C-PACE on a ground lease: what leasehold owners need

C-PACE is repaid as a charge attached to the property itself, not as a personal debt of whoever happens to own it today. That is what makes a ground lease awkward: when one party owns the land and another owns the building, the programme has to decide whose property the charge sits on, who signs, and what happens if the lease ends before the financing does.

Some programmes have answered those questions in writing. This guide sets three of them side by side — Philadelphia, New York City and New Jersey — using the programme documents themselves, all checked on 28 October 2026. If your building is somewhere else, the honest starting point is that your programme’s rules may be different from all three, and you should read them before anyone quotes you a rate.

Why a ground lease complicates C-PACE

Two features of C-PACE collide with a ground lease.

First, the assessment is tied to the real property. Philadelphia’s guidelines define the assessment lien as a first and prior lien against the real property on which the assessment is imposed, with the same priority status as a lien for any other tax. Adler & Stachenfeld’s October 2024 summary of New York City’s guidelines says the city formally clarified that the C-PACE loan runs with the land and is non-accelerable on default.

Second, the financing has a long fixed term, and a ground lease has a fixed end date. If the lease expires while payments are still due, the borrower’s leasehold ends before the financing does. That is why the programmes below test the lease term against the financing, or set a minimum lease length.

Philadelphia and New York City answer with the landowner’s agreement and a lease that runs at least as long as the financing. New Jersey instead sets a minimum length for the ground lease.

Philadelphia: consent, no government landowner, and the lease must run to the last payment

The Philadelphia C-PACE Program Guidelines released on 15 December 2025 say that properties with a ground lease are eligible for C-PACE if:

• the borrower has the consent of the land owner;
• the land owner is not a government entity; and
• the ground lease term does not expire before the last C-PACE payment in the amortization schedule is due.

The guidelines add a practical warning: review the ground lease’s default provisions to make sure they integrate with the C-PACE enforcement process.

The government-landowner exclusion is the one that catches people out. If your building sits on land leased from a public body, Philadelphia’s guidelines do not let it in, however strong the project.

Note also that the guidelines say a project is subject to the version of the guidelines in effect when its Statement of Levy and Lien Agreement is signed. If you are reading this months after we checked it, read the current version.

New York City: written consent on the programme’s form, the whole lot, and a recorded or recordable leasehold

Morrison & Foerster reported on 3 November 2021 that a Department of Finance rule taking effect on 7 November 2021 expanded loan eligibility to ground lease holders, and that the rule was further amended to require the fee owner’s consent when the borrower owns a leasehold interest. According to MoFo, that consent sits in a separate agreement in which the fee owner and the C-PACE borrower address each party’s responsibility for repayment. Adler & Stachenfeld’s October 2024 summary nonetheless describes the 2024 guidelines as the point at which ground-leased projects officially became C-PACE eligible.

The guidelines we read are version 4.0, revised on 26 June 2026, which say they replace all prior versions. Under them, a borrower must either own the site or hold an Eligible Lease, such as a ground lease. A ground lessee must:

• obtain the owner’s written consent on the programme’s Owner Consent form — other forms may be acceptable with the administrator’s approval;
• lease the entire Borough Block and Lots (BBL), not a portion of one — leasing a single building on a lot that holds other buildings outside your lease does not qualify;
• have a remaining lease term not less than the term of the PACE loan; and
• have a leasehold interest that has been recorded or is eligible to be recorded with the city register or the Richmond county clerk.

One more condition reaches the landowner directly: in the case of an Eligible Lease, the guidelines say both the borrower and the owner must not be delinquent in taxes, civil penalties or other debt to the City, or in water or sewer charges, at the time the PACE loan closes. Separately, consent is needed from all holders of mortgages or deeds of trust on the property — the landowner’s consent does not replace that.

Adler & Stachenfeld’s October 2024 summary of the earlier guidelines listed similar conditions but described the lease test as a remaining term “more than” the C-PACE loan term. The June 2026 text reads “not less than”. It is a small difference, but it is the sort of thing a lender’s counsel will check against the version that applies to your closing, so use the current document rather than a summary.

New Jersey: a 50-year minimum initial ground lease

New Jersey approaches the question from a different direction. Rather than listing conditions for a ground lessee, the Garden State C-PACE Program Guidelines posted by the New Jersey Economic Development Authority on njeda.gov define who counts as an owner. The document carries no version date in its text, so the rules below are as the posted file read on 28 October 2026.

A Beneficial Owner is the owner of the building and improvements on an eligible property who ground leases the land underneath, with an initial ground lease term of at least 50 years. An Eligible Owner can be either a Property Owner or a Beneficial Owner, and must not be in bankruptcy and must have written consent from all mortgage lien holders on the property.

Note what the test measures. Philadelphia and New York City compare the lease with the financing term. The New Jersey definition looks at the initial term of the ground lease. The Beneficial Owner and Eligible Owner definitions do not spell out a separate rule requiring the landowner’s consent. But the same document defines a Property Owner as an owner of an eligible property who consents to a C-PACE Assessment, and defines a C-PACE Assessment as imposed at the request of and with the consent of the Property Owner, which can be read as bringing the landowner in. Do not read that as permission to proceed without your landlord: ask NJEDA and your capital provider directly how they will handle the fee owner before you commit to costs.

The three side by side

	Philadelphia (Dec 2025)	New York City (v4.0, June 2026)	New Jersey (posted file, read 28 Oct 2026)
Landowner consent	Required	Required, in writing, on programme form	Not spelled out for a Beneficial Owner; confirm with NJEDA
Lease term test	Must not expire before last C-PACE payment	Remaining term not less than PACE loan term	Initial ground lease of at least 50 years
Landowner restrictions	Not a government entity	Owner (and borrower) not delinquent to the City or in water and sewer charges at closing	—
Other conditions	Review default provisions	Whole BBL; leasehold recorded or recordable	Mortgage lien holder consent

All three were checked on 28 October 2026 against the documents linked in this guide. The rules differ by programme, and none of these three is a general rule for the rest of the country.

What to raise with the fee owner early

The ground landlord is usually the slowest signature in the deal, and they gain little from C-PACE directly. Start the conversation before you pay for an energy audit or engineering report.

1. Show them the consent form. In New York City, the programme has its own Owner Consent form. In Philadelphia, ask the programme administrator what form of land owner consent it accepts. A landlord who sees the actual document is easier to persuade than one who hears “a lien on your land”.
2. Check the lease term against the financing term. If your remaining lease would end before the last payment, you may need a lease extension, or a shorter financing term, before Philadelphia or New York City will look at the deal.
3. Read the default clauses. Philadelphia tells you to check that the ground lease default provisions integrate with C-PACE enforcement. Do it whatever programme you are in; your lawyer, not your contractor, should do this.
4. Find out whether the landowner is a public body. In Philadelphia, that ends the conversation.
5. Check recording. In New York City, the leasehold must be recorded or recordable. If your lease or a memorandum of it has never been recorded, fix that first.
6. Line up the mortgage holders. New York City and New Jersey also require the consent of existing mortgage lenders. Philadelphia requires it too, unless the mortgage is prepaid in full before or at the C-PACE closing. Our guide to lender consent covers how that conversation usually goes.

If your landlord will not consent where consent is required, C-PACE is the wrong tool for that building. That is a perfectly normal outcome, and better learned in week one than month four.

Where to go from here

If you are still deciding whether C-PACE suits your capital stack at all, start with whether C-PACE is a loan and how the assessment behaves. To see what we have checked about the programme in your state, use the state pages.

C-PACE Desk is an advisory and placement service, not a lender and not a programme administrator. If you have a ground-leased building and want a second opinion on whether it can clear your programme’s rules before you approach your landlord, get in touch.