By early 2020, Ohio will become the fourth state to offer residential PACE financing — to be used by homeowners in Summit, Franklin and Lucas Counties — for energy improvements. Residential PACE (RPACE) loans can be used to fund energy efficiency upgrades including: HVAC, windows and doors, roofing, insulation and others. RPACE allows property owners to finance projects through low-interest, 5- to 20-year loans which are repaid through a voluntary assessment on their property tax bill.
Commercial PACE (CPACE) financing has already been available in more than 20 of Ohio’s counties. In 2018, the state saw 31 CPACE projects, representing $79.1 million in energy-efficiency investments (Bricker & Eckler, 2019). The Hayden office building in downtown Columbus is a local example of a PACE funded project. The Hayden is a two-building historic property. CPACE funded upgrades to the building’s lighting, HVAC and elevators. These upgrades totaled a financed amount of over $4 M, which is to be paid back over 25 years (Greenworks Lending, 2019).
For more details regarding PACE you can view the CDFA-Bricker PACE Webinar Series. Following is a summary of the first webinar in this series, PACE 101: The Basics of PACE Financing.
What is PACE?
A tax assessment based financing mechanism for resilience, efficiency, renewable energy, and water projects. Most PACE projects either increase energy efficiency or generate energy. PACE can be used for all building types, expect those that are government owned.
What is the process for getting PACE in your community?
States pass legislation enabling the use of property-based tax assessments for energy, water, and resilience (public purpose). Thirty-six states and D.C. have PACE legislation. Twenty of those states and D.C. have active PACE programs.
Tax-collecting municipalities within the state pass local ordinances to establish programs.
Programs are administered by the state, municipality, or contracted to an independent third party administrator.
Projects are financed by government bonds or PACE capital providers.
What are the benefits of PACE?
Covers 100% of a project’s hard and soft costs
Long payback periods and fixed rates
20-30 year repayment enables positive cash flow, and the annual savings in energy costs can be larger than the annual payment
Numerous economic and environmental benefits (e.g. local job creation, higher property values, reduced carbon emissions)