What projects are eligible for funding?
PACE financing can be applied to energy improvements for privately-owned commercial, industrial, non-profit and multi-housing properties (apartments with 5 or more units).
Eligible project categories are:
1. Energy efficiency improvements;
2. Renewable energy systems, and
3. Electric Vehicle charging systems.
Visit the What (Can PACE Fund)? page to learn more about what projects are eligible.
What if my project isn’t on the eligible project list?
PACE applicants can submit projects not on the eligible project list under the Customer Measure Track. Applicants for the Custom Measure Track should consult with Eutectics™ to assess eligibility. Some custom projects will require submission of engineering plans and specifications, though if a utility rebate has been approved for the project, this engineering plan approval may be fairly quick. The Program Administrator will approve the Custom Measure Track application on a case-by-case basis, and may request consultation from outside technology experts in making this decision.
Where does the money for PACE financing come from? Is it public money?
PACE is a financing tool to leverage private sector investment. PACE projects are funded via privately-placed revenue bonds, purchased by the private sector. PACE proceeds should pay for all the project costs – even the local government staff time to review and process PACE loans. No public money is required for PACE, after the initial de minimis start-up costs.
What sized projects make sense with PACE?
Eutectics can arrange financing for projects as small as $10,000 up to $10 million.
Do PACE projects have to be “cost-effective” by energy efficiency industry standards? How is this determined?
By law, all energy efficiency projects funded by PACE financing must be cost-effective. If a project is approved for Conservation Improvement Program (CIP) funds (i.e., a utility rebate program), this will act as the seal of approval for fulfilling the requirement to qualify for PACE financing. An engineer will also need to verify performance after installation.
Is there a limit to the size of project that can be completed using PACE?
PACE financing is limited to 20% of the current assessed value of the parcel. For example, a business with a $500,000 assessed value will be eligible for a PACE loan of $100,000. Similarly, a factory with a $3,000,000 assessed value can receive a PACE loan of $600,000.
Does a PACE special assessment require lender consent?
Minnesota’s PACE Statute does not require lender consent. However, PACE of MN has taken a conservative approach and requires all mortgage lienholders on the property to sign a Lender Acknowledgement Notice, stating the the existing mortgage-holder acknowledges that the PACE assessment will be placed on the property and that it does not create a default on the existing mortgage.
While this Lender Acknowledgement Notice has been a barrier for some entities trying to complete a PACE project on their own, Eutectics™ has deep experience working with mortgage lenders to make this process manageable and successful. In fact, Eutectics™ has a 100% success rate in gaining lender approvals for PACE projects in Minnesota.
Is a PACE special assessment different than other voluntary, private-party special assessments that cities already make to private properties under MInnesota law?
No. In fact, PACE assessments are more secure than other voluntary special assessments under Minnesota Statute 429.101 currently in use every week by cities for water line repairs, tree planting, or other improvements. Previously authorized assessments under Minnesota law have not required the acknowledgement of the existing mortgage-holder, and only PACE assessments are limited to 20% of the assessed value of the property. These added security measures were included in the PACE law to reassure private investors and potential bond-buyers, since PACE revenue bonds and assessments are somewhat new to the market. Eutectics™ has already helped create enough confidence in the local market that some investors are suggesting PACE bonds and loans will not need such a “belt-and-suspenders” approach in the future, and could be treated exactly the same as the other assessment-backed improvements in Minn. Stat. 429.101.
The PACE Now website is a national clearinghouse for information about PACE. Their resources page offers PACE webinars, newsletters, reports on energy efficiency, PACE marketing materials, videos on PACE, and other relevant information.
The Federal Department of Energy created a PACE Primer <pdf> explaining the basics of PACE.