In brief, a PACE lender provides 100% of the financing for certain energy efficient building improvements at a competitive rate and which is: (a) secured by an assessment against the property (like a special tax assessment) and (b) fully amortized over the expected life of the related improvements (typically 20-30 years).  As the PACE financing is paid through a property assessment, it needs to be legislatively enacted in the respective jurisdiction where the property is located.  Over the last ten years, the availability of PACE has been enacted in most states (including California, Florida, Texas, and New York), but up until recently was not available in New York City.  In New York City, the City Council passed the groundbreaking Climate Mobilization Act of 2019 (Local Law 97), which includes the enactment of PACE-enabling legislation.  This will now make PACE financing available in New York City for the first time.

PACE financings go hand-in-hand with construction loans and retro-fitting existing buildings and there are dramatic advantages to it, including:

  • From the borrower’s vantage point, it provides a fixed rate of interest that is less expensive than mezzanine financing - thereby reducing the over-all costs of funds;
  • From the lender’s point of view, it provides 100% financing of green related improvements, this can afford lower leverage at the mortgage loan level; and  
  • From both parties points of view, the improved energy efficiency from PACE improvements enhances the value of the property and also reduces on-going operational (energy) costs.

We are deeply involved with PACE lending and were one of the first law firms to represent clients in PACE financings as part of our national Finance Practice.  We have been representing and advising both lenders and borrowers on the benefits and intricacies of PACE loans and would be pleased to give you further information, connect you with PACE lenders, and otherwise advise you.