Overview of Steps to Launch Commercial PACE
This section presents the key steps that local governments (grantees) may follow to implement a commercial PACE program. The 13 steps are first summarized:
Review and Address Issues: Become familiar with issues related to PACE and factor their impact into program design and implementation.
Establish Supporting Framework: Lay a solid foundation for the program in the areas of team composition, goals, legislation, and assessment district formation.
Choose Capital Sourcing Approach(es): Choose how the financing will be funded.
Choose Credit Enhancement and Apply the American Recovery and Reinvestment Act of 2009 (ARRA) Funds: Decide how to achieve the best interest rates for the program and how best to apply and leverage ARRA funds to fit the program’s design.
Choose Eligible Property Types: Select the commercial property types eligible for the program.
Assemble Eligible Project Measures: Draw up a list of project measures eligible for PACE financing.
Choose Energy Audit Requirements: Decide the types of energy audits applicants will be required to undergo to assess expected project energy/cost savings.
Choose Program Eligibility Criteria: Determine the program underwriting/eligibility criteria that applicants and their properties must meet.
Leverage Existing Utility Rebate/Incentive Programs: Investigate local utility rebate/incentive programs and how best to leverage them.
Plan Quality Assurance/Quality Control: Decide how the program will ensure that project work meets program quality standards and how to guard against fraud.
Design Application Processing Procedures: Design the process for reviewing applications and either approving or rejecting them.
Specify Contractor Requirements: Specify the requirements for energy auditors and contractors to participate in the program.
Market and Launch Program: Decide what kind of outreach will be made to property owners and contractors and launch the program.
The following sections correspond to and expand on each of the steps above. Note that many steps will be carried out concurrently and not necessarily in this exact order.
Review and Address Issues
Current Regulatory Issues
On July 6, 2010, the Federal Housing Finance Agency (FHFA) issued a statement that PACE programs with senior lien position1 “present significant safety and soundness concerns that must be addressed by
1 Senior lien position refers to a debt having priority over all other debt on a property in the case of foreclosure (i.e., it gets paid off first before other outstanding debt, including mortgages). Most PACE programs use a senior lien position for the PACE debt because the PACE assessments are part of the property taxes, and property taxes are already senior to other property debt. But there are some PACE programs that use a subordinate or junior position instead, which means the mortgage has priority over the PACE debt.
Chapter 13 —