In July, 2010 the PACE plan supported by many states stalled when the FHFA (Federal Housing Finance Agency) raised concerns about the priority level of this loan in relation to a mortgage in the case of a default. The PACE (Property Assessed Clean Energy) program was designed to allow property owners to obtain low-interest, long-term loans for energy efficiency upgrades with a line item repayment on their property tax bills. This program would allow for energy efficiency upgrades and retrofits to existing residential and commercial properties.
As this program is backed by local governments and private funds, the state of Vermont has decided to move forward with the PACE program beginning in January, 2012. There are some conditions which must be met prior to obtaining the low-interest loan, i.e. an energy audit, 15% equity in the property and a good history of paying property taxes.
There are many benefits to moving forward with the PACE program in other states.
From the PACENow.org blog, the PACE program is explained:
What is PACE ?
PACE is a bipartisan local government initiative that allows property owners to finance energy efficiency and renewable energy projects for their homes and commercial buildings. Interested property owners opt‐in to receive financing for improvements that is repaid through an assessment on their property taxes for up to 20 years. PACE financing spreads the cost of energy improvements such as weather sealing, insulation, energy-efficient boilers and cooling systems, new windows, and solar installations over the expected life of the measures and allows for the repayment obligation to transfer automatically to the next property owner if the property is sold. PACE is unique because it:
- Creates badly needed local jobs.
- Uses private capital, not taxes or government subsidies.
- Saves money for building owners and increases property values.
- Is voluntary – not a government mandate.
- Promotes energy security without driving up energy costs.
- Avoids the need to build costly new power plants.
- Reduces air pollution.