Frequently Asked Questions
What is PACE and how does it work in Los Angeles County?
Property Assessed Clean Energy (PACE) financing is a financing option available to Los Angeles County non-residential property owners fund energy efficient, water-saving and renewable energy upgrade projects through an assessment on their property tax bills. In Los Angeles County, property owners choose their own PACE investor and negotiate their own rate and terms.
Is my property eligible?
Non-publicly owned commercial properties that receive a property tax bill within the County are eligible including but not limited to:
- Commercial offices
- Apartment buildings (five or more units)
- Schools, private universities, faith-based buildings and nonprofits
- Industrial facilities
Who are the ideal commercial property candidates?
- Older buildings in need of major upgrades
- Properties with no mortgage or low loan-to-value
- Portfolios of properties with a single owner, such as big box or grocery stores
- Industrial/manufacturing facilities
- Properties needing to comply with legal requirements
- Properties leased to government agencies
Do residential properties qualify for PACE?
What are the PACE financing benefits for me?
- PACE allows owners of commercial properties to finance up to 100 percent of project costs, allowing projects to be amortized over a longer period of time so they can be “cash-flow positive” from day one.
- PACE helps property owners reduce operating costs while increasing property value.
- Capital investments in energy efficiency using PACE financing can help owners increase rent, decrease vacancy and attract high-quality tenants.
- Most commercial leases classify property taxes as operating expenses. Operating expenses, such as a PACE assessment, may be able to be passed through to the tenants, eliminating a split incentive issue.
- Qualification for PACE financing doesn’t require a personal guarantee.
- If the property is sold, the financing assessment stays with the property and transfers to the new property owner since the improvements remain with the property.
Can you combine rebates with PACE financing?
Yes, you can combine PACE with other tax incentives and utility rebates that can significantly buy down the cost of your energy and water efficiency projects. Combined incentives and rebates can fund much of the project cost. Rebates help provide quality assurance without costing the program and participants.
When will I make the first payment?
PACE assessments function in the same way as other contractual assessments and follow the same collection schedule—twice-yearly payments, with an interest-only payment due on March 2, and a principal plus interest payment due on September 2. This collection schedule is dictated by California law and is not flexible; however, there is a wide flexibility to structure the details, term and interest rate of the transaction.
What are the property eligibility requirements?
- Applicant must be the legal owner of the property, and all of the legal owners of the property must agree to participate.
- Mortgage holder(s) must explicitly consent to the PACE assessment in writing.
- Property owner must be current on any existing mortgage(s); property owner must not have defaulted on the deeds of trust.
- Property must not be subject to any involuntary liens or judgments.
- Property must not have been delinquent on property taxes for the past five years, or since the date of the most recent transfer if less than five years.
- Property will be subject to the appropriate jurisdiction’s permitting inspections and all other applicable federal, state, and local codes and regulations.
- Property owner must not be in bankruptcy and must not have declared bankruptcy within the last 10 years.
Is there a minimum project dollar amount?
While there is no minimum project dollar amount, typical projects will have closing costs ranging from $30,000 to $45,000. Due to transaction costs, the effective minimum project dollar amount is $250,000. Contact us at (877) 785-2237 or email firstname.lastname@example.org to see if PACE is the right financing option for you
How does AB 1103 affect PACE?
California Assembly Bill 1103—which went into effect January 1, 2014—requires non-residential building owners to provide certain energy usage and energy efficiency information to prospective buyers, tenants and lenders by using and tracking energy performance using Energy Star’s Portfolio Manager. PACE financing uses the building’s energy star portfolio rating as a measurement tool to track improvement. If a building has an Energy Star score, disclosure of that score will be requested prior to and after improvements. Improvements financed through PACE are likely to increase a building’s Energy Star score; thus making it more marketable at times when disclosure is required per AB 1103.
What are the steps to getting started?
- Complete your Initial Application
- Have your property audited for energy use
- Create your project scope and select your investor
- Obtain mortgage lender consent
- Complete your Final Application
- Fund your project and start your upgrade
Who should I call to learn more?
To schedule a one-on-one meeting or to speak with someone to learn more about your options, call (877) 785-2237 or email email@example.com.
- Lower operating costs
- Increase property value
- Funds up to 100% of installed costs