PACE Financing

PACE stands for Property Assessed Clean Energy. In areas with PACE legislation in place municipality governments offer a specific bond to investors and then turn around and loan the money to consumers and businesses to put towards an energy retrofit. The loans are repaid over the assigned term (typically 15 or 20 years) via an annual assessment on their property tax bill. PACE bonds can be issued by municipal financing districts or finance companies and the proceeds can be used to retrofit both commercial and residential properties. One of the most notable characteristics of PACE programs is that the loan is attached to the property rather than an individual.^[1][2][3][4]

PACE programs help home and business owners pay for the upfront costs of green initiatives, such as solar panels, which the property owner then pays back by increasing property taxes by a set rate over about 20 years. This allows property owners to begin saving on energy costs while they are paying for their solar panels. This usually means that property owners have net gains even with increased property tax.

History

PACE was originally known as a "Special Energy Financing District" or "on-tax bill solar and efficiency financing."^{[citation needed]} The concept was first conceived and proposed^{[citation needed]} in the Monterey Bay Regional Energy Plan in 2005.^[5] The concept was designed to overcome one of the most significant barriers to solar and costly energy efficiency retrofits; up-front costs. A homeowner could spend tens of thousands of dollars on a solar photovoltaic system, upgrading windows to be more energy efficient or adding insulation throughout the home, yet all of these investments would not likely be recovered when the home was sold. PACE enables the homeowner to "mortgage" these improvements and pay only for the benefits they derive while they own the home. The first PACE program was implemented by Berkeley, California, led by Cisco DeVries, the chief of staff to Berkeley's mayor. DeVries saw PACE to provide a viable means to help achieve the Bay Area's climate goals. California passed the first legislation for PACE financing and started the BerkeleyFIRST climate program in 2008.^[3][6] Since then, PACE-enabling legislation has been passed in more than 16 states, allowing localities to establish PACE financing programs.^[7] PACE financing for residential properties was dealt a serious blow in 2010 when Fannie Mae and Freddie Mac refused to back mortgages with PACE leins on them. ^[8]

Benefits

For a city, PACE can play an important role in reducing local greenhouse gas emissions, promoting energy efficiency improvements in its buildings, making the shift to renewable sources of energy more affordable, and reducing energy costs for residents and businesses. Because PACE is funded through municipal bonds it creates no liability to the city's funds. PACE programs also help to create jobs and thus spur local economic development when local solar installers and renewable energy companies partner with the program. It is also an opt-in program, so only those property owners who choose to participate are responsible for the costs of PACE financing.^[1][6][9]

PACE enables individuals and businesses to avoid the upfront costs that are the most common barrier to solar installation. The PACE loans are paid with property taxes over a course of roughly 20 years while energy costs are simultaneously lower, providing the PACE consumer with net gains. Also, because the solar panels and the PACE loan is attached to the property, the consumer can sell the property leaving the debt to be paid through the property tax assessed on the subsequent owners.^[1][2][6][9]

Locations with PACE Legislation

Arizona California Colorado Florida Hawaii Illinois Louisiana Maryland Missouri Nevada New Mexico

New York North Carolina Ohio Oklahoma Oregon Texas Vermont Virginia Wisconsin

References

1. ^ ^{a b c} http://www.pacenow.org/
2. ^ ^{a b} http://votesolar.org/wp-content/uploads/2009/06/PACE_FAQGeneral1.pdf
3. ^ ^{a b} http://www.renewfund.com/pace/definition-history
4. ^ http://pacefinancing.org/about-us/
5. ^ Kammerer, Kurt (April 6, 2006). Monterey Bay Regional Energy Plan (Report). http://www.ccag.ca.gov/pdf/USTF/docs/AMBAGPartIFINAL11April06.pdf. 
6. ^ ^{a b c} "PACE Program (Property Assessed Clean Energy) Financing". 1BOG.org. http://solarfinancing.1bog.org/municipal-solar-financing/. Retrieved 2010-08-18. 
7. ^ Speer, Bethany; Koenig, Ron. [* [1] "Property-Assessed Clean Energy (PACE) Financing of Renewables and Efficiency"]. National Renewable Energy Lab.
   • [2]. Retrieved 7-9-11. 
8. ^ Hsu, Tiffany (7-7-10). "Fannie, Freddie freeze PACE energy-efficiency retrofit financing programs". LA Times. http://latimesblogs.latimes.com/money_co/2010/07/fannie-freddie-freeze-pace-energyefficiency-retrofit-financing-programs.html. Retrieved 7-9-11. 
9. ^ ^{a b} http://pacefinancing.org/

External links

[3] Berkeley FIRST RAEL wiki page renew fund votesolar PACE overview green right now PACE Background renew fund History

vote solar PACE FAQ Berkeley Lab Open Energy Info Map a Watt Solar Power Rocks [4]

See also

	Energy portal
	Environment portal
	Sustainable development portal

Interview with Cisco Devries on Sea Change Radio, originally aired May 26, 2010.