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Property Assessed Clean Energy (PACE) uniquely breaks down long standing barriers to energy efficiency in the private sector marketplace. PACE legislation allows building improvements that result in utility savings to be funded by private capital and repaid via a long-term tax assessment. Tax assessments for the public good have been used for over 200 years to fund such things as firehouses, sidewalks, and sewers. In the last few years, over 30 states have placed PACE legislation with 16 & DC having active programs that allow PACE funded building improvements. As of November 2016, over 750 PACE projects have been completed in the commercial sector.
PACE assessments by definition have quantifiable savings and the result is increased building value, lower operating expenses and a better building for tenants which makes it a better asset for both building owners and mortgage lenders.
Fill gaps in the capital stack with PACE Equity. PACE funded projects are secured by a special assessment on the property, building owners can access long term, fixed rate, non-recourse low-cost capital. With this security, PACE Equity can pair with almost any kind of capital stack to provide funding when there is a gap.
PACE improvements have an attractive ROI that result in immediate positive cash flow to the building. With no cost out of pocket for doing renovations & addressing capex needs, this can increase your building’s value while adding higher cash flow to your pocket.
Building owners can take a long term view as the PACE assessment can be transferable upon sale of the property. Building owners get 100% financing of the improvements with no up-front investment or personal guarantees.
PACE is nontraditional and is considered an addition to, not a replacement of, traditional capital loans. Banks are often reluctant to provide financing for capex needs, requiring the owner to go into their own pocket. PACE Equity terms can go up to 20-25 years where most bank loans are limited to 3-5 year terms.
Equity, mezzanine and other options can cause your net ROE to deteriorate. PACE’s terms of repayment are significantly lower, have the potential to be passed onto tenants, and can go up to 20-25 years.
With PACE Equity and energy engineering analysis, building owners can plan for tenant passthrough of costs with your project. When tenants benefit, you can benefit as well.
