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PACE/CPACE

What is PACE?

Property Assessed Clean Energy (PACE) is an innovative way to finance energy efficiency and renewable energy upgrades to buildings. Interested property owners evaluate measures that achieve energy savings and receive 100% financing, repaid as a property tax assessment for up to 20 years. The assessment mechanism has been used nationwide for decades to access low-cost long-term capital to finance improvements to private property that meet a public purpose. By eliminating upfront costs, providing low-cost long-term financing and making it easy for building owners to transfer repayment obligations to a new owner upon sale, PACE overcomes challenges that have hindered adoption of energy efficiency and related projects in our nation’s buildings.

 PACE is a local government/community initiative that creates permanent private sector jobs, strengthening our national and local economies. Buildings use nearly half of the energy we consume in the United States. PACE programs help make our nation more energy independent and secure while safeguarding our environment by reducing demand for fossil fuels. The PACE financing mechanism provides a strong credit that is attractive to private sector investors and without government subsidies. PACE is voluntary. Property owners, acting in their own self interest, implement building upgrades that can save them money, increase the value of their property. PACE programs add value, and have gained bi-partisan support nationwide at federal, state and local levels.

 Introduced in pilot programs in 2008, PACE made immediate sense to energy efficiency advocates across the country, and today, 31 states and the District of Columbia have adopted (or already had) legislation that enables local governments to offer PACE benefits to building owners.

 PACE improve consumer’s cash flow by decreasing energy needs and hence decreasing utility bills. PACE, compared to other retrofit mechanisms, is tax neutral and results in no exposure to county’s general fund

 
Commercial PACE

 Momentum is building across the U.S. for commercial PACE programs that drive energy efficiency, renewable energy, and in some cases, water conservation measures.

 Commercial PACE is completely voluntary. Property owners can determine if they will benefit from making their buildings more efficient. Only participating properties are subject to a specific PACE assessment. PACE can make it easier for owners of commercial property to implement energy efficiency and renewable energy projects that can save them money, make their properties more valuable, and create local jobs.

 
Benefits of PACE for Commercial Real Estate Owners

  • No up-front costs & funds available for up to 20 years
  • Immediate benefit to cash flow raises Net Operating Income
  • Solves split incentives issue
  • Increases building value & building efficiency
  • Treated like other property taxes and assessments
  • No additional debt load

 C-PACE

 Connecticut Property Assessed Clean Energy (C-PACE) is an innovative program that is helping commercial, industrial and multi-family property owners access affordable, long-term financing for smart energy upgrades to their buildings.

 C-PACE allows building owners to finance qualifying energy efficiency and clean energy improvements through placing a voluntary assessment on their property tax bill. Property owners pay for the improvements over time through this additional charge on their property tax bill and the repayment obligation transfers automatically to the next owner if the property is sold. Similar to a sewer tax assessment, capital provided under the C-PACE program is secured by a lien on the property, so low-interest capital can be raised from the private sector with no government financing required.

 PACE financing offers a broad range of benefits to building owners, municipalities, mortgage holders, lenders and energy efficiency/renewable energy contractors.

 C-PACE Financing High Performance Building Upgrades

 Commercial Property Assessed Clean Energy (C-PACE) is an innovative program that is helping commercial, industrial and multi-family property owners access affordable, long-term financing for smart energy upgrades to their buildings.

C-PACE allows building owners to finance qualifying energy efficiency and clean energy improvements through placing a voluntary assessment on their property tax bill. Property owners pay for the improvements over time through this additional charge on their property tax bill and the repayment obligation transfers automatically to the next owner if the property is sold. Similar to a sewer tax assessment, capital provided under the C-PACE program is secured by a lien on the property, so low-interest, long-term capital can be raised from the private sector with no government financing required. This arrangement spreads the cost of clean energy improvements – such as energy efficient boilers, upgraded insulation, new windows, or solar installations – over the expected life of the measure.

 BUILDING OWNERS:

 C-PACE provides 100% upfront, fixed rate, long-term financing to property owners for qualified energy upgrades. Game-changing benefits for owners are:

  • C-PACE assessments may qualify as an operating expense. This means owners can finance improvements without incurring additional debt and preserve capital and credit lines for core business investments. Also, under typical leases, payments – as well as energy savings – can be passed along to tenants.
  • The tax obligation (which is attached to the property) transfers upon sale to the new owner. Unlike other lending options, payments do not accelerate in case of default.
  • The C-PACE program requires projects to be cash flow-positive from project completion. Financing is structured so that energy savings must more than offset the additional property tax assessment.
  • Deeper energy upgrades are possible because the term of the assessment is up to 20 years and stays with the property rather than the owner.
  • Owners achieve lower operating costs due to increased energy efficiency, improved asset value from new equipment, and a better indoor air quality and comfort for tenants.

 

 

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