C-PACE is state-authorized financing for energy, water and resiliency improvements to commercial property, repaid through an assessment on the property rather than a conventional loan payment. It can sit in an Opportunity Zone project's capital stack wherever a state and locality have a program, but as of October 2026 OZ status neither qualifies nor disqualifies a project. The rules are set state by state, so this page reads one statute, Florida's, closely.
How C-PACE works
A state statute authorizes local governments, or entities they authorize, to finance listed improvements and to levy an assessment on the improved property to repay it. Because the obligation is an assessment attached to the property, any mortgage lender on the property has a direct interest in it. That is why statutes address lender consent.
What qualifies, how long the term can run, and what underwriting is required all differ by state. Check the statute and local program before planning around C-PACE.
A worked state example: Florida
Florida amended its program in 2024 (ch. 2024-273). The provisions below were read in the 2026 Florida Statutes on October 30, 2026.
| Provision | What it says | Why it matters |
|---|---|---|
| Commercial property (163.08(1)) | Real property other than residential, including multifamily with five or more units and commercial, industrial or agricultural property | Most OZ apartment, mixed-use and commercial projects fall on the commercial side |
| Qualifying improvements (163.08(4)(b)) | Waste system, resiliency (roofs, flood and wind mitigation), energy efficiency, renewable energy and water conservation improvements; "installing or constructing" improvements is covered | Only these items can be financed; other construction costs need other capital |
| Local authorization (163.082(1)(a)) | A program may operate only where the county or city has authorized it by ordinance or resolution | A site in an OZ may still have no program |
| Repayment (163.082(1)(e)) | Special assessments collected with the property tax bill under s. 197.3632 | Payments run through the property tax bill |
| Lender consent (163.082(3)) | Written consent of current mortgage holders or servicers before the financing agreement is signed | The senior lender must agree; build this into the loan negotiation |
| Underwriting findings (163.082(4)(a)) | Sufficient resources to finish the project; taxes current; no involuntary liens over $5,000; no recent recorded defaults; current on mortgage debt; not in bankruptcy | A sponsor needs clean title and payment history at the time of application |
| Term (163.082(4)(a)6.) | No longer than the weighted average useful life of the main financed improvements, and never more than 30 years | The term follows the improvements' useful life, so it can outlast a construction loan |
| Marketing limits (163.085(1)) | Program parties may not imply it is government assistance or free, and may not make representations about tax deductibility | Tax questions go to the owner's tax adviser, not the program |
How C-PACE meets the OZ tests
C-PACE does not change any OZ rule, but it touches three of them.
- Substantial improvement. An existing building is substantially improved only if additions to its basis exceed its adjusted basis within a 30-month period after purchase (50 percent in an entirely rural zone). C-PACE-funded roofs, mechanical systems or resiliency work may be part of those additions; confirm the tax treatment with an adviser.
- Investor benefit. C-PACE is not equity. Only an investor's cash investment of eligible gain in a QOF gets the deferral and exclusion (IRC 1400Z-2(e)(1)).
- 2018 zones after 2026. A business in a 2018 zone can keep buying replacement property in the ordinary course after 2026, and the IRS examples include replacement windows, appliances, fixtures and flooring. Expansions do not qualify. C-PACE-financed upgrades on an existing 2018-zone building may fall on either side of that line; see the transition rules.
Where it sits in the stack
C-PACE usually funds a defined slice of the budget, the qualifying improvements, alongside a senior mortgage, QOF equity and sponsor equity. Because Florida and other states require the mortgage lender's consent, the senior lender and the C-PACE provider negotiate how the two obligations sit together. See the OZ capital stack for the full layering.
What to prepare
- The property address, tract and zone status, and the local program, if any.
- A scope of qualifying improvements with costs and useful lives, often supported by an energy or engineering study.
- Title, tax payment and mortgage payment history.
- The senior lender's position on consent.
Janover Capital LLC arranges commercial real estate loans and can review how C-PACE fits with a senior loan. It is not a lender, a C-PACE program administrator, a fund sponsor or a broker-dealer. Send details through the financing form or to desk@janover.co; the desk usually responds within one business day.
Common questions
What is C-PACE?
Commercial Property Assessed Clean Energy, or C-PACE, is financing that a state allows local governments to offer for qualifying improvements to commercial property. It is repaid through an assessment on the property, collected with the property tax bill, rather than as an ordinary loan payment. Each state's statute sets its own rules.
Can C-PACE be used on an Opportunity Zone project?
Where a state and locality have authorized a program, C-PACE can fund the qualifying improvements its statute lists, whether or not the property is in an Opportunity Zone. OZ status does not make a project eligible or ineligible for C-PACE.
Does a mortgage lender have to approve C-PACE?
In Florida, yes. Section 163.082(3) requires the written consent of the current holders or servicers of any mortgage on the commercial property before the financing agreement is signed. Other states set their own consent rules.
Does C-PACE spending count toward the substantial improvement test?
The substantial improvement test counts additions to the building's basis within a 30-month period. Capitalized improvements funded with C-PACE may add to basis like other improvements, but how an assessment-financed improvement is treated for tax purposes is a question for the project's tax adviser.