Exploring Commercial Property Assessed Clean Energy (C-PACE) Financing in Ontario

Since June 2025, announced as part of the Province’s Spring 2025 Red Tape Reduction Package, the government has been exploring the feasibility of potentially enabling new municipally administered financing arrangements for clean energy projects. To support this initiative, the government is seeking your feedback on a potential implementation framework for Commercial Property Assessed Clean Energy (C-PACE) financing. 

C-PACE financing is an optional financial mechanism that enables commercial property owners to fund energy efficiency, renewable energy, and water conservation upgrades through private loans that are typically recovered through a property assessment imposed by local governments.

Municipalities have the option to facilitate eligible improvements on private properties and levy a local improvement charge to recover the associated costs. This charge can be added to the property tax roll, and once added, those charges are a special lien on the property. However, this does not apply to private financing that is provided directly to property owners for works undertaken by the property owners.

A potential approach to a C-PACE framework in Ontario could include:

Eligible Properties and Projects

• Eligible properties for C-PACE financing would be limited to commercial, industrial, multi-residential, manufacturing, hotel, and retail uses. This includes:
• Residential condominium buildings during their development phase, but prior to transfer of the individual units to the unit buyers.
• Purpose-built rental apartments.
• Office to residential conversions.
• The C-PACE loans must be for energy efficiency, renewable energy, and water conservation upgrade projects.

Municipal Role

• Municipal participation would be voluntary and at the discretion of the municipality who would have to opt-in, typically through a municipal by-law, for the C-PACE to be enabled in their community.
• The government is seeking feedback on whether participating municipalities should collect agreed-upon loan payments on behalf of C-PACE lenders in the same manner as property taxes, with these amounts secured through a special lien on the property, similar to property taxes. 

Arrangements with Eligible Lenders

• The arrangements entered into between C-PACE lenders and property owners would be considered private agreements and flexibility would be provided for lenders and property owners to enter into these arrangements (i.e., arrangements would not be regulated beyond existing requirements for lenders).
• However, these arrangements would need to provide for property owners the ability to repay some or all of the outstanding loan at any time without penalty.
• In addition, these arrangements would be subject to a maximum loan to appraised property value ratio of 35% to limit the financing amount that could be undertaken.

Existing Lender Consent

• A requirement that existing lenders (i.e., existing mortgagee and other lenders that have an interest in the property) provide consent to the property owner, prior to a property owner participating in the arrangement.

Discussion Questions:

1. To what extent should municipalities be involved in these arrangements (e.g., approving the arrangements with an administration role, not involved in administration)?
2. Should arrangements between C-PACE lenders and property owners be regulated? If so, how should they be regulated, and should lenders be pre-qualified to provide these loans in Ontario?
3. Is the list of eligible properties appropriately scoped for this type of arrangement?
4. Are the project types appropriate for such arrangements?
5. Is the list of limitations appropriate, or are there other limits the government should consider to safeguard the use of these arrangements?
6. Should there be a mechanism to enforce repayment in the case of default?

We welcome your feedback on the contents of this proposal. 

Analysis of Regulatory Impact:
As the Ministry of Municipal Affairs and Housing is currently seeking feedback on a potential policy, and no legislative or regulatory amendments have been proposed at this time, an analysis of impacts has not been finalized. 
Should the government decide to proceed with potential changes, an analysis of regulatory impacts will be made available.