The Property Assessed Clean Energy (“PACE”) Program is a local government initiative that creates voluntary liens on private property and enables property owners to finance energy efficiency, renewable energy, water conservation, electric car, and seismic, wildfire protection, and storm resiliency projects for their homes and businesses. Interested residential and commercial property owners can opt into a PACE Program administered by a conduit bond issuer to receive financing (loan terms ranging from 2 years up to 25-30 years, depending on the program) that is then paid back through an annual property tax assessment. This enables the borrower to spread the cost of the project over the useful life of the improvements and allows the repayment obligation to transfer automatically to the next property owner (subject in some cases of residential development to lender consent). PACE Programs bring many benefits to the local community, including job creation and “green” benefits associated with increased energy and water efficiency.
As the Administrator of more than 90% of the PACE loans made in California and an active PACE Administrator in Florida and Missouri (the only three States that have authorized residential PACE Programs to date), DTA is currently servicing almost $4 billion in PACE loans secured by over 180,000 parcels in the three states. DTA is familiar with all aspects of the implementation of PACE Programs for both residential and non-residential development. While the use of PACE loans on most residential properties is restricted to existing homeowners on developed properties, new non-residential and multifamily apartment development is eligible for PACE loans that complement their first trust deed financing and can decrease equity requirements to as low as 10% of construction costs. In the case of renovation projects, PACE can actually fund 100% of the eligible improvements for nonresidential and multifamily residential projects. As PACE loans are non-recourse to the borrower and not subject to the levels of regulation typically impacting tax-exempt debt, DTA has been successfully working with dozens of non-residential and multifamily developers to incorporate PACE loans in their capital stack. These PACE loans can be used solely as construction loans or as a combination of construction and take-out financing.