Green Financing for Hotel and Apartment Building Developments
How green loans, CMHC MLI Select energy points, PACE, retrofit programs and impact investors work, and what a hotel or apartment project needs to qualify.
Updated & fact-checked Figures are linked to their sources at the end of the article.
Green financing is money lent or invested on the condition that it pays for something with a measurable environmental benefit, usually lower energy use or emissions. For a hotel or apartment project it can mean a loan labelled green, better terms on insured mortgage financing, a retrofit loan repaid through a charge on the property, a utility rebate, or equity from investors who want a social or environmental result as well as a return.
This guide is for developers and owners in Canada, with notes on the U.S. where the tools differ. It explains what each source is, what usually qualifies and where the catches are. Program terms change often, so treat the details as a starting point and confirm them with the lender or program before you rely on them.
What makes a loan “green”
The usual market standard is the Green Loan Principles: voluntary guidelines developed by a working party of financial institutions and law firms, published by the Loan Market Association and, in the U.S., by the Loan Syndications and Trading Association.[1][2] Under the version updated in March 2025, a green loan is one whose proceeds are used only for eligible green projects and which follows four core components: use of proceeds, a process for project evaluation and selection, management of proceeds, and reporting.[1]
Green buildings are one of the listed eligible categories, defined as buildings that meet regional, national or internationally recognized standards or certifications for environmental performance.[1] In practice, a borrower should expect to show a certification target or modelled energy performance at the start, and to report on it afterwards. A green label alone does not guarantee a lower rate; the pricing depends on the lender.
CMHC MLI Select: energy points for apartment buildings
For Canadian rental housing, the most valuable green feature is often not a green loan at all but CMHC’s MLI Select mortgage loan insurance. Projects earn points for affordability, energy efficiency and accessibility; a minimum of 50 points is needed to qualify, and more points unlock higher leverage, longer amortization and lower premiums.[3]
Energy efficiency alone can reach the 50-point minimum, at the top level.
| Level | Points | New construction | Existing property |
|---|---|---|---|
| Level 1 | 20 | 25% better than NECB Tier 1, or 20% better than NBC Tier 1 | 15% decrease from current baseline |
| Level 2 | 35 | 50% better than NECB Tier 1, or 40% better than NBC Tier 1 | 25% decrease from current baseline |
| Level 3 | 50 | 60% better than NECB Tier 1, or 70% better than NBC Tier 1 | 40% decrease from current baseline |
| Total points | New construction | Existing property | Recourse |
|---|---|---|---|
| 50+ | Up to 95% loan-to-cost, 40-year amortization | Up to 85% loan-to-value, 40-year amortization | Full |
| 70+ | Up to 95%, 45 years | Up to 95%, 45 years | Full |
| 100+ | Up to 95%, 50 years | Up to 95%, 50 years | Limited |
A project that combines energy points with affordability or accessibility points can reach 70 or 100. Some limits matter for mixed-use and hospitality owners. MLI Select covers residential rental housing, including supportive housing and retirement homes, with a minimum of 5 units (50 for retirement homes). Non-residential space cannot exceed 30% of gross floor area or 30% of the lending value, and is lent against at no more than 75%.[3] Hotels are not among the eligible property types; an apartment building with a modest amount of ground-floor retail can be.
Retrofit loans through the Canada Infrastructure Bank
The Canada Infrastructure Bank’s Building Retrofits Initiative finances deep energy retrofits that are expected to cut emissions by at least 30%.[4] In June 2025 it formed a $100 million partnership with Scotiabank to lend to the bank’s commercial real estate clients, including owners of commercial, office and multi-residential buildings. Eligible work includes envelope improvements, heating and cooling upgrades, automation and fuel switching, lighting and electrical upgrades, and electric vehicle charging.[5] The initiative is delivered through partners, including banks such as Scotiabank and aggregator partners listed on the CIB’s site, so the route in is usually through one of them.
PACE: repaying upgrades through the property
Property assessed clean energy (PACE) financing lets an owner pay for energy or water upgrades through a charge attached to the property rather than a personal or corporate loan. The charge is collected by the municipality and, because it runs with the property, usually passes to the next owner on a sale.
In the U.S., commercial PACE (C-PACE) is well established. PACENation, the industry association, reports about US$13.5 billion of cumulative C-PACE investment across 3,837 commercial projects from 2009 to December 2025.[6] It is available only in states and localities that have passed enabling legislation and set up a program.
In Canada, PACE is set up province by province and municipality by municipality. Calgary’s commercial Clean Energy Improvement Program, for example, finances up to 100% of project costs to a maximum of $1 million, repayable over up to 20 years, for privately owned non-residential properties; new builds do not qualify.[7]
In Nova Scotia, the Municipal Government Act lets councils pass bylaws for charges that finance energy-efficiency, renewable energy, water and on-site sewage equipment on private property with the owner’s consent, and lets those charges be first liens on the property.[8] Municipal programs have mostly served homeowners. Halifax’s Solar City program, which uses a local improvement charge repaid over 10 years at a fixed 4.75%, is open to residential owners, non-profits, places of worship, co-operatives and charities, not to for-profit commercial owners.[9] A commercial owner in Nova Scotia should ask the municipality whether its bylaw covers their property class before planning around PACE.
Because a PACE charge can rank ahead of a mortgage, existing lenders will want to know about it. Check your mortgage terms, and expect a buyer’s lender to ask about the charge on a sale.
Rebates and incentives
Rebates are not financing, but they reduce what needs to be financed. In Nova Scotia, Efficiency Nova Scotia’s Business Energy Rebates cover up to 50% of product costs for eligible energy-efficient equipment, or offer interest-free financing for up to 24 months, for both new construction and retrofits. Pre-approval is required for rebates over $15,000 and for projects that need financing.[10] Most provinces and many U.S. utilities run similar programs, and it is worth checking them before equipment is ordered, since many require approval in advance.
Impact investors
Impact investors are a source of equity or patient debt rather than a loan product. The Global Impact Investing Network defines impact investments as “investments made with the intention to generate positive, measurable social or environmental impact alongside a financial return,” with returns that can range from below market to above market.[11] The GIIN estimated the global market at US$1.571 trillion of assets under management in 2024, managed by more than 3,900 organizations. It is an estimate of a loosely defined market, so treat it as an order of magnitude.[12]
For a real estate developer, the relevant impact investors are those that fund affordable or supportive housing, community facilities and energy-efficient retrofits. They expect the impact to be defined at the outset and measured afterwards, which in housing usually means committed affordable rents and, in energy, verified savings. An MLI Select affordability commitment is an example of the kind of measurable outcome such investors look for.
Preparing a project for green financing
Set a measurable target
Pick a standard the lender recognizes: an energy performance level against the NECB or NBC, a percentage cut from a measured baseline, or a certification.
Model or measure it
New projects need energy modelling by a qualified professional; existing buildings need a baseline from utility data and an energy audit.
Stack the sources in order
Rebates and incentives first, since they need pre-approval; then insured or green mortgage financing; then PACE or retrofit loans for specific measures.
Budget for verification and reporting
Most green financing requires proof that the target was met, and some requires reporting for the life of the loan.
Check how the pieces interact
A PACE lien, a second mortgage or an affordability covenant can each affect what a senior lender will accept.
Sources
- Green Loan Principles — Loan Market Association, March 26, 2025. Checked 2026-10-12.
- Green Loan Principles — Loan Syndications and Trading Association (LSTA), March 27, 2025. Checked 2026-10-12.
- Multi-unit CMHC MLI Select (fact sheet) — Canada Mortgage and Housing Corporation, 2025. Checked 2026-10-12.
- Building Retrofits Initiative — Canada Infrastructure Bank. Checked 2026-10-12.
- Canada Infrastructure Bank commits $100 million towards Building Retrofits with Scotiabank — Canada Infrastructure Bank, June 10, 2025. Checked 2026-10-12.
- PACE Market Data — PACENation. Checked 2026-10-12.
- Commercial Clean Energy Improvement Program — City of Calgary. Checked 2026-10-12.
- Municipal Government Act, S.N.S. 1998, c. 18, section 81A (consolidated) — Nova Scotia Legislature, April 9, 2026. Checked 2026-10-12.
- About Solar City — Halifax Regional Municipality. Checked 2026-10-12.
- Business Energy Rebates Program — Efficiency Nova Scotia. Checked 2026-10-12.
- What you need to know about impact investing — Global Impact Investing Network (GIIN). Checked 2026-10-12.
- Sizing the Impact Investing Market 2024 — Global Impact Investing Network (GIIN), October 23, 2024. Checked 2026-10-12.
