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CREFC Publishes C-PACE Primer

January 9, 2025

The CRE Finance Council on January 9 published a comprehensive Commercial Property Assessed Clean Energy (CPACE) Primer to serve as a valuable resource for our members.

The Primer provides an in-depth overview of the key features, stakeholders, and market trends associated with C-PACE financing, one of the tools used to drive sustainability and resiliency in the CRE sector.

Key topics include:

• Financing Mechanics: Understanding how C-PACE enables CRE owners to implement energy efficiency, renewable energy, and resiliency upgrades.
• Stakeholder Roles: A breakdown of responsibilities for property owners, mortgage lenders, legal counsel, and program administrators.
• Market Trends: Analysis of the growing C-PACE market, with over $7 billion in cumulative financing and nearly $2 billion in 2023 alone.
• Important Considerations: Insights into underwriting concerns, lease implications, and compatibility with CMBS transactions.

Why it matters: As the CRE industry continues to prioritize sustainability, C-PACE financing is one avenue for property owners to enhance asset performance while meeting environmental and resiliency goals.

• This Primer equips CREFC members with the insights needed to navigate and leverage this growing market segment effectively.

CREFC would like to thank the group of investors, bankers, rating agencies, lawyers, and lenders who contributed to the development of the Primer.

Please contact Sairah Burki (sburki@crefc.org) with questions.

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On Again, Off Again: Corporate Transparency Act Cases 

January 7, 2025

A flurry of court decisions in late December once again left the Corporate Transparency Act (CTA) and the Beneficial Ownership Information (BOI) reporting requirements in limbo ahead of the January 2025 filing deadline for existing legal entities.

Why it matters: Amid the decisions, Treasury’s Financial Crimes Enforcement Network (FinCEN) has paused BOI reporting requirements. Click here for additional background on the litigation. The latest procedural history is summarized on FinCEN’s website below:

• On Tuesday, Dec. 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., the U.S. District Court for the Eastern District of Texas, issued an order granting a nationwide preliminary injunction. The Treasury, via the Department of Justice, appealed that decision.
• On Dec. 23, a panel of the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court’s preliminary injunction.
• However, on Dec. 26, a different Fifth Circuit panel issued an order vacating the Court’s Dec. 23 order granting a stay of the preliminary injunction. On Dec. 31 the Department of Justice, on behalf of the Treasury, sought a stay of the injunction pending the ongoing appeal from the Supreme Court of the United States.
• The injunction issued by the district court in Texas Top Cop Shop, Inc. is once again in effect.

What’s next: The Supreme Court is likely to have the final say on the preliminary injunction and the constitutionality of the CTA. But changes in Congress and the administration could alter course, as there is both bipartisan support and frustration with the CTA.

• The original legislation was enacted in 2021 with broad bipartisan support as a measure to streamline BOI reporting and combat illicit finance. But FinCEN’s implementation has been rocky and delayed, adding to frustrations among some of the Act’s supporters.
• The original year-end 2024 government funding bill, torpedoed by Elon Musk, contained a provision that would have extended the CTA compliance deadline. That extension was not included in the slimmed-down version of the bill.

Contact David McCarthy (dmccarthy@crefc.org) with questions.

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Congressional Outlook: Reconciliation Paths 

January 7, 2025

Senate Republicans officially took control of the chamber on Jan. 3, and House Republicans re-elected Speaker Mike Johnson (R-LA) on the first ballot after some initial internal sparring among Republican lawmakers.

Why it matters: With the speakership race out of the way, lawmakers now will chart key legislative priorities to address ahead of President-Elect Donald Trump’s inauguration on Jan. 20. Immigration, energy, and tax are the top priorities, and policymakers are jockeying on how to structure legislative vehicles amidst narrow congressional majorities.

What they’re saying: A key question is whether Republicans will move their top priorities in one or two reconciliation bills. Recall that reconciliation is a legislative process that allows the Senate to consider certain bills (tied to spending) with a simple majority rather than a 60-vote threshold.

• The current plan points to one reconciliation bill encompassing tax, border, energy, and a debt ceiling increase. Part of the calculus is to craft a bill addressing key campaign promises and priorities to ensure Republican support.
• Senate Majority Leader John Thune (R-SD) said late last year that Trump advisors and the Senate would move two reconciliation bills, first immigration/energy and then tax. House Ways and Means Chairman Jason Smith (R-MO) pushed back against the two bills, instead arguing for one bill encompassing all priorities.
• Proponents of two bills argue that border/energy should go first for easy and early wins, while tax should be separate due to its complexities.
• Trump has changed course on this posting Sunday for “one powerful bill,” but kept his option open for two bills in an interview on Monday morning.

The big picture: Both paths will be politically challenging in a narrow trifecta in which House Republicans can lose one or two votes at most.

• Reconciliation processes involve complex legislative procedures where committees propose instructions on modifying federal inlays, outlays, and the debt limit.
• Just reauthorizing expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA) will have budgetary costs in the trillions of dollars. But with additional priorities — including state and local tax (SALT) reform, lower corporate rates, and other tax cuts — the “cost” of the bill would increase.
• The GOP is looking to cut some spending via reconciliation, but the politically palatable cuts are unlikely to approach anything close to the “cost” of the bill, which may be an issue for deficit hawks.
• Tariffs will be part of the calculus, but Trump is likely to implement those outside of the legislative process using executive authority.

What’s next: Speaker Johnson has set an ambitious agenda with budget instructions passed in February with a House-passed bill by early April and the final legislation on Trump’s desk by the end of April. He acknowledged that the timeline may slip.

Contact David McCarthy (dmccarthy@crefc.org) with questions. 

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