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- Property Assessed Clean Energy (PACE)
Property Assessed Clean Energy (PACE)
Financing for Energy Efficiency
Financing for energy efficiency, energy generation and water conservation improvements is available for residential, commercial, retail, agricultural and industrial property owners in Butte County. PACE offers 100% up-front financing for hundreds of money-saving solar, energy efficiency and water conservation improvements. Qualifying improvements may include:
- Solar Photovoltaic
- Solar Thermal
- Exterior Doors
- Process Equipment
- Control Systems
The amount of financing available is based solely on the value of the property. Semi-annual installments are collected through the property tax bill as an assessment line item. PACE installments may run with the property in the event of a transfer, so you may only pay for the benefits you receive.
Rising energy costs, new environmental disclosure regulations such as AB 1103, and aging building stock has prompted Butte County to approve PACE - a breakthrough financing solution for energy and water-efficient building improvements. This timely financing opportunity was uniquely designed to help property owners clear investment hurdles to capital-intensive energy upgrade projects including tenant-owner split incentives and accounting treatment.
Upgraded buildings enable:
- LEED and Energy Star certification
- Increased asset value
- Higher rents
- Compliance with AB 1103
- Increased net operating income
PACE gives property owners unparalleled flexibility and benefits:
- 100% up-front financing
- Long terms (up to 20 years)
- No encumbrance of corporate credit
- Transferability of lien upon disposition
- Repayment via property tax bill
- Potential off balance sheet treatment
The California Statewide Communities Development Authority's (CSCDA) Open PACE program is a turnkey resource for residential and commercial property owners to finance energy efficiency, renewable energy and water conservation.
Risk Considerations for Participating Property Owners
The PACE program allows for property owners to freely and willingly enter into contractual agreements with contractors and PACE financing providers for clean energy improvements. As with any contractual agreement, the borrower/property owner enters at their own risk. PACE improvements are financed by loans managed by 3rd party PACE Administrators and repaid via line item assessments placed on property tax bills. It is important to note that this often more than doubles a property owner's tax bill, so planning ahead to increase mortgage lenders escrow account contributions or save money sufficient to pay the bills on the bi-annual due dates is essential.
Importantly, there are inherent risks that should be considered by all applicants. The Federal Housing Finance Agency (FHFA) has expressed concerns regarding the PACE program. According to FHFA, the central risk is that these loans create an additional potential for the loss of property through a tax sale or foreclosure by the PACE Administrator if the owner cannot meet the extra debt burden. Fannie Mae (FNMA), Freddie Mac (FHLMC) and Federal Housing Administration (FHA) lenders will not finance or refinance mortgages with existing PACE liens. Property owners are likely to be required to pay off the PACE assessment balance at the time of refinance or sale. All PACE programs now include disclosures regarding the FHFA position regarding PACE programs in applications, financing documents, and closing statements.