Business PACE one-pagerCommercial PACE Financing
Clean Energy Financing for Northampton’s Commercial Property Owners
In July 2010, Massachusetts enabled municipalities to establish Property-Assessed Clean Energy (PACE)
programs as an alternative means for homeowners and businesses to finance energy efficiency and renewable
energy improvements to private property. Northampton PACE program(s) will provide long-term financing (up
to 20 years) to private property owners to install energy efficiency and/or clean energy improvements that are
repaid through an assessment on their property taxes.
PACE financing lets property owners use future energy savings to pay for current building improvements (e.g.,
upgraded insulation, sealing air leaks, or energy efficient boilers) that lead to those savings and automatically
transfers the repayment obligation to the next property owner if the property is sold.
Currently, a federal policy ruling has effectively paused PACE programs for residential home mortgages. Due to
this, Northampton will design initial PACE programs for commercial properties including multi-family housing.
CITY BUSINESS
$$$$
UUppffrroonntt
$$$$ RReeppaaiidd
oonn ttaaxx bbiillll
· Creates PACE program and project
approval process
· Provides upfront capital
· Attaches repayment obligation to the
property deed
· Identifies work and chooses contractor
· Accrues energy savings
· Repays financing as a line item on the
property tax bill
· Repayment obligation (and energy
savings) transfer with ownership
Benefits of PACE to Northampton Business Property Owners
· Reduces Lost Capital – Money wasted on excessive energy use is instead used to pay for building
improvements.
· No Upfront Cost – No money down financing. (Note: PACE can be coupled with utility rebates to reduce
costs needing to be financed.)
· Improved Cash Flow –More money in your pocket at the end of each year! PACE’s 20 year finance option
enables annual energy savings (from building improvements) to exceed annual assessment payments.
· Low-risk Investment – No need to worry about owning the property long enough to recoup your
investment. Upon sale, the payment obligation passes on to the next owner (as do the efficiency savings).
· Increased Customer Comfort – Energy efficient buildings are more comfortable for staff and customers.
· Ability to Market “Green” Business – Owner can increase how “Green” a building is by accessing 20 years of
energy savings to fund building efficiency improvements now.
PACE and other Funding and Financing Options Option Funding / Financing $ Source / Amount Interest Term / Cash Flow Risk Additional Comments PACE Financing City of Northampton Cap not yet determined Low to average (not yet determined) - 20 yr term - Designed for positive cash flow (annual savings exceeds annual payment) Upon sale of property, payment obligation and energy savings transfer to new owner. This removes risk of annual payment obligation without annual energy savings. Can only be used for City-specified efficiency improvement measures (still to be determined) Can be combined with utility rebates and 0% HEAT Loan Utility Assisted Financing (HEAT Loan)* Financing Participating bank or credit union Loans available from $5,000 to $25,000 (per building) for businesses, nonprofits and some landlords 0% (the entire interest cost is paid by the utility) - 2 to 7 yr term - Negative cash flow for many important efficiency improvements (annual payment exceeds annual savings) - Positive cash flow for quick payback measures Upon sale of property, payment obligation remains with current owner while energy savings transfer to new owner. Can only be used for utility-specified efficiency improvement measures Is often coupled with utility rebates Private Financing Financing Private financial institution No preset cap Average to high (depending on particular loan) - Depends on type of loan: 5-30 years - Positive cash flow possible for most efficiency measures Upon sale of property, payment obligation remains with current owner while energy savings transfer to new owner. No limit on efficiency improvement measures Can be coupled with utility rebates Utility Rebates* Funding Significant utility rebates are available for both commercial and residential properties. NA NA None Can only be used for utility-specified efficiency improvement measures Property owner could borrow cost remaining after rebates and HEAT loan * some program details subject to change