Green energy initiatives for buildings are the most insightful methods of achieving energy efficiency in the U.S. However, the high cost of these programs may discourage a building owner to come forward and prepare a plan of action for this. To overcome this barrier, a program called Property Assessed Clean Energy (PACE) finance with its original name “On-Tax Bill Solar and Efficiency Financing” was introduced. California was the first state to legally implement PACE financing program and now legislation is in force within 31 states and in the District of Columbia.
The Structure of PACE Financing Program:
Under this program, local governments create “land-secured financing districts” wherein property owners join voluntarily to fund energy efficiency and renewable energy improvements. They give loans to the property owners for the purpose which would be paid back through property taxes or other locally collected tax. The cost of the improvement is tied to the property itself and not to the property owner. If the property is sold during the tenure, the repayment obligation is also legally transferred to the buyer.
How PACE Financing Works for a Typical Project?
The PACE program may differ slightly depending on the legislation and circumstances in a local area. However, the program consists of the following steps involving the property owner, licensed contractors like National Glazing Solutions (NGS), local government and financial institutions.
1. The property owner needs to engage a licensed contractor who has been authorized to conduct an energy audit or site evaluation as per location-specific PACE terms and conditions.
2. Once a quote is given by the auditor, the property owner applies to the local administrator of PACE financing program.
3. Once the project is approved by the local administrator and installation is complete, the total cost of the installation is paid to the installer directly.
4. The property owner pays the loan back to the administrator through an increase in property valuation and tax..
5. No upfront cash needed except a small fee at the time of making the application.
6. If the property is sold, the liability to pay the loan is transferred to the buyer and does not need to be repaid in escrow.
What are the Major Benefits of PACE Financing in Fenestration Measures?
Through PACE financing, building owners can spread the cost of energy improvements over the lifetime of the building, increasing the property value and reducing utility bills. Further, homes and buildings with energy improvements both lease and sell faster than those without. PACE projects create large-scale employment opportunities in the community, especially in the building construction and energy improvements sector. Building owners can become code compliant and energy efficient under the relevant building codes. For example, as per the latest California Building Codes and under 2013 California Residential Title 24 Energy Code updates, windows and glass door products must have U-factor of 0.58 or lower for vertical fenestration. The 2013 Non-Residential Title 24 Energy Code updates stipulate that buildings need increased fenestration requirements to reduce solar gains and increase in visual light transmittance for day lighting.
PACE Financing Statistics:
PACE Legislation is present in 31 US states and in the District of Columbia covering about 80% of the total U.S. population. Active discussion on implementation is going on in states like Texas, Oregon, Ohio and Utah. About 24% of the PACE implemented projects consist of multifamily buildings, 21% of the projects belong to office buildings and about 19% of the projects are in the services sector. The current largest PACE project is a deep-retrofit efficiency hotel project in Universal City, CA, which received around $7 million of project financing
Contact NGS to find out if your project could qualify for PACE financing @ 866.925.2083