How to use DC PACE for/with:
DC PACE allows for the use of PACE financing to fund energy and water saving improvements and related building upgrades in new construction and substantial rehabilitation projects. Contact us about the technical application required for new construction projects.
Yes. Interested applicants are encouraged to seek approval from the program Administrator and close on PACE financing before starting construction. At minimum, the Property Owner should submit a Preliminary Application and receive a Letter of Preliminary Eligibility prior to beginning construction on the PACE project (or PACE-eligible project components, if PACE is to be part of a larger project). Construction may then proceed in parallel with the remainder of the PACE approval process. On a case by case basis, DC PACE may also approve new applications for projects that have already begun construction. However, property owners are advised that until an application has been submitted and approved, there is no guarantee that the project will be approved. In addition, prior to closing, there is no guarantee that a Capital Provider will provide the PACE funds.
PACE may be used to refinance PACE-qualifying projects under certain circumstances. Guidance for determining PACE eligibility, qualifying investments, and calculating the Savings-to-Investment ratio will all be established on a project by project basis. Please contact the Administrator early in the project development process to discuss any PACE funding for refinancing projects.
The lessee of a property that is leased through a long-term ground lease, including a ground lease for a property that is owned by the District or another public entity, is eligible for PACE financing and will be treated as the property owner for PACE underwriting purposes if the following conditions are met:
- The term of the PACE financing does not exceed the remaining term of the ground lease, and
- There are no terms and conditions in the ground lease that would prevent the property owner from taking on a voluntary special assessment or otherwise participate in DC PACE.
DC PACE is compatible with SUE rebates / incentives, many other local and federal subsidies and tax benefits, and more. Property owners are encouraged to take advantage of as many rebates and subsidies as possible, and the Administrator can help connect you to SEU resources. NOTE: The Administrator is not liable for any loss of or change to a rebate or tax credit.
Condominiums are generally difficult to finance with PACE, as each unit is its own real estate tax parcel. There are certain situations in which PACE might work for a condo building, particularly if the condo association itself owns a portion of the real estate (such as the common areas). Contact us and we can help determine if PACE might work for your condo building.
PACE financing is available to all eligible building owners in the District regardless of whether the building is owned by a religious institution. DC PACE financing is available for qualifying physical improvements to the buildings of a religious institution on the same basis as for the financing of improvements to the buildings of other organizations within the District. Religious institutions are eligible to participate in District programs, including DC PACE, that are generally available to the public.
PACE can typically be used in the context of both 4% and 9% LIHTC transactions, a structure used in affordable housing finance. Contact us to learn more.
The US Department of Housing and Urban Development (HUD) has issued guidance concerning the use of PACE in FHA financed or insured transactions, and will grant lender consent to conforming projects.
Freddie Mac has indicated the ability to finance PACE properties but have not issued formal guidance as of yet. It is historically challenging to achieve lender consent on properties with Fannie Mae financing.
DC PACE can be integrated into a larger tax-exempt revenue bond financed projects, to provide an additional source of proceeds beyond the revenue bond debt, and displace other capital contribution requirements. See the Far Southeast Family Strengthening Collaborative project in Anacostia for a case study.
PACE may also be available at tax-exempt rates on a standalone basis for qualifying projects.
Most commercial buildings in the District are eligible for DC PACE. This includes retail / office, institutional, or industrial real estate, and most types of multifamily housing. Properties owner by non-profits that do not pay real estate taxes are still eligible for PACE. Both retrofits and new construction may be eligible.
In addition to measures that directly reduce utility costs or add renewable generating capacity, DC PACE can finance measures that are substantially related to or necessary for the installation of energy and water conservation measures (e.g. a new roof to support a solar installation). DC PACE can finance up to 100% of eligible projects, including both hard and soft costs.
For more information, view our program guidelines, or contact us to see if your project is eligible.
Typically, the minimum size for a PACE project is $100,000, though smaller projects focused on a single measure are also eligible. There is no maximum size.
Property Assessed Clean Energy (PACE) can provide 100% financing for energy and water saving upgrades in commercial real estate and multi-family housing in Washington, DC. PACE financing is secured by a voluntary property tax assessment. The assessment is simply repaid on your property tax bill, much like other tax assessments routinely used to finance infrastructure upgrades.
Get started with a simple online eligibility check, and we’ll get back to you with next steps.
Typically, PACE is 15 or 20-year fully amortizing financing. Rates may be fixed or adjusting depending on your selected capital provider.
DC PACE connects property owners with 100% private financing from a range of local and regional banks as well as PACE-specific lenders and other lending institutions.
Yes. Select either a DC PACE-registered contractor or work with your preferred vendor to develop and implement a qualifying project.
In order for a PACE assessments to be placed as agreements in the tax record, consent of any banks holding outstanding mortgage liens on the property is required. Because PACE projects typically improve cash-flow and increase the value of the property, there is a proven track record for securing lender consent nationally.
PACE financing is secured by a voluntary property tax assessment, and a memorandum of the assessment (not a deed of trust) will be recorded at closing. The assessment is simply repaid on your property tax bill, much like other tax assessments routinely used to finance infrastructure upgrades. Like with real estate taxes, a lien is only created in the case of a delinquency.
While the ultimate decision about how to treat PACE should be made by your accountant, there is precedent for treating PACE as off-balance-sheet financing. PACE is not traditional mortgage debt, but instead is a semi-annual special assessment obligation taken on by a property owner. Like with real estate taxes, it is non-accelerating, and in the case of delinquency or default, only missed payments and penalties (future payments due not become due). In addition, PACE is tied to the property, not the borrower, and in most cases the payment obligation simply transfers to a new owner upon sale of the property.