Through the Property Assessed Clean Energy (PACE) financing program, commercial borrowers are "set to receive record loans this year" for solar energy installations, Bloomberg reports (See our Feb 14, 2013, blog post for more information). The decision by two of the nation's largest commercial real estate owners – "Prologis, an international owner of industrial properties, and Simon Property Group, the country's largest U.S. Real Estate Investment Trust" – to use the program to fund projects ranging from rooftop solar panels to energy-saving systems has "radically changed market acceptance," Bond Buyer reports. Simon Property alone recently used $5 million in PACE financing for three energy efficiency projects in Ohio and California.
Although they vary from state to state, most PACE programs feature a municipal government that offers PACE bonds to investors who provide loans to businesses and consumers for renewable energy and energy efficiency projects. The government provides financing by creating an assessment district that is added to the tax roll, which the property owner then pays on a tax bill for a period of up to 30 years.
At a time when banks are becoming "less eager to provide long-term capital for renewable energy," it is estimated that more PACE loans will be made in 2013 "than in the past four years combined," and that as much as $150 million in PACE loans will be provided for projects like these, Bloomberg reports. The commercial property side of the program is drawing so much interest, Bond Buyer reports that "market watchers think in a few years enough volume could exist in California to start bundling the currently privately-placed bonds to sell in the public market." For more, read the full Bloomberg story and the full Bond Buyer story.
Bricker & Eckler LLP is Ohio's leader in PACE law. Bricker attorneys assisted in drafting Ohio's PACE law and served as bond counsel for Ohio’s first three issues of PACE bonds, including the energy efficiency bonds for the Simon Properties' project in Lake County, Ohio.
Major companies use the PACE program to fund renewable energy and energy efficiency projects
