Among the topics on the agenda for Connect Investment & Finance, taking place Oct. 6 at the Hyatt Regency O’Hare in Rosemont, IL, will be green financing in its various forms. Within the universe of green financing options for commercial real estate properties, C-PACE (Commercial Property Assessed Clean Energy) is among the best known. It’s also frequently misconstrued, in the experience of CRE finance veteran Ed Wlodarczyk, VP of originations with PACE Loan Group, who will be one of the panelists on the green financing session. 

“There’s a lot of misunderstanding of how we work,” Wlodarczyk told Connect CRE. “Many brokers think we’re going to write a check along with senior debt at closing. That’s not what happens. On new construction, we basically are a draw, just like construction lenders. We’re not going to do what private equity does.” 

And, as Wlodarczyk points out in a white paper, that misunderstanding extends to lenders, as well. C-PACE financing doesn’t displace senior lenders from their collateral poisiton, nor does it restrict secured lenders’ remedies or foreclosure rights. 

But both are misconceptions Wlodarczyk has encountered with lenders. “When we go out, the banks are looking at us saying, ‘wait a minute. You guys are going to be in front of us.’ And that’s not true.” 

Clearing up those misconceptions can put lenders at ease. “The way to get them comfortable is really sitting back and saying, ‘look, we’re here to help you. We’re mitigating risk by taking some of the risk. And at the same time, we want to work with you to protect not only your capital, but our capital and the integrity of the work.’” 

Part of why the misunderstanding about C-PACE is fairly widespread is that the industry itself is still young. It arose out of the PACE program for consumers that was established in 2009 under the Obama adminiustration. Another reason is that it’s not universally available: although a majority of states and the District of Columbia have enabled C-PACE programs in recent years, not all of those states have active programs and not all local governments have adopted them. 

However, with the passage of time and persistence in setting the record straight, Wlodarczyk is confident that those misconceptions will subside. “There’s a lot of education that that we as capital providers in the industry will need to make,” he said. 

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