Chicago Keeps PACE: Financing Sustainability Improvements in a COVID Era


Illinois Maintains PACE with Other States

As the real estate market begins to recover from the impact of COVID-19, real estate investors and owners are looking for alternative funding sources for their future projects.   Property Assessed Clean Energy (“PACE”) financing is shaping up to be one of those options. Illinois has joined 37 other states and the District of Columbia in adopting legislation to implement PACE to give owners and investors a boost in financing environmentally friendly projects and renovations. Generally, PACE programs exist for either residential (“R-PACE”) or commercial (“C-PACE”) improvements.

C-PACE in Illinois and Chicago – Nuts and Bolts

The Illinois legislature has enacted the PACE Act to allow local governments to establish PACE programs for commercial (but not residential) projects.[i][ii]  Commercial Property Assessed Clean Energy is a program that incentivizes real estate owners and investors to undertake and utilize green efforts by providing capital for sustainability projects in new and existing real estate projects.  Through C-PACE financing, governments encourage entities to invest in improvements or technologies that save energy, produce renewable energy, and/or conserve water.  In doing so, local governments create “PACE areas” and enter into assessment contracts with property owners to finance or refinance one or more green and environmentally friendly projects on properties located within the area.[iii] Asset types can range from offices and retail spaces to healthcare clinics and multifamily housing.[iv]

Currently, seven (7) Illinois counties, including Cook County, have enacted statutes and ordinances to authorize PACE financing. In doing so, the County has given the go ahead for cities like Chicago to enact their own programs and create PACE areas within their boundaries. Chicago’s program intends to provide “low-cost, long term financing for energy efficiency, sustainability and renewable energy infrastructure deployed in new or existing buildings.”[v] By providing these loans, the City intends to reduce capital costs and operational expenses for sustainable improvements.  

In Chicago C-PACE loans range from $10,000 to $100 million and include fixed interest rates of 5.5% to 7.5% for a term of up to thirty (30) years. Chicago PACE projects worth over $2 million are required to include 26% minority and 6% woman-owned contractors. The loans are available for both new and existing assets, as well as leased properties but it should be noted that if existing financing encumbers a property, the owner will need to work with their existing lender for approval.

Chicago’s C-PACE structure, like other PACE programs, utilizes property assessments, which streamlines the repayment of the PACE loan in accordance with an already established commercial property tax schedule.  This assessment is treated as a senior lien on the property and automatically transfers to a new property owner upon any sale of the property.[vi]  The program allows property owners to obtain 100% financing for eligible energy projects[vii] which may be used to finance soft costs, the cost of the product, installation, and other approved ancillary costs.


With the setback to the real estate market from the COVID-19 pandemic, the benefits that PACE financing offers provide something of a glimmer of hope.  Through C-PACE financing, Chicago hopes to have opened a viable avenue to help reverse the downturn.

With the push for better air quality, air circulation, and sanitation in buildings, C-PACE financing provides an avenue for investors and owners to finance these improvements without providing upfront capital.  The implementation of these upgrades could benefit landlords looking to attract new tenants and decrease vacancies that owners have experienced since the beginning of the pandemic.  Additionally, for many of the small and medium sized businesses that were forced to close during the pandemic, C-PACE loans could serve as a viable avenue to rebuild or to venture into something new (such as electronic vehicle charging stations[viii]).

Chicago’s investors and owners can access the program and learn more about its eligibility requirements through Loop-Counterpointe PACE. More information on the general PACE program and eligibility requirements can be obtained from the U.S. Department of Energy or PACENation.

Moving Forward

Because PACE is not a uniform program, states and municipalities differ in their application of PACE.  For example, some programs only allow the funds to be used for existing buildings while others allow it to be used for new buildings; some states require contractor guarantees of energy savings, while other states have no guarantee requirements; and some programs are available for residential projects, not just commercial.  Investors and owners, in Chicago and elsewhere, should consult with attorneys and consultants to navigate the applicable PACE program when looking to incorporate PACE funding into their projects and capital stacks.

[i] 2019 Ill. Legis. Serv, 101-169 (West).

[ii] The statute’s definition of residential does not include multifamily properties with five (5) or more units and to co-operative housing.

[iii] Supra note i.

[iv] Id.

[v] Chicago PACE, (last visited Apr. 26, 2021).

[vi] Chicago PACE, supra note v.

[vii] Id.

[viii] Sarah S. Shaw and Chauncey C. Mayfield, “Basics to Consider before You Plug in to an EV Charging Station Agreement”, Honigman (April 2021),

Kristen M. Boike is a real estate partner and Christa-Gaye L. Kerr is a real estate associate in the Chicago office of Honigman LLP.

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