COMES TO TENNESSEE!
Property Assessed Clean Energy (PACE) financing programs have been in existence since the early 2010s including three bordering states with very active programs: Kentucky (kypace.org), Virginia, and Missouri. Over 40 states have passed state-enabling legislation but only about 30 states have actively administered programs. In 2021, the Tennessee State legislature passed PACE enabling legislation HB 667, allowing counties or cities to establish PACE programs.
Common terminology in PACE financing includes:
PACE: “Property Assessed Clean Energy,” the original and common name for this type of property assessment financing across the United States.
C-PACE: “Commercial” PACE, which is used to distinguish PACE from its counterpart, Residential or “R-PACE.” R-PACE programs are active in a few states like Florida, California and Missouri. (NOTE: Tennessee’s legislation, like most states, does NOT allow PACE financing for single-family residential properties).
C-PACER: C-PACE plus “Resiliency.” Some of the recent states to pass PACE legislation have included resiliency improvements to the PACE-eligible list, which historically have been energy & water efficiency and renewable energy improvements.
What is PACE financing?
PACE financing allows eligible property owners to obtain long-term financing from private PACE lenders for eligible building improvements along four categories: energy efficiency, renewable energy, water efficiency and resiliency.
Program-approved property owners repay PACE financing via a voluntary special assessment placed on ONLY their property. The PACE special assessment is billed and collected as part of the normal annual property tax bill. The local government office responsible for property tax reconciliation then remits special assessments it collects directly to the private PACE lender.