How Does PACE work?

Typically, a property owner or his/her contractor has an upgrade project that needs long term, fixed rate financing. The owner or contractor confirms that the building is located in a participating locality and then contacts the administrator of the PACE program in that area. The PACE administrator qualifies the project, and then directs the owner to a pool of capital providers, one of which will fund the project -typically at completion. If the building is encumbered with mortgage loans, the owner will work with the administrator or third party to obtain the consent of the existing lender(s). The PACE “loan” is repaid on the real estate tax bill on a bi-annual or annual basis, depending on the jurisdiction until the loan is fully paid off at term. In addition to affording property owners with previously unavailable long term financing, the PACE loan runs with the land and therefore, does not accelerate or become due upon sale. As a result, the next owner would continue to pay the annual amount due on the loan similar to a property tax.

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