Bass, Berry & Sims attorneys Richard Spore and Justin Starling authored an article for Commercial Property Executive offering insight on how developers in markets offering Commercial Property Assessed Clean Energy (CPACE) financing programs can integrate the program into their capital stack to finance commercial real estate (CRE) projects.
The article explored the pros, cons, requirements and restrictions of CPACE financing for qualifying environmentally-friendly developments as part of a financing strategy that also includes tax increment financing (TIFs) and payments in lieu of taxes (PILOT) programs. This included a discussion about considerations that CRE owners should look out for when identifying which projects are a proper candidate for each type of funding program, such as restrictions certain funding programs carry to not allow owners to use additional funding programs on one single project.
“As more markets introduce CPACE financing programs, developers in these markets should consider using these three funding sources as part of their capital stacks,” Richard and Justin said, discussing markets like Atlanta and Richmond, Virginia, that have recently rolled out CPACE programs. “While CPACE financing allows a CRE owner to obtain favorable nonrecourse financing for qualifying project costs using the property tax collection system, TIF and PILOT payment financing allow the CRE owner to utilize a portion of property taxes or PILOT payments to pay debt service on bonds or loans used to pay certain project costs.”
The full article, “Building Your CRE Project’s Capital Stack with Taxes,” was published by Commercial Property Executive on April 17 and is available online.