Property Assessed Clean Energy (PACE) financing makes it possible for real estate property owners to obtain low-cost, long-term financing for 100% of the hard and soft costs of energy efficiency, renewable energy and water conservation improvements to commercial properties. PACE financing is a low-cost replacement for more expensive debt and equity.
PACE is a tax-assessment based financing mechanism for energy efficiency, renewable energy, and water conservation projects. In a typical PACE transaction, a private PACE lender will provide long-term, fixed-rate financing to a property owner that is repaid through a special assessment levied against the property and collected with the property's tax bill usually on an annual basis. A program administrator appointed by the state or local government will ensure the project meets program rules and is projected to obtain energy savings.
PACE is a state-based program authorized by state statute and implemented by local governments. Currently, 32 states and the District of Columbia have adopted PACE legislation and there are over 40 active PACE programs throughout the country. After a state passes PACE legislation, municipalities and/or counties must pass local ordinances to "opt in" to the state legislation in order to initiate PACE programs. Once approved at the local level, municipalities and counties work with private-sector lenders who will provide PACE financing for qualified projects.