What is PACE Financing?
Property Assessed Clean Energy or PACE financing is a new way of funding conservation, efficiency, and renewable energy projects for commercial and industrial facilities.
PACE works by providing 100% financing for approved projects and arranging the repayment through a Special Assessment attached to the property. The program, in effect, leverages the increased asset value of the property to finance the improvements over time.
This can be quite advantageous to the building owner, as the value of these improvements is fully realized before the repayment stream starts; while the liability is limited to the actual monthly or quarterly tax payments. In addition, these payments are often more than offset by the energy savings, lower operating costs, and greater net operating income.
Over 30 states have passed similar legislation. PACE financing is widely seen as overcoming most, if not all, of the barriers to implementing clean energy improvements.
Eligible Clean Energy Projects Under PACE Financing
- High efficiency lighting
- Heating ventilation air conditioning (HVAC) upgrades
- High efficiency chillers, boilers, furnaces, water heating systems
- Building enclosure / building envelope improvements
- Building automation systems / energy management systems
- Renewable energy systems (solar, CHP, wind, etc.)
Sander Mechanical, in collaboration with New Jersey PACE, is assisting commercial, industrial and non-profit property owners across our state to access relatively low-cost private capital by taking advantage of this game-changing program.
For additional information on Property Assessed Clean Energy and PACE Financing, please visit the following link. Or to learn more about program eligibility and availability in your municipality, please contact us today.
What Makes PACE Financing Work?
- Provides 100% upfront financing for qualified clean energy upgrades.
- No cash investment is needed.
- Not dependent on building owner's credit rating.
- Off-balance sheet transaction allows owners to use their credit elsewhere.
- Projects can result in positive cash-flows immediately or near term.
- Allows for deeper energy upgrades because the financing offered is payable over an extended period (up to 30 years).
- Provides needed security to lenders and investors, because repayment is tied to the property tax.
- It increases the net operating income and asset value each property, with limited liability to the property owner.
- If the property is sold, PACE assessment and repayment obligation passes to the new owner (commensurate with the remaining savings).
- Like any other municipal assessment, payments don't accelerate in case of default.
- There is no cost to the municipality.
- The program is voluntary and self-funding.