Commercial PACE

PACE is an innovative program that makes it possible for owners of commercial and industrial properties to obtain low-cost, long-term financing for energy-efficiency, water conservation and renewable energy projects.

PACE statutes authorize municipalities and counties to work with private sector lenders to provide upfront financing to property owners for qualified projects, and to collect the repayment through annual assessments on the property’s real estate tax bill.  The term of PACE financing may extend up to 20 years, resulting in utility and other cost savings that exceed the amount of the assessment payment. PACE legislation for commercial property has been adopted in 29 states and the District of Columbia.

PACE Across the Country

Download List of Programs in PDF

Commercial PACE is available in more than 1,000 municipalities across the country. In PACE enabled states, a range of program implementation models are used by local governments and both for-profit and non-profit companies are emerging to provide administrative, marketing, and financing services.

Find a Program Near You

Estimated Commercial PACE Market

# of buildings upgraded

  • Energy Efficiency 46%
  • Renewable Energy 45%
  • Mixed 9%


Jobs Created

* All aggregate commercial PACE data is shared with us by programs or other sources considered to be reliable, but has not, in all cases, been independently verified by PACENow.

See More PACE Data

Unique Benefits of  PACE

  • 100% financing with no up-front, out-of-pocket costs for the property owner.
  • Positive cash flow and increased property value, even with long simple payback projects.
  • Alignment of landlord and tenant interests, as the real estate tax assessment, along with the cost savings generated by a sustainability project, can be shared with tenants under most lease forms.
  • PACE assessments are linked to the property and automatically transfer to a new owner upon the sale of the property.
  • Available for most projects that save or produce energy, and for water management in many states.

Download PACE 1-pager in PDF

PACE Is Taking Off Across the Country

In this video, market leaders are speaking of the benefits of PACE and why property owners in various states find it an effective financing mechanism.

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.


Download the slides:

For presenting to building ownersFor presenting to community leaders

Financial Impact of PACE:  In-Depth Dive for Commercial Property Owners

Why Should Property Owners Use PACE?

The purpose of this presentation is to clearly describe the many benefits of PACE financing for real estate companies and to provide examples of the financial impact of PACE under various lease forms.

Download Presentation in PPT

Money Is Often Misunderstood

The purpose of this presentation is to remove confusion about how the cost of PACE financing compares with the cost of internal capital allocated by companies to energy efficiency and renewable energy projects. This video reviews the concepts of “weighted average cost of capital,” “hurdle rates,” and “allocated cost of capital.”

Download Presentation in PPT

George Caraghiaur

George Caraghiaur

These presentations were developed by George Caraghiaur, our in-house expert on how commercial real estate companies can maximize EBITDA through sustainability practices . George joined PACENow as a Senior Fellow in April 2014. Until recently, he was SVP, Sustainability for Simon Property Group, an S&P 100 company and a global leader in the retail real estate industry, where he was responsible for developing and implementing the company’s sustainability strategy, including energy efficiency, waste recycling, renewable energy, tenant engagement, sustainable construction, and transparent reporting. George holds a Master of Science from Penn State University, and a Bachelor of Engineering from École Polytechnique de Montréal.

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.

Download the whitepaper in PDF

Existing Mortgage Lender Engagement

PACE financing is repaid with an assessment added to the property tax bill. Like property taxes and other assessments, current or past due PACE assessments have a senior claim to other property liens, including mortgages. “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 1-Pager on Lender Consent

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

Download List of Banks in PDF

*This is a partial list of banks that have provided consents. It is intended to be used as a policy document showing growing support for PACE among the mortgage lenders. This list does not reflect institutional views of the listed banks. Updated May 2016.

PACE mechanism has been embraced by scores of property owners, ranging from multinational REITs to main street business owners. Since 2009, the size of commercial PACE projects has ranged nationally from $5 thousand to $7 million, proving its versatility.

Featured Project

PACE financed $1.8 million of energy efficiency upgrades at 644 Broadway on the edge of San Francisco’s historic Chinatown, as part of a complete redevelopment of a four story mixed-use building owned by Bay Area based Cypress Properties Group.

See More Project Examples

What Are Property Owners Saying about PACE?

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

Commercial PACE FAQs

PACE 101

How does PACE work?

“PACE in 90 Seconds” is a useful video that provides a brief overview of how PACE works. While there are variations in program design and financing arrangements across the country, at a minimum a PACE project will involve: a property owner who wants to complete an energy efficiency or renewable energy project, an energy services contractor to do the work, a lender to provide 100% of the project’s costs, and a unit of local government to impose, collect, process and enforce the PACE lien. PACE financing can be arranged by a PACE program or by a building owner working with a PACE lender directly. Ultimately, PACE is a public-private partnership that allows building owners to access private financing and repay it along with other payments on their property tax bill.

What is a typical PACE project?

PACE is a versatile financing tool that can be used to retrofit virtually any type of building. PACE can finance a range of energy efficiency improvements (e.g., windows, lighting, HVAC, or roofs) and a variety of technologies that produce energy (e.g., solar, wind, geothermal). PACE offers financing for up to 20 years, which makes projects with long-term paybacks possible and cash-flow positive. Therefore, PACE unlocks the market for projects that could not gain access to other forms of financing. The PACE market is developing and evolving. To date, completed commercial PACE projects range from $7,000 to $7 million in size and include many building types – industrial, office, multifamily, agricultural, non-profits, and others. The Commercial PACE data page shows the types projects financed to date:

What steps do I have to take to get PACE financing?

For a property owner or developer, the very first step is to find out if the state where a property is located has a PACE enabling legislation, by simply checking the list of states with PACE laws: The second step is to identify whether PACE is offered in the municipality/county where the property is located, by searching the list of cities and counties:  While in some states, such as California in Connecticut, PACE is widely available in most municipalities, in other states PACE programs are still gaining traction and building out their footprint. If PACE is not available in the municipality/county where the building is located, see if it is available in nearby cities/counties and contact a program operating in your state to see if the program can be expanded to the locality where the project is contemplated. The third step is to identify energy efficiency and renewable energy measures to be financed with PACE. The fourth step is to contact the local PACE program provider and see if the contemplated project technologies and property are eligible for PACE financing under the local program guidelines.

How long does it take to get a project done through PACE?

Financing with PACE need not take any longer than using any other funding source. The timeline will depend on the complexity of the project and the decision-making process of the property owner. Typically the PACE financing process takes between 30 and 60 days.

How do I get mortgage lender’s consent?

To date, over 100 lenders have given their consent to commercial PACE projects. Most PACE programs consider getting lender consent to be a best practice. To learn more, please refer to our lender consent one pager.

Who has used PACE thus far?

From the hundreds of non-residential projects completed thus far, we know PACE works for just about every type of building, and can be an effective way to finance almost any project that saves or produces energy. There are scores of projects in development and involving industrial, agricultural, multi-family, non-profit, and other types of properties.   Large commercial property owner, like Simon Properties Group and Prologis Inc., took advantage of PACE as well as small ‘main street’ business owners.  PACE finance has a broad applicability in terms of the size of projects and property types. Please refer to Success Stories page for specific examples and see PACE Data page for an industry snapshot

PACE Policy Implementation

What can I do to get my State to adopt PACE legislation?

If there is no PACE legislation in your state, please write to us ( to find out if there is an effort to introduce PACE enabling legislation already underway. Generally, successful legislative efforts have a local champion (e.g., a coalition of stakeholders, an energy related NGO, or a private PACE provider) to shepherd a bill through the legislative process. The following PACE Talks discuss the strategies and tactics employed by successful legislative campaigns in Arkansas (, Utah (, and Virginia (

If my state has a PACE enabling law does it mean I can use PACE?

Maybe. While PACE financing is now available in over 1,700 municipalities throughout the US, it will likely be a few years before its available everywhere. Having a PACE law is only the first step. The second step is the establishment of a PACE program. Connecticut has a statewide program, managed by the state’s Green Bank, which any municipality can join. Elsewhere , PACE programs have been established by individual jurisdictions (e.g. Sonoma County, Los Angeles County, or Ann Arbor) or by multiple jurisdictions acting jointly through inter-local agreements (e.g. Florida’s Green Energy Works Authority, or California’s HERO or CaliforniaFIRST programs) or by private sector PACE providers (e.g. Ygrene Energy Fund, or Michigan’s Lean & Green).  The “PACE near you” page has a searchable database of all cities and counties that have created or joined a PACE district.

How do I get a program started?

The answer depends on many factors: differences in the enabling legislation (which reflect different state laws and constitutions), different attitudes about the role government should play in operating (and paying for) a public benefit program, financial constraints, and the like. The following topic paper lays out options and things to consider:

What is the FHFA and why do they oppose PACE?

The Federal Housing Finance Administration (FHFA) is the federal regulator and conservator for mortgage giants Fannie Mae and Freddie Mac. Residential PACE programs in development stages throughout the United States were largely stalled in 2010 when the FHFA directed Fannie and Freddie to stop buying home mortgages with PACE assessments. Efforts to reverse the FHFA with bipartisan legislation in Congress and lawsuits in federal courts (including one filed by the State of California) have not succeeded thus far, and a federal appellate court ruling found the FHFA, acting in its conservator role, has broad latitude in protecting Fannie and Freddie’s interests. However, since 2010, a number of programs in CA and other states have continued to provide senior lien residential PACE financing to homeowners, with no reaction, to our knowledge, from the FHFA. The FHFA’s opposition relates to the residential and not the commercial market for PACE. On the commercial side, it is a best practice to seek a mortgage lender’s consent before placing a PACE assessment on a property. Please read the Lender Consent 1-pager: that details existing lender’s considerations revolving giving the consent.

Financial Impact of PACE

Does PACE affect net operating income?

The term of PACE financing may extend up to 20 years (25 in some states), resulting in utility and other cost savings that exceed the amount of the assessment payment. At properties with gross leases, this increases net operating income for the landlord.  At properties with triple net leases, net operating income remains unchanged.

Why should I use PACE versus internal capital?

Owners typically allocate internal capital to projects that meet their hurdle rate for investment in sustainability projects. PACE can generate positive cash flow and increased property value, even with long simple payback projects that don’t meet the hurdle rate for the use of internal capital. PACE also removes barriers to investment because of lease form disincentives, such as split incentives under a triple net lease.

For buildings with tenants, does it matter what type of lease I have?

The form of lease affects the economics of sustainability projects for landlords. Under all lease forms, PACE can generate one or more of the following benefits: reduces the risk of investment in needed infrastructure CAPEX; improves aging infrastructure without encumbering the exit upon sale; increases NOI; increases cost recoveries; increases property values; aligns landlord and tenant interests; and increases sustainable development.

How does PACE affect funds available for distribution?

The term of PACE financing may extend up to 20 years, resulting in utility and other cost savings that exceed the amount of the assessment payment. At properties with gross leases, this increases funds available for distribution (FAD).  At properties with triple net leases, FAD remains unchanged.

What are the closing costs of PACE?

The administrative costs of running a PACE program are usually recovered through closing fees, as with any form of financing.  These can include fixed, interest rate-based, or project size-based administrative fees. Other fees can include project application, loan origination, legal, trustee, and recording fees, depending on the program.  Usually, closing costs can be rolled into the PACE financing.

What are the annual costs of PACE?

The administrative costs of issuing, collecting and disbursing the annual PACE assessment is recovered through annual fixed or assessment-based tax collection and trustee fees. These costs are not typically material.

Can I recover project development costs through PACE?

Yes.  Development costs, both hard and soft costs, such as in-house time and travel expenses, engineering assessments, legal fees and other typical development costs can usually be rolled into the PACE financing, in accordance to the local PACE program guidelines.

Can I still use utility rebates and other local/state/federal incentives if I finance a project with PACE?

Yes.  Projects financed through PACE can avail themselves of any and all available incentive programs for sustainability projects.

Is PACE treated as an on or off balance sheet item?

As of May 2015, the Federal Accounting Standards Board has not issued guidelines on the accounting treatment of PACE.  In many ways, PACE assessments do not share the characteristics of mortgages, bonds, or other debt instruments:

  • There is no breakdown as to the amount of principal and interest associated with the PACE financing on the property tax bill.
  • Similar to property taxes, PACE assessments are a solely a legal liability of a property. There is no corporate guaranty with regards to the payment of a PACE assessment.
  • There is no acceleration of the principal amount of the assessment upon the sale of a property, and no requirement for pre-approval of the buyer.
  • The total amount of the PACE assessment is not typically shown on the property’s title report as a lien against the property. Ad valorem and non ad valorem assessments on property tax bills do not become a legal liability of a property until they are placed on the property tax roll, at which time they are shown as a lien against the property in the title report. Future property taxes are typically not placed on the balance sheet until the year in which they are levied and placed on the tax rolls.
  • In the event of default for non-payment of property taxes, only the amount of the unpaid PACE assessment in the year of the default, plus penalty interest and fees, can be recovered. There is no option of accelerating the entire unpaid principal amount, penalty interest and fees, as is the case with a mortgage.

  On the other hand, PACE assessment contracts provide for property owners to a pay a fixed annual assessment for the term of the assessment contract.  Because of the fixed and determinable nature of PACE assessments, some accountants may suggest placing the entire amount of the PACE financing on the debt or contingent liabilities section of the balance sheet.  Property owners who use PACE should consult with their accountants with respect to the accounting and tax treatment of PACE assessments.

What are the interest rates like for PACE projects?

Interest rates for PACE projects are market-based and are usually based on a similar tenure treasury rate plus a spread.

Applicability of PACE

What improvements can PACE pay for?

Energy efficiency and energy generation improvements and, in some states, water conservation and hurricane hardening, all qualify for PACE financing. Eligibility may vary by state and municipality, so we recommend that you contact your local PACE program for a list of eligible properties and improvements.

Can I use PACE to finance a renewable project PPA?

Yes. In fact PACE PPA and PACE Lease structures have been successfully in used in CT and CA. Please refer to a PACE Talk that details the applicability of PACE PPA:

What types of buildings can use PACE?

Almost any building is eligible for PACE financing, including homes, offices, hotels, restaurants, shopping centers and other retail properties, non-profits, warehouses, garages, etc. Eligibility may vary by state and municipality, so we recommend that you contact your local PACE program for a list of eligible properties and improvements.

Can PACE be used to finance new construction?

PACE can be used to finance new construction in the following states: California, Colorado and Ohio.

Availability of PACE

Where is PACE financing available?

See PACE Near you page: where you can find out which states have passed PACE enabling law, which states have active PACE programs, and which cities and counties have active PACE districts.

Who offers PACE financing?

PACE financing is offered by private actors and local governments across the country. Please see our list of commercial PACE programs:

Can you connect me with a PACE program?

Yes. Please see the list of PACE programs (, most program have listed their contact information. If there is no contact information, please write to