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.
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