Page 62 - Green Builder Magazine Nov-Dec 2017 Issue

CODE ARENA

The Latest Rules, Regulations and Codes Impacting Sustainable Construction

Slowing Down the PACE?

Days could be numbered for this popular green home financing program.

CREDIT: CHOKKICX/ISTOCK

BY MIKE COLLIGNON interest rates on these loans are typically higher than a traditional
mortgage rate but lower than a credit card’s.
10-YEAR-OLD GOVERNMENT FINANCING vehicle that The shifting of debt enables the property owner to more quickly
incentivizes renewable energy and energy efficiency is realize the positive cash flow of a reduced energy bill. Just like the
now in jeopardy of having its impact reduced and, quite upgrades, the debt obligation remains with the property should it
possibly, eliminated. be sold before the debt is repaid. This assessment is a disclosure in
A Property Assessed Clean Energy (PACE) financing the real estate process. But ideally, the reduced energy bills would
works like this: The property owner agrees to a long-term property also be shared with potential buyers.
tax assessment in exchange for upfront funding to pay for an energy Because the debt is tied to the property tax, PACE financing has
efficiency or renewable energy upgrade. The upfront costs of such a high rate of repayment. (PACE financing can be allowed through
retrofits, which can be cost prohibitive, are instead financed over a private capital firms, too.) And, according to a study published in the
period that can be as short as three years and as long as 20 years. The Journal of Structured Finance, PACE financing was found to have a

60 GREEN BUILDER November/December 2017 www.greenbuildermedia.com

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