Guiding principles: Accessibility and Affordability, Compatibility and Integration, Sustainability and Flexibility
Barrier addressed: Cost
Property Assessed Clean Energy (PACE) programs allow property owners to use municipal bonds to finance energy efficiency, solar and other qualifying green retrofits, and repay them through a special assessment on their property tax bill. This arrangement spreads the cost of a new solar energy system out across a 20-year payment plan that is easily transferable to the next property owners. The annual payment is typically less than the power bill savings generated by the improvements. PACE primarily serves property owners but can produce energy savings for tenants if their landlords participate.
Municipalities in more than 20 states and the District of Columbia currently operate PACE programs or have enacted PACE-enabling legislation. Residential access to PACE financing has become more widely available within those states following a 2015 order from the Federal Housing Administration that offers clear guidance around payment and transfer of PACE liens to address mortgage lender concerns. Click here for more on structuring PACE programs.
As part of the July 2016 Clean Energy Savings for All Americans Initiative, Housing and Urban Development and Department of Veterans Affairs announced guidance to unlock residential PACE financing by outlining how properties with PACE assessments can be purchased and refinanced with Federal Housing Administration mortgage insurance and by welcoming the use of PACE financing for Veterans Affairs-insured mortgages. In addition, Department of Energy released a draft of their updated Best Practices Guidelines for Residential PACE Financing for public comment.