How many times have you been in the following situation?...
A salesman or a website has just piqued your interest in a remarkable product that has the potential to change your life in a good way. Everything about it is win-win; it increases your comfort, productivity, and ability to enjoy life...it saves you money, helps everyone around you, and its just the right thing to do. But the first cost is too much. What if I changed the dream sequence to...
...the salesman tells you your credit score doesn't matter. You'll be financed for 20 years at a prime interest rate. The loan stays with whoever owns the property. There is no money down. You still get all of the federal and local incentives...does this sound too good to be true? It's here, and it's called PACE.
Property Assessed Clean Energy (PACE) is a form of land secured financing designed to pay for improvements in the public interest. Historically, land secured financing may have gone to pay for a drainage system or a side walk for a park in a particular community. But PACE is a little different. As indicated in the name, PACE financing purposes include Energy Efficiency and primarily Renewable Energy Goals. The end result of the implementation of these efficiency measures are reductions in greenhouse gases, improved energy independence, and a clean energy economy, leading to sustainability. Sustainability implies a wide range of factors ranging from our current electrical grid infrastructure, to the ability of people to sustain their current comfort levels, I.e. the ability to afford to heat and cool their homes and provide hot water and lighting at comfortable levels without undue financial hardship..
It's no secret that our current power generation sources have to be converted over to more renewable and clean energy sources such as nuclear, geothermal, solar, hydro and wind power. But did you know that by starting at the end of the grid, meaning our homes and businesses, we can make more of a difference than in any other way? I'm not necessarily talking about reducing our standard of living, either. Some may immediately think of having to make reductions in comfort such as setting the thermostat warmer in the summer, and cooler in the winter, taking fewer showers and closing all of the blinds to keep the heat out or the warmth in. While all of these ideas help, they are not the essence of the sustainable measures of which I am speaking. I am talking about the true renewable energy efficiency measures. Clean Energy measures as are indicated in the acronym, "PACE".
By installing truly renewable energy efficiency measures such as geothermal air conditioning systems, solar thermal and photovoltaic heating and energy producing products in our homes and businesses, we can reduce peak demand on our energy producing utilities in such a way that the need for additional infrastructure will be offset for a considerable time.
Typically, in order to take advantage of the PACE program once it is implemented, a "district" is formed and tax assessments are assigned. While some of the land-secured districts have historically been an all or nothing type of program such as might be the case for street lighting in a neighborhood, the PACE program is a "voluntary" property-by-property land secured financing district. There are many examples of success in this type of program.
PACE programs reduce risks and provide distinct value for existing mortgage lenders. The Appraisal Journal sighted that a $1000 decrease in a home's energy consumption can increase the value of the home significantly. Homes that have been rated as green or LEED certified sell for up to 10% more than similar homes with standard efficiency measures.* Finally, lowered energy bills decrease the risk of default by a property owner.
*The Appraisal Journal, October 1998, Nevin/Watson: Evidence of Rational Market Valuations for Home Energy Efficiency
