1. What is PACE financing?
The Recovery Through Retrofit report (CEQ 2009)—a product of the White House Council on Environmental Quality, 11 federal departments and agencies, and six White House offices— identified property-assessed clean energy (PACE) financing programs as a means of removing barriers to expansions in the residential energy efficiency and retrofit market. Under PACE programs, municipalities and counties form special tax districts to help property owners finance energy retrofits by allowing a property owner to place an additional tax assessment on his or her property. Property owners who invest in energy efficiency (EE) measures and small renewable energy (RE) systems repay these assessments over 3 to 20 years via additional annual payments on their property tax bills. The PACE program enables property owners to make energy efficiency, renewable energy, climate resiliency and water saving improvements to residential, multifamily, commercial and agricultural buildings with 100 percent, PACE financing. If you sell your property, payments may transfer to the new owner, just like your property taxes. (Property taxes are legally transferable when you sell your property, however, some mortgage lenders may require full repayment (payoff) of any remaining PACE special tax/assessment upon sale or refinance.) Named one of the top 20 “world-changing” ideas by Scientific American magazine, property assessed clean energy (PACE) is a simple, effective way to pay over time for a wide range of energy and water saving, renewable generation and climate resiliency improvements to our built environment—which has all sorts of benefits. According to the EPA, improving the energy efficiency of your home or business can help lower high utility bills, improve comfort and reduce greenhouse gas emissions. And by improving your home’s energy and water efficiency, you may be able to increase its value.
While PACE programs are enabled by state legislation and must be approved by your local government, it is not a government financing program. PACE can be simplified by realizing it is similar to any property tax assessment such as a street or sewer repair. The difference is the Pace does not have to be paid in full if building is sold unlike other assessments. The government provides a bond that they will forward the money to financial source when they receive it. The government is continuously trying to create jobs in their community. PACE is an excellent way to create jobs without putting taxpayers at risk, and helps to stabilize building infrastructure, and eventually increase their tax base as the building increases in value. The U.S. Department of Energy recently announced the release of $452 million in funds to 25 communities that received the grants as part of the competitive solicitation under the Energy Efficiency Block Grant Program. The funds can be used towards “innovative financing models to make these savings accessible, for example by offering low and no-interest loans that are repaid through property tax and utility bills” (U.S. DOE 2010), and can therefore be used towards implementing PACE programs.
2. What types of property improvements qualify?
Hundreds of energy and water saving PACE-eligible improvements (and associated installation costs) qualify, including energy-efficient heating and cooling, windows, doors, roofing, insulation and ducts, pool pumps, water heaters, drought tolerant landscaping and solar. In certain areas, PACE financing is used to install electric vehicle charging stations, make water conservation and seismic upgrades, as well as storm and wind protection improvements.
3. When will I make my first payment?
Your first payment (and all future payments) will be incorporated into your property taxes, and will appear as a line item on your annual statement delivered by your County Tax Assessors office. The date it appears on your property tax statement for the first time depends on the date your PACE improvement contract funds. PACE improvements funded on or before June 30 of this year appear in the year’s property tax statement; PACE improvements funded after June 30 of this year will appear in next year’s property tax statement.
4. What is my payment schedule?
Your annual PACE special tax/assessment will be added to your property taxes as a line item on your annual (or semiannual) statement. You can pay it in one of two ways:
5. How do I qualify?
It’s easy. First check your property eligibility by filling in the contact form on the home page. If your property is in one of our service areas, you can apply online with us in just a few minutes. PACE financing is based on the equity available in your home or property (among other factors), and not on credit (FICO) score, proof of employment, income or financial statements.
6. Will you pull my credit report?
Yes. While we do not use your credit (FICO) score as a factor in determining eligibility for financing, we do pull your credit report
7. Who keeps the credits and rebates etc?
The property owner keeps all the same benefits that they would retain in any energy efficiency upgrade package. This will typically be arranged by the contractor and Energy Pace Finance as an additional service to the property owner.
8. Will the mortgage company accept a PACE program on my home?
In most states, the mortgage company is not obligated to be informed. But, Energy Pace Finance works with the mortgage company to explain the financing mechanism and provide a Consent form. Mortgage companies understand that it saves the property owner money and the building has an increased value. Also, in the event of a default the Pace financing only receives payment on the unpaid payment thus the mortgage company is giving up a very small lien position. All the major banks such as Wells Fargo, US Bank, Bank of America, amongst many others have signed off on with their consent.
9. How much will my payments be?
It depends on the amount you finance and the length of time you choose in which to repay it. Interest runs between 5-8% depending on all the factors.