A number of states and the District of Columbia have enacted legislation authorizing Property Assessed Clean Energy (PACE) programs to finance the installation of energy conservation improvements on multifamily housing projects. HUD has established standards for determining whether such programs are compatible with FHA and subsidized housing programs and guidance for obtaining HUD approval for participation in PACE programs.
PACE programs typically allow owners to finance the up-front costs of the installation of energy conservation improvements by entering into a contract with the participating locality providing that the costs will be repaid through special property assessments, generally through semiannual payments over 20-years. Under the HUD guidance, a PACE program will be approved only if the special assessment will be assessed by a state, county, or municipality under state law and sent with tax bills; payments will be collected with tax bills; at any given time, the owner’s only obligation will be the payment or payments then or past due, with no acceleration of the entire assessment amount; and in the event of a default on payment of the PACE assessment, the mortgagee will receive timely notice and a reasonable opportunity to cure the nonpayment.
Once a local PACE program has received notice that it satisfies HUD’s procedures, HUD will consider requests from project owners to participate in the program.
States with active residential PACE programs are Florida, Missouri, and California. There are also a number of states with enabling legislation but no actively operating PACE programs. These are:
- Maine
- Rhode Island
- New York
- Vermont
- New Jersey
- Maryland
- Ohio
- Michigan
- Wisconsin
- Minnesota
- Illinois
- Georgia
- Arkansas
- Oklahoma
- Nebraska
- Colorado
- New Mexico
- Nevada
- Oregon
Owners of HUD-assisted projects interested in possible participation in a PACE program should obtain and review a copy of HUD Notice H 2017-01 dated January 11, 2017.
Owners of non-HUD-assisted properties are also eligible to participate in local PACE programs, including Low-Income Housing Tax Credit properties. Owners of properties located in the states noted above that are interested in possible PACE participation should contact their locality for details.