Green Building Improvements Have a Friend in PACE

"Developers grappling with the cost of new laws enacted to combat climate change are taking advantage a little-known finance tool to help pay for green-building requirements," reports Joe Gose.

"The model for the loans, known as Property Assessed Clean Energy, was created in 2008 to fund improvements that create environmentally sustainable and resilient properties," adds Gose. "Now, developers are turning to PACE loans to help create more energy-efficient buildings and meet tougher environmental standards."

"Promoters say a PACE loan is better than conventional debt used for similar upgrades because it is typically cheaper, it has a fixed interest rate and terms are 20 to 30 years instead of three to five," explains Gose. "What’s more, unlike conventional loans, PACE financing becomes an assessment on the property. It is paid annually along with the real estate tax bill, and it transfers to new owners."

Gose is writing for The New York Times, but the examples included in the article are taken from around the country, like in the city of Omaha, where developers Shamrock Development used PACE to fund LED lighting, heat pumps, and low-flow water fixtures, among other building features, for the $205 million mixed-use development called the Capitol District.

The article includes more details on the benefits of the PACE program for developers, as well as a history of the program (born in Berkeley, California), and the expanding pool of money (even former baseball player Alex Rodriguez has sent large chunks of money toward lenders) available for PACE loans.