard forms of documentation to be used by program participants, and to implement, administer and oversee the Program.
Each New Jersey municipality will be able to join the Program by adopting an opt-in ordinance and entering into an agreement with NJEDA. After a municipality opts in, property owners in that jurisdiction may use the Program to finance improvements to properties located there.
Following the initial launch of the Program, the Program will be expanded to also enable C-PACE to be used in certain circumstances for the refinancing of previously implemented improvements and to fund a portion of the cost of new construction projects. The loans to support these types of financing will provide the same benefits that derive from making C-PACE loans to initially finance improvements to previously developed property.
Benefits of C-PACE
Garden State C-PACE is intended to offer multiple benefits to a broad range of stakeholders, including but not limited to property owners, municipalities, mortgage holders, capital providers and energy efficiency/renewable energy contractors.
Project Indication of Interest
While the Garden State C-PACE Program has not yet officially launched, commencing when NJEDA makes the preliminary draft documents available for public comment, prospective Garden State C-PACE project and financing participants will be invited to complete a Project Indication of Interest Form and submit it to email@example.com. Submission of an indication of interest will be voluntary and will not constitute any commitment on the part of the submitter to complete a formal application for the proposed C-PACE project or, if such an application is submitted and approved, to execute the applicable financing. Instead, these submissions are intended to assist NJEDA in gauging interest in the Program and allow staff to begin discussions with potential future applicants.
The Project Indication of Interest form will be made available in conjunction with the release of the preliminary draft documents for public comment
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