What is it?
Property Assessed Clean Energy (“PACE”) is a voluntary program that allows eligible property owners to finance energy efficiency and renewable energy improvements through low-interest loans from cities and counties that are repaid through an assessment on the property owner’s property tax bill. Through this annual tax collection, a bond can be issued which is repaid from the revenue (giving the bondholder the highest form of security possible).
What are the Benefits?
These special tax assessments are permanently fixed to the property and do not stay with the property owner if he/she chooses to sell the property, thus eliminating any concerns a property owner may have that their investment will not be recouped through utility bill savings prior to selling the property. In addition, property owners benefit by avoiding the upfront costs of these improvements. As a result, property owners can finance their “green” efforts with minimal financial risk. One stipulation is that PACE funds cannot be used to finance the installation or purchase of appliances that are not permanently fixed to the property.
By providing its citizens with a means to install “green” technologies, these programs will also assist local governments in reaching the goals of Assembly Bill 32, the California Global Warming Solutions Act of 2006. The PACE mechanism requires little or no investment of general funds and presents very low risk given that the loan repayment is a senior lien on the property, ahead of the mortgage itself.
Property-Assessed Clean Energy (PACE) Financing of Renewables and Efficiency (PDF)
– National Renewable Energy Laboratory, July 2010
What is PACE? – California Center for Sustainable Energy
Property Assessed Clean Energy: Innovation for Financing Energy Efficiency (PDF) – PACENow.com, Nov. 2011
Assembly Bill No. 811 (PDF)
Senate Bill No. 555 (PDF)
Assembly Bill No. 32 (PDF)