What is a Pace Agreement?

A Property Assessed Clean Energy (PACE) agreement is a financing option available to property owners who want to make their buildings more energy-efficient. PACE programs are typically run at the state or local level and allow property owners to access low-cost, long-term financing to pay for energy upgrades. The financing is paid back through a special assessment on the property tax bill.

PACE programs were first introduced in 2008 and have since grown rapidly in popularity. At the end of 2020, there were more than 30 states with active PACE programs, and nearly $6 billion in PACE financing had been provided for energy upgrades.

How Does a PACE Agreement Work?

When a property owner decides to participate in a PACE program, they work with an approved PACE lender to determine the cost of the upgrades they want to make and how much financing they need. The PACE lender then provides the financing, which is typically repaid over a period of 10-25 years through a special assessment on the property tax bill.

The special assessment is tied to the property, not the property owner, which means that if the property is sold, the new owner is responsible for the remaining payments. This can make it easier for property owners to obtain financing for energy upgrades, as the loan stays with the property and not the owner.

One of the key benefits of PACE financing is that the cost of the upgrades can be spread out over a long period of time, which means that the property owner can see immediate savings on their energy bill without having to pay a large upfront cost.

What Upgrades Can a PACE Agreement Cover?

PACE financing can be used for a wide range of energy upgrades, including:

– Solar panels and other renewable energy systems

– Energy-efficient heating, cooling, and ventilation systems

– Insulation and air sealing

– Energy-efficient lighting and appliances

– Water conservation measures

The specific upgrades that are eligible for PACE financing will vary depending on the state or local program.

Is a PACE Agreement Right for You?

If you are a property owner and are interested in making your building more energy-efficient, a PACE agreement may be a good option to consider. PACE financing can provide long-term, low-cost financing for a wide range of energy upgrades, and the special assessment stays with the property, not the owner.

However, it`s important to carefully review the terms of the PACE agreement and make sure that the financing terms work for your specific situation. As with any financial decision, it`s a good idea to consult with a financial advisor or other qualified professional before making a decision.