How Ontario can make C-PACE work for building owners and municipalities

Making a C-PACE program work for borrowers and municipalities must balance oversight and flexibility 

Access to a range of attractive financing options is critical to scale retrofit activity. While Ontario’s market is served by a range of retrofit financing options, there is one type of financing broadly available in the U.S. which is not available to most Ontario building owners: Property Assessed Clean Energy loans.  That’s why it’s worth paying attention to Ontario’s proposal to amend the regulations governing Commercial Property Assessed Clean Energy (C-PACE) financing to enable a critical fix: the participation of private lenders.  

How property-based financing works 

C-PACE lets property owners pay for eligible upgrades – e.g. energy efficiency and on-site renewables– using financing tied to the property rather than the owner. Building owners can invest in a major retrofit and repay the cost gradually through a charge on their property tax bill, often over 20 years or more.  

Because the financing is tied to the property rather than the borrower, C-PACE can better align repayment terms with the long-lived upgrades like better building envelopes and heat pumps.  

C-PACE financing has been allowed in Ontario for over a decade; however, the large majority of municipalities have not offered C-PACE programs due to the requirement to use their own capital to finance the energy upgrades, competing with other municipal spending priorities. Combined with the administrative burden of designing and operating a C-PACE program, this has made C-PACE a tough sell for Ontario municipalities.  

In contrast, in the U.S., C-PACE is authorized in 36 states, with hundreds of municipalities participating, and over $9 billion in capital deployed. So why are U.S. cities so much keener on C-PACE? Mainly it’s because American states allow the loans to be made by private lenders, while still being secured and repaid via municipal property tax systems. This means C-PACE lending doesn’t compete with other municipal capital spending priorities. Additionally, most U.S. programs make use of third-party program administrators, lightening the load on municipal staff.     

Under Ontario’s proposal, municipalities would opt in by passing a bylaw, then collect C-PACE payments on lenders’ behalf through their existing property tax systems.

Expand eligibility for real-world needs 

Ontario’s proposed eligibility – energy efficiency, renewable energy, water conservation – is a solid starting point.  But greater flexibility is needed to enable owners to take on complementary or enabling measures without requiring secondary financing sources. 

If C-PACE is going to support the deeper retrofits Ontario needs, the eligible project list has to catch up to reality. That means explicitly including: 

• Energy storage systems 
• Electric vehicle charging infrastructure 
• Required electrical capacity and service upgrades 
• Climate resilience measures 

As extreme heat and flooding become bigger threats, C-PACE should be able to finance cooling systems that protect people during heat waves, and flood resilience upgrades that keep buildings running when the weather doesn’t cooperate. And the province should confirm C-PACE can be used for new construction, not just retrofits – building resilience and efficiency in from day one is almost always cheaper than adding it later. 

Streamline oversight and clarify repayment rules 

A financing program is only as good as people’s confidence in it. Because C-PACE repayment is secured by a lien on the property, lenders get strong protection – which is good news for borrowers if it translates into better terms. But that security cuts both ways: Ontario needs clear safeguards to keep the system transparent and fair. Municipalities shouldn’t be left to vet lenders or build oversight systems from scratch. That creates duplicated effort province-wide, adds unnecessary administrative burden, and will likely discourage participation – especially among smaller municipalities with limited capacity. In TAF’s conversations with municipal staff, this concern comes up consistently. Many are already stretched thin, looking for ways to encourage greener construction and higher building standards, but lacking the financing tools and internal capacity to make those goals actionable. 

We recommend the province should: 

• Designate a single provincial administrator to run C-PACE programs across participating municipalities 
• Or explicitly authorize municipalities to bring in qualified third-party administrators to do it for them 

Trust also depends on how repayment itself is structured. Ontario should clarify two repayment rules. First, unpaid charges should be treated the same way as property tax arrears for collection purposes. Second, financing obligations need to stay non-accelerable in default – meaning only the missed payments come due, not the entire remaining balance. These aren’t flashy details, but they’re the difference between a tool lenders and mortgage holders trust enough to actually price well, and one they hesitate to touch. 

Empower municipalities through a provincial framework 

Municipalities are central to delivery. They know their building stock, local market conditions, housing pressures, and climate and infrastructure priorities better than anyone. Ontario should provide a consistent provincial framework while giving municipalities the flexibility to shape local program requirements through their enabling bylaws. That means giving them the ability to: 

• Set local participation criteria 
• Prioritize the project types that matter most in their community 
• Attach outcome-based requirements, like minimum energy savings or emissions reductions 
• Factor in affordability for multi-unit residential buildings, so retrofit financing supports housing stability instead of undercutting it 

Getting the balance right is important. Ask too much of municipalities administratively, and many will simply opt out. Give them too little flexibility, and financing won’t match what their communities actually need. Standard templates, provincial guidance, and shared administrative services would truly enable municipal implementation – and therefore, benefits for Ontarians. 

Ensure C-PACE supports Ontario’s building sector 

The province has a real opportunity here. With broader project eligibility, stronger oversight, a practical municipal administration model, and clear repayment rules, C-PACE can help drive skilled local job creation and local economic activity, ensure buildings are more affordable to run, and make Ontario’s communities healthier and more resilient. 

Getting the details right is what will make the difference. 

For more detailed recommendations, read TAF’s full submission to the Environmental Registry of Ontario here.