Property Assessed Clean Energy ("PACE") programs are
being adopted throughout the country at a rapid pace. In 2014,
Maryland enacted legislation authorizing local governments to
establish PACE programs. Subsequently, Montgomery, Howard, Anne
Arundel and Queen Anne's counties have enacted PACE programs.
On March 31, 2015, the Montgomery County Council enacted Bill No. 6-15 to create the Commercial
Property Assessed Clean Energy program ("C-PACE"). C-PACE
offers financing to qualified commercial, multi-family, non-profit
(CivicPACE) and industrial property owners for energy efficiency
and/or renewable energy building improvements.
Under the C-PACE program, eligible property owners may apply for
100% up-front, long term financing for energy efficiency and/or
renewable energy building improvements that ultimately lower
operating costs. The loans provide competitive rates and may cover
the cost of materials, labor, permit, application, administration
and inspection fees, any bank or lender fee, and any other fees
incurred for the installation of the improvements. Financing is
limited to 20% of the assessed or appraised property value, but may
be utilized for eligible portions of new construction
projects. From the lender's perspective (the County's
designated lender, Greenworks Lending, or a private lender), the
loan has a lower risk because, similar to the front-foot benefit
charge, the loan is collected as a surcharge on the property
owner's tax bill and if delinquent, becomes a tax lien
enforceable through the tax sale process. Accordingly, any existing
lenders must consent to the financing. The benefit of collecting
the loan through the tax bill is that the property owners can
easily pass through this charge to tenants and transfer the loan to
successor owners deriving the benefit. Contractors also benefit
from C-PACE through increased demand and the ability to apply for
inclusion on the County's registered contractor list.
PACE Financing, LLC from Connecticut manages C-PACE for Montgomery
County. The list of eligibility requirements and eligible
improvements are set forth in Bill No. 6-15; however, the
Montgomery County Commercial PACE Program Guidelines
("Guidelines") provides significant insight and detail
into these requirements and the application process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
