Property Assessed Clean Energy Program

• Author: Kyler Massner
• Pages: 84-90

84 Sustainable Development Code: Climate Change

PROP ERTY A SS ESS ED

CLEA N ENE RG Y PROG RA M

Kyler Massner (author)

Jonathan Rosenbloom & Christopher Duerksen (editors)

INTRODUCTION

Property Assessed Clean Energy (PACE) programs provide a mechanism for

owners of private property to nance low-cost, long-term funding for renew-

able energy (RE) and energy eciency (EE) improvements. Most impor-

tantly, PACE programs oer homeowners an opportunity to take advantage

of renewable energies without having a substantial upfront cost.1 PACE pro-

grams are struc tured to provide 100% nancing of a RE or EE project’s cost.

at upfront cost is secured by the property, backed by the local government,

and repaid by the property owner through an additional assessment on the

owner’s taxes for a term of up to 20 years.2 Local governments can make

PACE available to both commercial (C-PACE) and residential properties

(R-PACE). As of 2017, over 150,000 homeowners have made approximately

$4 billion in RE and EE improvements through PACE programs.3

In most jurisdictions, state governments must enact enabling legislation

authorizing local governments to oer PACE nancing and form PACE

assessment districts that recognize RE and EE developments as public

“goods.”4 After the districts are created, loc al governments establish spe-

cial assessments for utilities that are nanced through property assessments

and simi lar collection proce dures.5 ese assessment districts benet local

governments by protecting or insulating the government’s debt rating from

being impacted by the PACE nancing program.6 Participation in the dis-

trict is typically voluntary, allowing property owners to opt-in.7

PACE nancing “debt” (evidencing the upfront costs) attaches to the

property as a lien.8 Securing t he debt by a lien on the property has three

distinct advantages. First, it reduces the initial nancia l burden by spread-

ing out repayment over many years.9 Second, the repayment obligation can

transfer with the property, and thus is not required to be resolved prior to

a subsequent sale.10 ird, it provides owners assurance that their invest-

ment is protected, thus reducing apprehension of investing in RE and EE

improveme nts.11