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As interest rates remain elevated and capital access tightens, multifamily borrowers continue to face pressure to deliver performance while managing costs. Sal Tarsia, Managing Partner of CastleGreen Finance and their Commercial Property Assessed Clean Energy (C-PACE) platform, has more than 30 years of experience in commercial real estate and structured lending. Sal works directly with borrowers navigating today’s financing landscape and has some insights on C-PACE and how the platform continues to strengthen its place in alternative financing.
C-PACE financing is gaining unprecedented momentum, with 2025 shaping up to be a record-breaking year for the structure. Over the past five years, C-PACE loan volume has grown at an average annual rate of 50%, and in 2024 alone, nearly $2.6 billion in C-PACE financing was closed, almost a quarter of the total $10 billion originated since the program’s inception. Industry experts predict that originations could surpass $3 billion this year, fueled by increasing deal sizes (the average deal rose from $5.6 million in 2022 to $11.4 million in 2024) and broader institutional adoption.
We sat down with Sal recently to get his overall take on the trajectory of C-PACE and then focused on how multifamily investors are leveraging the platform for their financing strategy.
Why do you think we are seeing this surge in C-PACE financing?
The surge in C-PACE financing isn’t surprising, it’s the result of a perfect storm of market conditions and evolving awareness. With interest rates still elevated and traditional bank lending remaining tight, developers are looking for capital that’s both flexible and affordable. C-PACE delivers on that with long-term, fixed-rate, non-recourse financing that’s tied to the property, not the borrower.
At the same time, awareness is growing. More developers, brokers, and even lenders are becoming familiar with how C-PACE works and how it can be layered into the capital stack. And with more states enabling or expanding C-PACE programs, accessibility is increasing across the country.
We’re also seeing a shift in how senior lenders view C-PACE. Historically, many were skeptical, but that’s changing. As education improves and more deals successfully close with C-PACE in the mix, senior lenders are becoming more comfortable with the structure and protections built into the programs. That’s helping unlock even more opportunities for borrowers.
With the commercial real estate market demanding more creative capital solutions—especially for adaptive reuse, energy efficiency, and resiliency— C-PACE is filling critical financing gaps that other sources can’t or won’t cover. It’s not just a niche tool anymore. It’s becoming a mainstream strategy for multifamily and beyond, and its role is only expected to grow from here.
What are some current advantages of using C-PACE financing for multifamily development?
Right now, C-PACE is becoming a useful tool for multifamily projects. One of the best features is its flexibility. You can use it at different stages of projects from ground-up construction to developments that get stalled by cost overruns and delays, to renovation projects, and even for recapitalization of completed projects.
C-PACE can be used for energy efficiency and resiliency components that are likely already included in property owners’ budgets, providing a valuable financing option without the need to jump through too many hoops that usually come with public-private partnership programs. The big benefits are lower-cost, long-term, fixed rate, financing and non-recourse terms, which spread costs over a longer period. Repayment is tied to property taxes, making it easier to manage and allowing it to be freely transferred from owner to owner.
It’s also helpful for filling financing gaps, especially in tighter market conditions. The designs to reduce energy costs over time create a compensating effect relative to the associated financing costs, something other tools don’t do.
What are the most promising opportunities and legislative measures related to C-PACE programs and lending terms, and how could they potentially affect multifamily?
We’re seeing some programs expand eligible improvements to include resiliency measures. Projects with flood, wind, and seismic mitigation components are now being included. Minnesota made significant changes last year by extending the maximum financing term from 20 to 30 years and increasing the loan-to-value ratio from 20% to 30%. States like Colorado have broadened what qualifies for C-PACE to include building resiliency improvements and water conservation projects. This gives multifamily developers the potential for additional funding coupled with longer repayment terms.
New states like Idaho, North Carolina, Hawaii, and Georgia have recently passed laws enabling local governments to establish C-PACE programs. These newer programs are being designed with broader eligibility to reflect geographic and weather-related challenges.
These changes are making C-PACE an even more attractive option. With expanded eligibility, longer terms, and higher loan-to-value ratios, owners can finance a larger portion of their projects. It remains, and is becoming, an even better tool for filling gaps in the capital stack, especially with traditional lending still tight. C-PACE helps offset high interest rates and uses fixed rates to limit exposure to market fluctuations.
“More developers, brokers, and even lenders are becoming familiar with how C-PACE works and how it can be layered into the capital stack. And with more states enabling or expanding C-PACE programs, the accessibility is increasing across the country.”
In the current financing environment, what are the most effective ways of utilizing the funds, and how does the type of multifamily project being financed and developed influence these decisions?
There are various ways it is being used. Owners are using it to offset the overall cost of capital for projects with eligible improvements. Upwards of 35% of their stabilized property value can be financed using C-PACE. Others use it as a value-add strategy to improve their property while reducing operational costs.
With program expansions now covering resiliency upgrades, including wind or flood mitigation in areas prone to such disasters, in addition to continued expansion of seismic shoring in earthquake zones, strong benefits are available to multifamily owners. It improves energy efficiency and enhances public safety. One of the best attributes of C-PACE is flexibility. Owners can use it pre-, mid-, and post-construction. Most states have lookback features of one to three years for completed improvements, allowing access to C-PACE financing without refinancing the full capital stack.
As of late, what are the most often funded sustainability measures, and what do you attribute their funding to? What are some of the advantages of subsidizing them with C-PACE financing?
Multifamily properties are abundant in eligible sustainability measures, both for new construction and upgrades. Windows, roofs, and HVAC systems are typically big-ticket items in new developments and major renovations. In moderate renovations, even though kitchen appliances aren’t eligible, replacing old lighting with new LED fixtures, completing related electrical work, installing low-flow features, upgrading insulation, and adding solar panels are common.
These are all eligible for C-PACE financing. Many of these items, particularly lighting, low-flow features, and renewables, have a relatively short payback period in terms of energy savings. Using C-PACE spreads payments over a longer timeframe than their actual equity payback period, which benefits return on investment.
Are there any acute challenges associated with using C-PACE financing to fund improvements and ground-up developments?
The most significant challenge is awareness. Awareness among mortgage brokers is spreading quickly as disruptions like COVID, Fed rate hikes, and inflation have pushed the brokerage community to look for alternative capital sources like C-PACE. This helps bring the message to developers and property owners.
However, progress in educating first mortgage lenders, especially banks, has been slower. There are still irrational fears about the product. While C-PACE isn’t a one-size-fits-all solution, it’s highly predictable for first mortgage lenders to underwrite, and statutes contain meaningful protections for them. As education expands through conferences, forums, direct conversations, and articles like this one, acceptance continues to grow each year.
Q: What do you think the future of C-PACE financing looks like?
C-PACE is extremely popular among property owners and mortgage brokers. In my experience, demand from borrowers drives acceptance and tends to overcome other obstacles. This will fuel the continued adoption of C-PACE as a mainstream commercial real estate financing option for developers and owners looking to improve aging properties.
The industry continues to collaborate with states and municipalities to improve programs and apply best practices that make them more user-friendly. Moving forward, the growth of the industry will depend on three factors: awareness among brokers and users, education among first mortgage lenders, and continued expansion of geographic eligibility. Together, these factors are likely to produce strong, sustained growth in industry volume.
How will the Big Beautiful Bill impact C-PACE and multifamily?
The “Big Beautiful Bill,” signed into law in July 2025, is a game-changer for multifamily developers leveraging C-PACE. One of the most impactful provisions is the reinstatement of 100% bonus depreciation, which allows property owners to immediately deduct the full cost of qualifying improvements. This aligns perfectly with C-PACE-financed upgrades—like HVAC systems, insulation, windows, and solar panels—enhancing cash flow and further accelerating return on investment.
For multifamily owners, this means that not only can they finance energy-efficient and resilient improvements with long-term, fixed-rate C-PACE capital, but they can also realize immediate tax benefits. The bill also expands Section 179 deductions and raises the SALT cap, further improving after-tax returns for developers in high-tax states.
Multifamily is one of the biggest beneficiaries of this legislation. With C-PACE already helping to fill capital stack gaps and reduce borrowing costs, the added tax advantages from the bill make these projects even more financially viable. It’s a powerful combination that supports both sustainability and profitability in today’s challenging financing environment.
Take the next step.
Talk to CastleGreen about how to optimize your multifamily capital stack. Our team can help structure a solution that reduces costs, supports long-term growth, and aligns with your project’s goals.
Learn more about Sal Tarsia and C-PACE.
