PACE financing allows property owners to pay for energy efficiency, renewable energy, and water efficiency projects through additional assessments on their property tax bill over 5-20 years. The contractor receives funds upfront to complete the retrofit project. Then the property owner pays back the funds as a special assessment on their property taxes. This overcomes challenges like lack of access to financing, limited internal capital budgets, and uncertainty around payback periods by spreading costs over many years and securing repayment through a senior lien on the property.

1. What is PACE financing and how does it work?PropertyAssessedCleanEnergy PACE financing allows property owners to pay for energy efficiency, renewable energy, and/or water efficiency projects via an additional assessment on their property tax bill over a 5-20 year term. PACE is also referred to as “tax-lien financing”Provides capital to fund energy retrofitContractorreceives funds to do retrofitPays special assessment on property tax billCapital improvements that saves energy costsProperty OwnerLocal Tax EntityContractor/ESCOProperty owners in a cash flow positive position1Johnson Controls - Overcoming Financial Barriers to Energy Efficiency

2. PACE model overcomes some significant challenges2Johnson Controls - Overcoming Financial Barriers to Energy EfficiencySpread cost over 5-20+ yearsScarce internal capital budget Repayment security thru senior lien position rather than borrower’s credit

3. Backed by property, not by owner or equipment collateral

4. Local governments provide scale

5. Low rates due to security / policy

6. May be treated off balance sheetNo access to or aversion to financingNo investment-grade credit rating