by Brianna Crandall — October 22, 2014—Former President Bill Clinton helped launch Property Assessed Clean Energy or “PACE” at the 2009 meeting of the Clinton Global Initiative. The progress PACE programs have made over the last five years was recognized at this year’s 10th anniversary meeting of the Clinton Global Initiative in New York.
PACE is an innovative financing mechanism that makes it easier for property owners to complete energy efficiency upgrades and renewable energy projects that make buildings more valuable and sustainable. PACE allows property owners to finance 100% of a project’s costs; eligible measures include lighting, windows, heating/cooling/ventilation equipment, solar panels, water pumps, and more. Also, PACE works for just about any building, and it has been used on office, retail, multifamily, single-family, agricultural, hotel, government, and industrial properties, says PACENow, the nonprofit advocate for PACE financing.
At the Clinton Global annual meeting, a number of PACE milestones were recognized. PACE has reportedly enjoyed a steady bipartisan support over the years. In fact, 13 Republican and 18 Democratic Governors have signed PACE-enabling legislation, making PACE a truly bipartisan approach to energy conservation, points out PACENow. New legislative efforts are underway in Indiana, Kentucky, Massachusetts and Pennsylvania.
“PACE is a voluntary, market-based economic development program that does not burden government resources,” says Charlene Heydinger, executive director of Keeping PACE in Texas, a nonprofit association. “PACE legislation passed the House and Senate on consent calendars and was quickly signed by Governor Perry. Our business community has been actively supportive throughout, and helped design “PACE in a Box,” a uniform, user-friendly, sustainable and scalable administrative model that we are giving to all of our counties and municipalities.”
States
Today, over 80 percent of the U.S. population lives in PACE-enabled states, according to PACENow. Twenty-five commercial and seven residential PACE programs are accepting applications and funding projects in California, Connecticut, the District of Columbia, Florida, Michigan, Minnesota, Missouri, New York, Ohio and Wisconsin, with 14 additional commercial programs near launch.
California is a leader, with PACE available and being used throughout the state. There are eight active programs that provide financing for homes, commercial, agricultural, industrial and nonprofit properties, including through Renewable Funding, a national clean energy finance company offering commercial and residential energy efficiency and renewable energy financing solutions.
Connecticut, under the leadership of Governor Malloy and the state’s Green Bank, established the statewide “C-PACE” program that covers 90% of the state’s building stock in 84 cities and towns thus far. “C-PACE closed 30 commercial projects, sold a $30 million portfolio to a clean energy investor, and has $100 million worth of projects in the pipeline,” according to Jessica Bailey, director of the C-PACE program.
Cities
Major cities have also made commitments to PACE retrofit programs, with PACE financing now available in more than 800 municipalities, says PACENow. San Francisco, Los Angeles, DC, Miami, Detroit, and Minneapolis all have active programs making PACE financing accessible to building owners. Additionally, Chicago, Salt Lake City, Houston, and Denver are developing commercial PACE programs.
Rich Chien, PACE program manager for the City and County of San Francisco, noted, “PACE financing offers a new opportunity for building owners in San Francisco to update their facilities to meet market demands in a way that is sustainable and profitable. PACE enables real estate owners, service and building technology companies, and capital providers to create shared economic value by deploying clean energy solutions that benefit the environment.”
Property owners
In addition, major property owners such as Simon Property Group, Prologis, Forest City, and others are using PACE to finance sustainability projects throughout the United States, adds PACENow.
“PACE is a collaboration between government and private industry to promote sustainable development by creating an alternative financing mechanism that stimulates investment in renewable energy and other energy efficient installations like lighting retrofits. Prologis is participating in the PACE program in order to promote new, innovative solutions for financing sustainable building improvements. It provides the flexibility to drive more energy improvement programs, and that’s something everyone should embrace,” said Jack Rizzo, managing director, Global Construction and Renewable for Prologis.
Investment
Further, PACE is emerging as a new investment class, points out PACENow. This year, Deutsche Bank securitized a $100-million, AA-rated issuance of PACE obligations backed by thousands of PACE home financed projects from Southern California’s HERO PACE program, run by such companies as Renovate America.
By 2014 year end, over half a billion dollars will have funded tens of thousands of commercial and residential PACE projects. These projects resulted in more than 6,000 jobs nationally. Additionally, since 2009, PACE has driven a reduction of nearly 900,000 metric tons of CO2, the equivalent of nearly 200,000 cars being taken off the road.
