PACE for Mortgage Lenders

Increase your portfolio’s value

PACE makes it possible for owners of commercial, industrial, multifamily, and nonprofit properties to obtain low-cost, long-term financing for energy efficiency, water conservation, renewable energy projects, and more.

In most states, to use PACE for commercial buildings, the owner must obtain consent from the property’s existing mortgage lender. To date, many PACE lenders have consented. These mortgage lenders see the value of PACE because it adds to the value of the building stock that underlies their mortgages. Furthermore, a 2015 study showed that PACE increases the value of homes.


To learn more about how PACE works, see “What is PACE?”

Benefits of PACE for Mortgage Lenders

  • Hundreds of commercial lenders have allowed PACE liens to take a priority position on their mortgaged properties because they see that PACE improvements create value for themselves, their properties, and their clients. These lenders — which have included regional banks and major institutions across the country — recognize that critical efficiency upgrades and solar installations improve the quality and value of their building stock. In applicable cases, these improvements also improve tenant comfort and can lead to higher rents.
  • Residential properties also benefit from PACE improvements: a 2015 study published in the Journal of Structured Finance by economists Laurie Goodman and Jun Zhu showed that, by three different methodologies, homes with PACE improvements sold for more than comparable homes, even after taking into account the financing costs.
  • PACE assessments do not accelerate, which means that PACE runs with the land and the entire portion of the assessment does not come due upon sale or refinance of a property. For this reason, only the unpaid portion of a PACE assessment becomes senior to other liens on a property, in the same manner as unpaid municipal taxes.
  • While underwriting processes vary between PACE programs, PACE assessments typically do not exceed 10-15% of a property’s value. As a result, PACE exposure in any given year is usually no more than 0.5 to 1% of the property’s value, given a PACE term of 20 years. PACENation’s Consumer Protections Policies, which have been adopted by major residential PACE programs, stipulates that the yearly PACE assessment plus all property taxes can not exceed 5% of the property’s fair market value, and that the PACE assessment must not exceed 15% of the property’s value, among other restrictions.
  • In many cases, the long payback periods of PACE assessments allow projects to be cash-flow positive from day one, which puts money into the building owner’s pocket and improves their ability to make mortgage payments.

PACE Works for Lenders


*This is a partial list of banks that have provided consents. This list does not reflect institutional views of the listed banks. Updated Oct 2018.

Learn more about mortgage lender engagement from our Lender Support Update, Lender Support Handbook and Lender Support Study (2013).

“Lender consent” means gaining the support of an existing mortgage lender for a PACE project, and is widely considered a best practice for commercial PACE projects. A lender’s consent may be required by state PACE enabling statutes, and even if not, most PACE programs, project funders and building owners themselves require the support of an existing lender before proceeding with a PACE project.

Why would a mortgage lender allow a PACE assessment to be senior to its lien on a mortgaged property? There are many reasons, and to date over 100 mortgage lenders have found that approving PACE funded projects makes sense. Download the one-pager to learn more.

PACE makes homes more valuable

In the first economic study of homes with PACE upgrades, three different methodologies and three home price indices were examined and all turned up the same results; PACE is good for the resale value of homes, even after taking into account the financing costs.

The study, conducted by Laurie Goodman, a well-known housing market and industry expert in Washington, D.C., compared data on PACE (Property Assessed Clean Energy) assessed homes that sold with prices predicted by housing price indices, and a random sample of comparable homes. Houses with PACE assessments surpassed projected appreciation rates and increased the sale value of foreclosed homes as well. It was determined that homes with PACE upgrades have higher net resale values ranging from $199-$8,882 compared to homes without PACE upgrades.

Success stories

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

Other resources and downloads for lenders

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.

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.

Next step…

Connect with our members and join PACENation

View current PACE market statistics

Explore our library of C-PACE case studies

MikePACE for Mortgage Lenders