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A Renewable Energy and Energy Efficiency Loan Program for Property Owners

How PACE Works

PACE is a voluntary program and stands for Property Assessed Clean Energy. It enables interested Cities or counties set up special Clean Energy Development Boards (CEDB) capable of issuing low-interest bonds, and the bond money is used to cover the costs of a loan program. Participating property owners, both commercial and residential, can opt-in and receive a 20 year loan for renewable energy and energy efficiency improvements, and pay the loan back through a 20 year assessment on their property taxes. This arrangement spreads the cost of clean energy improvements—such as a solar array, energy efficient windows, upgraded insulation, etc – across a 20-year payment plan that automatically transfers to the next property owner if the property is sold. The monthly energy savings is always more than the assessment.

What Are the Benefits to Participating Property Owners?

  • Low Upfront Cost – Removes the upfront cost barrier of renewable energy and energy efficiency improvements. Most programs only charge a small fee to property owners.
  • Less Investment Risk – Removes the uncertainty of recovering the cost of improvements if the property is sold, since the loan stays with the property via the tax assessment.
  • Lower Monthly Payments – Reduces the cost of ownership of the property immediately, since the monthly loan payment is typically less than the monthly savings on utility bills.
  • Good Financial Sense – The loan typically has terms that are better than other loan options.

Sample Project

  • $18,000 project pays for insulation in attic & walls, new windows, and high-efficiency heat pump for a home
  • Total project cost is $20,000 (including financing & administration costs)
  • Yearly assessment = $1,000 ($20,000 repaid over 20 years)
  • Resulting energy savings = $1,500 (must be greater than the yearly assessment in this case $1,000/yr)
  • Net Result = ($1500 – $1,000) = $500 savings/yr

Missouri Organizations Supporting PACE

City of Kansas City, St Louis County, City of Ferguson, City of Creve Coeur, Kansas City Power and Light (KCP&L), Missouri Public Utilities Alliance (MPUA), Missouri Energy Development Association (MEDA), The Council for the Municipal League, Missouri Energy Initiative, St. Louis Regional Chamber Growth Association (RCGA), Renew Missouri, Missouri Solar Energy Industrial Association (MOSIEA), Missourians for a Balanced Energy Future, Missouri Association of Accredited Energy Professionals (MAAEP), Missouri Votes Conservation

Municipalities Considering PACE

Chesterfield, Springfield, St Charles, O’Fallon, Kirkwood, Clayton, Columbia, City of St Louis

What Are the Benefits to Muncipalities

  • Revenue Neutral- PACE loan programs have very little impact to the city’s budget, since the bonds cover both the loans and the program administration costs and are repaid through the voluntary assessments placed on participating property owners. Loan payments are collected alongside property taxes.
  • Job Growth – PACE has the ability to stimulate local job creation through the installation of solar energy and efficiency improvements on private property – jobs that can’t be outsourced!

Information on PACE in Missouri

  • Recent information about eligible property types can be found at http://www.stlrcga.org/PACE.xml.
  • Bonds are secured by assessments, not municipal assets
  • Puts people to work right away
  • Allows Local Control by enabling Municipalities and Counties to create PACE Programs
  • Creation of PACE programs is voluntary Individual participation is also voluntary
  • All costs are paid back by a special assessments on property, with a payback period up-to 20 years.
  • No effect on state, city, or county-wide taxes; only affects PACE program participants
  • Program pays up to 100% of up-front costs, including certified energy audits guaranteeing amount of energy savings
  • Program requires that programs guarantee energy savings are GREATER THAN yearly assessment to pay back project costs.
  • Financial savings begin immediately – result is always cash-flow-positive
  • Upon sale of home, Energy Savings & Assessment are both passed on to new homeowner
  • Programs administered by “Clean Energy Development Boards”, created by participating Municipalities & Counties

National Organizations Supporting PACE

American Institute of Architects (AIA), Barclays Capital, Bipartisan Policy Center, Environmental Defense Fund, Hannon Armstrong, Johnson Controls Inc, Jonathan Rose Companies , Jones Lang LaSalle Inc., National Association of Real Estate Investment Trusts (NAREIT), Natural Resources Defense Council (NRDC), Real Estate Roundtable, Royal Bank of Canada, Siemens Corp, Solar Energy Industries Association (SEIA), Stewards for Affordable Housing for the Future (SAHF), Trane, The Vote Solar Initiative, Wells Fargo

PACE information assembled by Renew Missouri for more information contact Jason Hughes at (573) 239-5690 or Jason@RenewMO.org