1. Financing Green Improvements
with Property Assessed
Clean Energy (PACE)
Peter Adamczyk | Energy Finance and Development Manager
April 14, 2010

2. Why do we need PACE?
• For 150+ energy finance programs, participation has
been < 0.5% per year
• Energy financing programs mostly serve those who
least need them
• Short-term consumer financing (less than 7 years) is
not effective unless there are substantial subsidies
• Positive cash flow is key
 It reduces the risk perceived by lenders
 It supports loans to those who would be judged
unable to meet debt obligations without promised
savings

3. How does PACE work?
• Voluntary mechanism allowing individuals to opt
in to a special assessment district created by their
municipality
• Eligible energy efficiency and / or renewable
energy improvements are funded by taxable
municipal bonds or other municipal debt
• Repayment period up to 20 years—may not
exceed projected life of improvements
• Special assessment fees transfer to the new
owner when the property is sold, or assessment
obligation can be paid in full at time of transfer

4. Where PACE has been authorized
NY: 2009
OR: 2009 VT: 2009
WI: 2009
MD: 2009
NV: 2009 OH: 2009
IL: 2009
CO: 2008
CA: 2008
VA: 2009
NC: 2009
NM: 2009 OK: 2009
TX: 2009
LA: 2009
18 states
authorize PACE
FL: Existing
HI: Existing Authority* (16 states have
Authority* passed legislation
PACE financing authorized and two states
permit it, based on
Source: www.dsireusa.org existing law)

5. Typical PACE program parameters
• The cost of the project financed through PACE cannot
exceed 10-15% of the assessed value of the property
• The loan-to-value ratio of any outstanding mortgages,
plus the amount of the PACE assessment, cannot
exceed 80-100% of the assessed property value
• Residential properties generally capped at $20,000 to
$40,000
• Repayment period 15-20 years—may not exceed
projected life of improvements

6. How PACE money flows
Financing Source
Town’s
PACE Program
Property Property Property Property Property
Owner Owner Owner Owner Owner
Opts In Opts In Opts In

7. Implementation issues
• Lien position
- first mortgage
- subsequent mortgages/liens
• Default procedures
- non-payment or partial payment
- loan loss reserves
- Foreclosure –current vs. accelerated payoff
• Transfer of PACE lien at sale
- limited experience shows many liens are paid off
- difficulty in establishing value of improvements

8. PACE lien position
PACE assessments, like
all special
assessments, are
typically subordinate to
property taxes and
senior to mortgages

9. Obstacles to growth of PACE
• Demand for PACE bonds
- Taxable bond market is very small
- Natural fit for retirement accounts
• Lack of standardization
- Lien status
- Loan-to-value
- Savings to investment (SIR) ratio
• Economies of scale
- back office services
- financing

10. Additional PACE resources
• White House Policy Framework for PACE
Financing Programs
www.whitehouse.gov/assets/documents/PACE_Principles.pdf
• PACENOW
www.pacenow.org
• Database of State Incentives for Renewables &
Efficiency
www.dsireusa.org/documents/summarymaps/PACE_Financing_Map.ppt
• Guide to Energy Efficiency & Renewable Energy
Financing Districts for Local Governments
http://rael.berkeley.edu/financing/resources

11. More information
Peter Adamczyk
Energy Finance and Development Manager
Vermont Energy Investment Corporation
802-488-7631
padamczyk@veic.org