PACE Financing – What’s the Deal Now?

There’s big buzz around the new concept called PACE financing, which stands for Property Assessed Clean Energy. Basically, PACE is a way to finance solar systems or energy efficiency retrofits, where a city gives you a loan, and you pay it back through property tax bills over twenty years.

So why is PACE good for you?

• For starters, the program doesn’t require shelling out any cash upfront or reducing equity in your home.
• Secondly, using property tax increases to finance clean energy improvements solves the problem of “what happens when I sell my home?” The simple answer is that the solar power system and whatever tax liability you have both go to the new owner of your home.
• Third, it’s backed by the city, so people know they won’t get scammed, and the financing is guaranteed secure!

Check out these links to learn more about how PACE programs work or PACE program financing.

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The Buzz in California: Setting the Stage

It all started in Berkeley, CA with the “Berkeley FIRST Program.” A company called Renewable Funding developed a system for financing home solar energy systems and energy efficiency improvements by partnering with a city and adding the cost of energy improvements to the homeowner’s property tax bill, spread out over twenty years. The program was absurdly popular when it launched, and now cities are starting to run much bigger programs left and right. California has also passed AB811 to let any city that wants to do this go for it.

So, What Federal Policies and Programs Favor PACE?

PACE Financing was pushed along majorly by the American Recovery and Reinvestment Act (ARRA), which repealed a provision that had limited the use of Investment Tax Credit (ITC) for projects that also subsidized energy financing (a distinction PACE likely fell under), thus allowing for state policies to move forward. The White House, via the Recovery Thorough Retrofit program, announced a PACE-based financing initiative for competitive grants under the Energy Efficiency Conservation Block Grant Program (EECBG). Up to $453M will be available for state and local governments in the form of competitive grants in specified areas.

The Buzz (Kill) in Washington

A recent announcement by the FHFA (Federal Housing Finance Agency) has declared that residential PACE financing programs do not meet the financial requirements of federal mortgage giants Fanny May and Freddie Mac. This announcement significantly hampers the ability of homeowners to use PACE financing to fund clean energy and energy efficiency projects for their home. It has also effectively halts new PACE program development in the near future as PACE supporters are forced to appeal to elected government officials to intervene on PACE’s behalf. Stay tuned – we will keep you updated here on the latest news and status of PACE financing.

We’re working to make this the richest resource for what is happening with PACE financing in your city, and we need the help of people running PACE programs to do it! If you know something we don’t about the program, please tell us: Contact Us