PACE Lives On! (Despite What You May Have Heard)
A few weeks ago, I went to Palm Desert for a conference about PACE, Property Assessed Clean Energy, or as it’s more informally known, “the best financing tool ever developed for efficiency and distributed renewable energy upgrades for property owners.” Sounds like a big claim, but in the two years since PACE launched, 24 states have passed PACE legislation as a way to jump start clean energy and energy efficiency improvements for their constituents. But let’s back up – what exactly is PACE and how does it work? PACE is a local government initiative that allows property owners to finance energy efficiency measures and renewable energy projects for their homes or commercial buildings. Interested owners can voluntarily opt in to receive financing that is repaid through an assessment on their property taxes for up to 20 years. If the property is sold, the remaining costs (and the benefits of the improvements) are passed on to the next owner. Global Green has been a strong supporter of PACE programs ever since they first began, especially since every 100,000 homes that are made energy efficiency results in $1 billion in direct spending for American materials and labor!
The conference explored the history and successes of PACE, but the main focus was to answer the question on everyone’s mind – “Does PACE have a future, or did it die as a result of the mortgage lending crises?” See, in the late spring of 2010, the federal government claimed that PACE threatened the floundering mortgage industry because PACE assessments have a senior lien to mortgages if property owners default, and consequently forbade Fannie Mae and Freddie Mac from underwriting these mortgages. But experience from communities around the country showed the opposite of what the government assumed. Communities that have PACE programs in operation have lower default and delinquency rates. Unfortunately, the Federal Government had already spoken, and they weren’t planning to turn back. Many of the new PACE programs throughout states were abandoned and existing programs were put on hold.
Yet the conference was hopeful. Despite these major setbacks, the conclusion was that PACE is still alive and even growing in some places. PACE commercial programs are unimpeded by the government’s decision. And PACE residential programs are continuing, albeit slower and less robustly. Now, decision makers across the country are taking action to bring PACE back: eight jurisdictions are suing the Federal Government, and various legislators have authored bills to bring PACE back. There’s still a lot of hope, and a lot of cities and individuals who are willing to help. Global Green will continue to track PACE and support a program that is not just alive, but alive and kicking!