Economic development and job creation through clean energy
PACE is an economic development engine that’s energized local economies from D.C. to L.A. and thousands of cities and towns in between. PACE makes it possible for owners of residential, commercial, industrial, multifamily, and nonprofit properties to obtain low-cost, long-term financing for energy efficiency, water conservation, renewable energy projects, and more. (Tip: see where PACE operates on the page “PACE near you“)
PACE has already financed billions of dollars of clean energy improvements for homeowners and $approximately $500 million for over 1000 commercial building owners. This capital investment has had profound impacts on local economies — it’s increased jobs for local, family-owned contractors and solar installers; reduced energy bills for thousands of homeowners, which puts more money in their pockets each month; and brought up property values in central business districts through efficient redevelopment projects.
PACE also helps municipalities meet their climate goals. Los Angeles, Miami, Multnomah County, OR, Milwaukee and other municipalities have used PACE as a tool to tackle their greenhouse gas and energy reduction targets. According to the HERO program — which has completed over $1.4 billion residential PACE financings — every $100,000 invested leads to 182 tons of CO2 emissions abated and over 200,000 gallons of water saved. PACE programs only allow the use of certified efficient products to ensure that customers will save energy.
To learn more about how PACE works, see “What is PACE?”
PACE impacts on local economies:
Residential financing completed
Commercial financing completed
- PACE makes investments in energy efficiency and renewable energy more feasible for a wider group of homeowners and business owners. PACE doesn’t rely on personal credit (which can be a barrier to obtaining financing for many low-income homeowners and small businesses) but rather depends on equity in the property. PACE also allows for longer payback terms than most other forms of financing — up to 25 years. As a result, PACE brings in more investment dollars for projects that otherwise may have been left stranded.
- These investments directly create jobs for HVAC contractors, energy services companies, and solar installers, which are often small local businesses.
- Commercial PACE financing can be used to reinvigorate business districts through redevelopment projects, such as Milwaukee’s Mackie Building restoration, which used $1.7 million PACE financing for efficiency improvements to prepare the building for the addition of 25 apartments and new office space. These changes will bring new business to a historical area of downtown Milwaukee. See this case study.
- PACE puts money back in consumers’ pockets in the form of utility bill savings, tax deductibility of the assessments (in some cases), and lower insurance premiums in areas where resilience, such as hurricane hardening or seismic retrofits, is an important factor. People will recirculate these saved dollars into the local economy, creating an economic multiplier effect that further creates local jobs.
- PACE improvements (being permanent, income- or savings-generating fixtures to properties) increase property values, which, in the long-run, leads to greater tax revenues for municipalities that can be used for public programs that further benefit the local community.
To learn more, read a study of the Economic Impact of Residential PACE Programs by EcoNorthwest.
- PACE helps communities achieve important energy and water conservation goals. Efficiency projects upgrade old equipment which reduces energy use, while renewables replace fossil fuels and reduce greenhouse gas emissions.
- PACE allows for projects with paybacks of 20 years, rather than only low-hanging fruit with quick paybacks. This makes possible comprehensive projects with a deeper impact on energy usage.
- PACE has been used to finance an estimated $88 million for water conservation in drought-stricken areas of California, saving multiple billions of gallons of water.
- PACE solves problems inherent in other efficiency financing options. With PACE, building tenants can see both the costs and benefits of efficiency improvements, which solves the “split incentives problem” that typically exists between tenants and landlords. PACE also makes it possible to securitize efficiency projects of different types, as multiple PACE providers have achieved with over $1.5 billion already securitized. This bundling of diverse efficiency projects into a single securitization is possible because of the added security PACE provides and the strict standards for qualifying projects set by the PACE program. As such, PACE has the unique potential to drive trillions of investment dollars from major lending institutions into energy efficiency and renewable energy.
- Most PACE programs make use of private funding, not municipal dollars.
- It is possible to set up a PACE program without any cost, or minimal cost, to the participating municipality. In the case of Lean & Green Michigan and the Texas PACE Authority, these programs set up the necessary administration framework and allow municipalities sign onto the program at no cost. Funding is then secured from private institutions to complete commercial projects.
For more information on program types and structures, see the page “Start a PACE Program.“
- PACE offers additional consumer protections over and above other types of financing.
- PACENation has released consumer protection standards, which provide the strongest protections for homeowners using PACE or any other type of financing who want to invest in clean energy and water efficiency upgrades to their properties. They address:
- A homeowner’s eligibility for financing and ability to repay
- Comprehensive financial disclosures
- Appropriate contractor conduct
- Acceptable products and projects (with pricing guidelines)
- Post-funding support
- Treatment of protected classes
- Grievance procedures
- Data security and privacy matters
One-pager: Working With Community Leaders
Download and share this printable one-pager to learn more about how PACE benefits municipalities and how best to include municipal leaders in the process of starting a PACE program.
Economic Impact Analysis of Property Assessed Clean Energy Programs (ECONorthwest, 2011)
This research, performed by ECONorthwest for PACENation, found that $4 million in PACE funding generates $10 million in gross revenue, $1 million in combined federal, state, and local tax revenue, and 60 jobs.
Which means that spending a $1 million on residential energy efficiency or renewable energy PACE projects results in:
- Creating approximately 15 local jobs
- Creating positive economic impact ranging from $717,000 to $939,000 at the individual city level
- Total tax revenue impact at all levels of government is over $1 million
PACE for Commercial Building Owners and Community Leaders: A Primer
Why use PACE? Learn more in our downloadable slides for presenting to commercial real estate companies and community leaders. These slides give a primer on PACE, how it works and why to use it, and the specific benefits of PACE for building owners and communities. Please download the slides that match your needs and share them with your constituents.
Whitepaper: Benefits of PACE for Commercial Real Estate Companies
For commercial real estate property owners, PACE financing can remove the typical barriers to the implementation of energy efficiency improvements. In this whitepaper, George Caraghiaur explains how to take advantage of the many benefits PACE provides to commercial real estate companies.
PACENation’s Consumer Protection Policies
PACENation developed these policies to provide stronger protections for homeowners than any other type of clean energy financing. They address a homeowner’s eligibility for financing and ability to repay, comprehensive financial disclosures, appropriate contractor conduct, acceptable products and projects (with pricing guidelines), post-funding support, treatment of protected classes, grievance procedures, data security and privacy matters.
PACE funded $1.8m efficiency improvements at San Fran’s 644 Broadway
MI building saves money and energy for the owner and for tenants
CA hotel financed efficiency upgrades with $6.8m PACE financing
Through San Francisco’s PACE program, we absolutely realized the power of PACE — the building has become more valuable not only from a financial point of view but from a people’s standpoint. Our vision for the project was to create a creative and cultural mecca, which we’ve done!Jeff Lee, Principal, Cypress Properties Group
Prologis is participating in the PACE program in order to promote new, innovative solutions for financing sustainable building improvements. It provides the flexibility to drive more energy improvement programs and that’s something everyone should embrace.Jack Rizzo, Managing Director, Global Construction and Renewable Energy, Prologis Inc.
PACE is the only funding mechanism that is credible in providing verifiable information to our investors, and therefore is the ideal tool for us to move forward in becoming the gold standard in sustainable hotels.Make Davis, General Manager, Hilton Los Angeles/Universal City