We help our partners establish the scale of a project and identify areas of opportunity for additional funding through PACE and other mechanisms.
Through our work, we get asked a lot of the same questions often. We thought you might have some of those questions as well, so we created this page with Frequently Asked Questions About PACE Financing.
what is a pace loan?
A PACE loan is long-term, fixed interest financing that can be used to finance building upgrades or enhancements to new construction. The loans are generally for energy efficiency or water reduction improvements, but the rules vary by state. The financing is non-recourse, meaning there are no personal guarantees for the loan, and is treated as property tax.
Who is involved in the PACE process?
The process generally involves the following people / groups:
Building Owner or Developer: group receiving the funding
Financier: company providing the loan
Energy Engineer: firm hired to qualify the improvements
Program Administrator: authority that certifies that the loan meets program requirements
How long does it take to get a PACE loan?
It varies but generally 4 to 12 weeks is required depending on many factors.
Where is PACE allowed?
There are many states that allow PACE financing, see below for a map:
Why would I use PACE on my project?
PACE can be used for many reasons. Some of the most common include:
Reducing the amount of capital needed for new construction.
Paying for energy efficiency improvements to existing buildings.
Refinancing the costs of upgrades (available in some states but not all).
Converting capital expenses of upgrades or new construction into operational costs.
How do you size a PACE loan?
PACE can pay for up to 100% of retrofits, and as a general rule 20% - 25% of new construction. There are many factors to consider including but not limited to loan-to-value ratios, senior lender consent, PACE financier underwriting, and technical qualifications.
What's the difference between R-PACE and C-PACE?
The “R” and “C” stand for “Residential” and “Commercial”. Note that multifamily properties such as apartments are considered commercial. There are approximately 30 states that have C-PACE programs but only a small number have R-PACE.
What is the typical term for a PACE loan?
Terms are generally restricted by the average useful life of the upgrades, but there may be other limiting factors. 20 to 25 year fixed-interest financing periods are typical.
What is a PACE Program?
Property Assessed Clean Energy (PACE) is a financing concept that converts the cost of energy efficiency upgrades or new construction into an assessment on a property that is treated as property tax. To use PACE, a state must have enabling legislation in place, and a local ordinance is also usually required. A PACE program is the combination of the legislation, approving authority and the other parties involved in originating and approving a PACE loan.
What can you finance with a PACE Loan?
PACE can generally be used for both retrofits and new construction of items that reduce energy, and in some cases water. Typical technologies include windows, wall and roof insulation, LED lighting, high efficiency HVAC systems, building controls, plumbing and domestic hot water systems, renewable energy systems and others.
Can I fund solar with PACE?
Yes, solar installations on both existing buildings and new construction can usually be funded with PACE financing. Note that most PACE financiers generally want to fund loans of at least $500,000.