EXISTING MORTGAGE HOLDERS: INVEST IN THE ENERGY EFFICIENCY MARKET

EXISTING MORTGAGE HOLDERS: INVEST IN THE ENERGY EFFICIENCY MARKET

Start Exploring!

PACE financing is an effective and proven option that provides 100%, extended-term fixed rate funding to commercial property owners for energy efficiency and renewable energy improvements. PACE financing is repaid via a voluntary special assessment added to the property tax bill. Owners of non-residential buildings work with PACE to finance most mechanical, electrical, and plumbing equipment as well as additional items such as roofs, elevators and solar, all of which make a positive impact in reducing the building’s utility bills and improving the value of the property.

PACE History and Current Market

PACE was first implemented in 2007 by a local government in California as a pilot program. Since that time, over 30 states have passed legislation to enable PACE financing. Locally, Ohio passed PACE legislation in 2009 (HB 1) while Kentucky enacted it in 2015 (HB 100). PACE is a public-private partnership. The assessments are legally authorized by state legislation and implemented by local governments, while the funding is provided by private lenders. Nationally, over $3 billion has been invested in PACE to support energy efficiency and renewable energy improvements.

Why should mortgage lenders allow a PACE assessment?

There are many reasons why over 100 mortgage lenders, according to the non-profit PACENation, have provided written approval for PACE financed projects:

  • List

    PACE assessments are small in comparison to the property value & mortgaged amount and have a minimal effect on overall economics. PACE assessments generally do not exceed 20% of the total property value; therefore, this means that the PACE exposure in any given year is typically no more than 1% of the property value when PACE financing is extended over a 20-year term.

  • List

    PACE assessments do NOT accelerate in the event of a mortgage loan default or tax foreclosure, ONLY the PACE assessment amount that is in arrears becomes due. The remaining PACE assessment balance continues with the property until the term end date.

  • List

    PACE assessments stay with property upon sale and transfers to new owner.

  • List

    PACE assessments can be prepaid before the term end date (penalties may apply).

  • List

    PACE requires no funds from the existing mortgage holder.

  • List

    PACE improvements reduce energy expenses and increase cash flow of the property owner.

  • List

    PACE improvements increase the value of the property.

  • List

    PACE capital typically comes from private sources. This enables property owners to reserve other lines of credit for working capital or non-energy related improvements.

  • List

    PACE capital does not rely on government funds.

  • List

    PACE financing repayment process is secure and proven due to using the same special tax assessment structure that has been in place for over 100 years.

  • For Commercial Real Estate (CRE) property owners with tenants, PACE improvements increase Net Operating Income (NOI) as shown below:

PACE Improvements Graphic