December 03, 2013 Articles

Residential PACE Programs Struggle, Commercial Programs Thrive

Push-back from the mortgage industry has stymied private homeowners.

By Ashley L. Thompson – December 3, 2013

Although the federal government frequently trumpets its energy-efficiency programs, so far, few federal programs have provided homeowners and business owners with immediate benefits. It can be difficult for property owners to obtain traditional financing for energy-efficiency projects because these types of projects often require a large capital investment up front even though no return on the investment can be expected until gains from lower monthly energy bills slowly add up. Property-assessed clean-energy (PACE) programs aim to fix this problem by providing a way for homeowners and business owners to obtain financing for energy-efficiency projects.

PACE programs provide financing for individual home and business owners to install energy-efficiency upgrades or complete energy-efficient retrofitting of their homes and businesses. Through a PACE program, the home or business owner receives a loan from the local government to pay for the project and then repays the loan through a tax assessment on the property. The property secures the loan, and the loan transfers with the sale of the property, just like any other property assessment.

While commercial PACE programs have taken off, residential PACE programs have been essentially stopped due to push-back from the mortgage industry. Supporters of residential PACE programs have brought various lawsuits to attempt to overcome the mortgage industry’s resistance; however, as of this year, these challenges have all been dismissed.

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