Property-Assessed Clean Energy (PACE) Programs

The Property-Assessed Clean Energy (PACE) model is a financing structure that enables local governments to raise money through the issuance of bonds or other sources of capital to fund energy efficiency and renewable energy projects. Land-secured financing districts (also known as "special tax" or "special assessment" districts) are a familiar tool in municipal finance. In a typical assessment district, a municipality issues bonds to fund projects with a public purpose such as streetlights, sewer systems or underground utility lines. The property owners that benefit from the improvement repay the bond through property assessments, which are secured by a property lien and paid as an addition to the property tax bill.

The extension of this financing model to energy efficiency and renewable energy improvements allows a property owner to install improvements without a large up-front cash payment. The financing is repaid over a set number of years through the "special tax" or "assessment" only on those property owners who voluntarily choose to attach the cost of their energy improvements to their property tax bill. The financing is secured with a lien on the property and in the event of foreclosure, the energy financier is paid before other claims against the property. If the property is sold before the end of the repayment period, the new owner inherits both the remaining repayment obligation and the financed energy improvements.

Transaction Points

The PACE model is a tool that is most appropriately utilized for planned major energy efficiency or renewable energy retrofits for the residential and commercial markets (currently supported in non residential applications only). It takes longer than a personal or business loan to arrange but can finance much larger projects over a much longer periods often to 20 years. DMS secures temporary funds retired by a long term note to expedite the improvement process.

Please visit www.pacenow.org to learn more......