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FAQ: PACE for Homes

What is Residential PACE?
  • Residential PACE (Property Assessed Clean Energy) is an innovative financing mechanism that can finance clean energy, energy and water efficiency, and resiliency retrofits to existing single-family homes at no upfront cost.
  • PACE assessments repayments are made through your property taxes, where they are featured as an additional line item on your property tax bills
  • PACE assessments, like property taxes, are attached to the property and not any individual. Therefore, they can be transferred with the sale of property. Moreover, in case of a sale, the new property owner pays the “amortized” costs as they enjoy the savings that come with the retrofit.
  • PACE assessment adds a lien to your home which is senior to your primary mortgage. However, some PACE administrators are also exploring the idea of offering PACE as a secondary lien to the mortgage.
  • PACE assessment does not get accelerated at default and can be prepaid without penalty in most cases.
How do you repay the Residential PACE assessment?

PACE assessments are paid through your property taxes. They appear as an additional line item on your property tax bills.

What are the interest rates like?

While the interest rates vary with the retrofit, they are generally between 7-10%

What is the assessment duration?

The duration/tenor of the assessment depends on the effective life of the equipment.

What measures can you finance through Residential PACE?

Residential PACE can only be used to finance specific retrofits. Listed below are some of the measures which could be financed through this financial instrument:

  • Resiliency Measures- Earthquake, Flood, and Grid Resiliency (Resiliency retrofit eligibility varies with the state)
  • Energy-Efficiency Measures
  • Water-Efficiency Measures
  • Renewable Energy Measures
Where all is Residential PACE financing available today?

Residential PACE programs are available in multiple counties in the following three states:

  • California
  • Missouri
  • Florida

For more information: http://pacenation.us/pace-programs/

What is the benefit of Residential PACE ?
  • Homeowners can undertake retrofits to their home at NO upfront cost with the help of PACE.
  • PACE assessment spreads the cost of ownership over the effective lifetime of the retrofit measures so that you can pay as you save.
  • PACE is attached to the property and not the property owner so that allows for a seamless transfer at the point of sale.
  • Residential PACE is catalyzing private capital to solve a market barrier while creating local jobs
Why act now? What are the risks for inaction?

The U.S. loses a $33 Billion opportunity to upgrade its infrastructure and build high-performing homes which are future-ready!

Parts of the U.S. most at risk of natural disasters are also the places where property values are highest and increasing most quickly. There is a need to leverage private sector capital to build new high-performing homes which are resilient to grid failures and natural disasters in these areas.

How can Residential PACE scale net-zero energy home construction?

Residential PACE, if enabled for new construction, can absorb the incremental upfront cost of building a NZE home. So then you could build a NZE at the same cost as any other home. Learn more : see our research on Residential PACE for new construction.

Can Residential PACE be used to finance net-zero energy new construction?

Unfortunately, Residential PACE cannot be used for financing net-zero energy new construction as of now unless the ownership is transferred from the developer to the property owner. However, RMI’s research findings indicate that if Residential PACE is enabled to finance new construction, it can scale net-zero energy home construction.

Can PACE be used for multifamily housing?

Yes, multifamily projects can be financed with PACE, but they must use a commercial PACE program (as opposed to a residential PACE program) for any building with 5 or more units. Residential PACE can be only used for retrofitting single-family, one to four unit residences. Commercial PACE is available in 19 states. See if your state has residential or commercial PACE programs here: http://pacenation.us/

Can Commercial PACE be used for new construction?

Yes, Commercial PACE can be used for new construction in 19 states as of 2017. Talk to your local PACE Administrator to know more!

What are the benefits for enabling Residential PACE for new construction:

Builders and Developers:

  • Builders and developers can use PACE to finance the incremental upfront cost of building a net-zero energy home. This implies that if Residential PACE was enabled for new construction, builders could build a new net-zero energy home at the same upfront cost as any other new home. Moreover, builders won’t need to invest their own capital or take additional construction loans to finance the incremental cost associated with building this high-performance homes.

Homeowners:

  • RMI’s research proves that homeowners could benefit substantially from their investment in a net-zero energy home by accruing higher energy savings year-on-year while building more resiliency. PACE can absorb the entire upfront incremental cost of owning this high-performing net-zero energy home.

State Policymakers and Municipal Leaders:

  • 27 states in the U.S. have implemented ambitious renewable energy portfolio requirements in the form of renewable portfolio standards (RPS) or alternative energy portfolio standards (AEPS) and/or instituted state-wide climate and sustainability goals. Residential PACE, when enabled for new construction, could help scale net-zero energy new construction in states using private capital. Moreover, states can benefit from investment capital influx into the real estate sector and ensure greater local job creation through PACE.

RMI believes that Residential PACE is a win-win for all stakeholders, when homeowners need financing support for upgrades. For a detailed analysis on the benefits of using PACE, please read our blog.

What is RMI’s role and intent in promoting PACE?

RMI is a non-partisan, independent organization that transforms global energy use to create a clean, prosperous and secure low-carbon future. Access to energy efficiency and clean energy financing is an important part of that transformation.. PACE can mitigate financial market barriers for all American homeowners to implement deep energy retrofits. Iain Campbell, Managing Director, Buildings is on PACENation’s Board and chairing PACENation’s committee on consumer protections

How can I take action to enable Residential PACE in my state?

Inform your representative about Residential PACE and tag them using the following tweet:


What is the market opportunity for NZE homes and what is the net benefit to homeowners after paying for PACE financing?

What is the business case for net-zero energy homes? How can you scale them using Residential PACE?

Resources

Insight Brief

R-PACE: A Game-Changer for Net-Zero Energy Homes

learn more
Blog

Transforming the Real Estate Market: Scaling Net-Zero Energy Homes at No Additional Up-front Cost

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Residential Energy+

Learn more about RMI's Residential Energy+ program.

learn more