PACE Financing Gathering National Momentum
Vice President Joe Biden recently announced a national initiative that innovates the retrofitting of America’s building for energy independence. PACE, or Property Assessed Clean Energy bonds, is when the proceeds are lent to commercial and residential property owners to finance energy retrofits (energy efficiency and small or “distributed” renewable energy systems. The 20-year loans are repaid by the property owners via an annual assessment on their property tax bill and can be issues by municipal finding districts or finance companies.
The program is geared to improve the economics of energy retrofits and promote the adoption of clean energy solutions. The official PACE website outline the advantages of PACE Financing as the following:
Our Nation:
- Significant job creation
- Accelerates movement toward energy independence & reduces GHG emissions
- Very low fiscal cost & high probability of success
Property Owner:
- Lower energy bills and substantially reduced upfront costs for energy retrofits
- Improved return on investment/positive cash flow on retrofits (annual savings > cost)
States, Cities & Municipalities:
- Immediate job creation
- No credit or general obligation risk
- Obligation is liability of real estate owner
- Greenhouse gas reductions/energy independence
- Opt in: Only those real estate owners who opt in pay for it
Existing Mortgage Lenders:
- Borrowers cash flow/credit profile improves (energy savings > annual tax cost)
- Property/collateral value increases
Lender:
- Virtually no risk of loss as property tax liens are senior to mortgage debt
- 97% of property taxes are current & losses are less than 1%
Several state municipalities are already working to make these bonds a reality to meet their green building and renewable energy initiatives. Boulder County in Colorado was one of the first to launch PACE Financing with its ClimateSmart Loan Program. The 2009 Ballot 1a program garnered so much local attention and success that in March of 2010 Ballot 1b will provide additional funding and an opportunity for more home and business owners to get involved.
Texas, Florida, Arizona, Louisiana and other states have PACE Financing plans for or already have these programs in place to assist the home and business owners in their states.
This type of financing, if executed correctly, can be a game changer in the renewable energy and energy efficiency industry as well as how the Country chooses to use its energy. Contact your local municipalities or visit www.pacenow.org to see if you can take advantages of these programs.
