Building Your CRE Project's Capital Stack With Taxes

As municipalities have explored additional sources of funding for promising commercial real estate development or redevelopment projects that may not be economically viable without public support, some major cities, such as Atlanta and Richmond, have launched new Commercial Property Assessed Clean Energy financing programs that are poised to boost environmentally-friendly development in 2024. Many cites have leveraged CPACE programs, along with tax increment financing and payment in lieu of taxes transactions, to facilitate and encourage these CRE developments. While CPACE financing allows a CRE owner to obtain favorable nonrecourse financing for qualifying project costs using the property tax collection system, TIF and PILOT payment financing allow the CRE owner to utilize a portion of property taxes or PILOT payments to pay debt service on bonds or loans used to pay certain project costs.