What is PACE?
PACE is Property Assessed Clean Energy, a new and innovative way for commercial property owners to pay for energy efficiency upgrades, on-site renewable energy projects, and water conservation measures. PACE funding is provided or arranged by a local government for 100% of a project’s costs, and is repaid with an assessment over a term of up to 20 years. Local government assessment financing has been used efficiently for decades throughout the United States to fund improvements to private property that meet a public purpose.
- PACE financing is available for all types of commercial and industrial properties, large and small, and may be available to non-profits and government facilities as well.
- Financing approvals are simple, but PACE projects must be permanently affixed to the property and save money for the property owner.
- Benchmarking, energy audits and evaluations can be used to ensure that projects make sense, but PACE is 100% voluntary. In communities that adopt PACE, assessments are only paid by participating owners, and only for their own projects.
PACE is a national initiative, but programs are locally based and tailored to meet local market needs. Visit www.pacenow.org to see if PACE financing is available in your community or learn more about how you can support development of a program.
Energy efficiency is the least expensive energy we can buy. In the U.S., buildings alone consume over 40 percent of the energy we use, and roughly 75 percent of all electricity.
A 2012 study by the Rockefeller Foundation and DB Climate Change Advisors sees an investment opportunity of nearly $280 billion over the next 10 years that would translate to over $1 trillion in energy savings, over 3 million jobs, and 600 million fewer metric tons of carbon emissions per year. PACE is clearly working because it meets a market need.
- Property owners see an opportunity to save money and make their buildings more valuable.
- Existing mortgage lenders support projects that meet their clients’ objectives and increase the value of their collateral.
- Energy service companies and contractors find PACE can help them make sales.
- Local governments like PACE because it creates jobs, economic activity, and helps meet energy conservation goals.
- Private market investors like PACE because assessment liens are a proven, strong credit.
Benefits of PACE
PACE financing has many features that can uniquely solve barriers to the adoption of energy efficiency measures.
- 100% financing requires no up-front cash investment.
- Long-term financing (up to 20 years) results in immediate positive cash flow
- No payoff upon sale because PACE assessments (and energy savings) remain with the property.
- Assessment costs and savings can be shared with tenants.
- PACE can attract a wide range of private investors with low interest rates.
- PACE may be treated as off balance sheet financing.
- Non-recourse, non-accelerating financing.
- PACE programs are local and community members are motivated to engage in outreach and marketing efforts.
Where is PACE available?
PACE can now be used in 31 states and programs are being launched throughout the U.S. Over the past 12 months, financing activity has more than doubled, with more than $30 million provided to improve over 160 buildings. Projects completed and in the works range from $10 thousand to over $3 million. In the coming year, programs in California, Connecticut, Florida, Georgia, Michigan, Minnesota, New York, Ohio, and others could easily triple these results.
PACE financing works for large and small projects on just about any commercial building. Some of the world’s largest property owners, including Simon Property Group and Prologis, Inc. have used PACE to finance energy efficiency and renewable upgrades to their buildings.