Property-Assessed Clean Energy

DefinitionProperty-assessed clean energy (PACE) is a financing tool for property owners to fund energy or water efficiency or renewable energy installations. PACE is a secured loan that attaches to the property as a voluntary assessment on the property taxes. To be eligible for a PACE loan, the building must be located in a local jurisdiction where the city or county has passed a resolution to participate in a PACE program. PACE financing is often a public-private partnership between a private finance company and a public agency. The loan may be transferred to the new owner upon sale of the property with the approval of the system owner. If the seller owns and not a third-party, then the renewable system is typically considered real property and tax credits and maintenance requirements belong to the property owner. Loan terms can vary between 5 and 30 years. Some programs also allow PACE to finance solar leases and power purchase agreements (PPAs). Due to the complexities of PACE financing, the National Association of REALTORS® (http://www.realtor.org/articles/administration-issues-pace-guidance) and states like California (https://dfpi.ca.gov/pace-program-administrators/pace/) have provided statements which are worth further consideration.