Local Option - Property Assessed Clean Energy (PACE) Financing

Note: In 2010, the Federal Housing Finance Agency (FHFA), which has authority over mortgage underwriters Fannie Mae and Freddie Mac, directed these enterprises against purchasing mortgages of homes with a PACE lien due to its senior status above a mortgage. Most residential PACE activity subsided following this directive; however, some residential PACE programs are now operating with loan loss reserve funds, appropriate disclosures, or other protections meant to address FHFA's concerns. Commercial PACE programs were not directly affected by FHFA’s actions, as Fannie Mae and Freddie Mac do not underwrite commercial mortgages. Visit PACENow for more information about PACE financing and a comprehensive list of all PACE programs across the country.

Property-Assessed Clean Energy (PACE) financing effectively allows property owners to borrow money through their local government to pay for energy improvements. The amount borrowed is typically repaid via a special assessment on the property over a period of years. In August 2009, North Carolina enacted legislation (S.B. 97) that authorizes counties and cities to make special assessments in order to finance the installation of "distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to residential, commercial, industrial or other real property." Counties and cities that choose to adopt such programs may finance them by revenue bonds, general obligation bonds or general revenues. 

While S.B. 97 only authorized local governments to adopt PACE programs through June 30, 2015, S.B. 284 of 2015 extended the expiration date to June 30, 2020. That same legislation amended a provision, which reduces the allowed number of annual installments for PACE financing from 30 to 25.

For more detailed information, see the University of North Carolina School of Government's resources on the subject:

• An Overview of Special Assessment Bond Authority in North Carolina, published in November 2009
• Addressing Climate Change Locally: North Carolina Local Government Financing Programs for Private Energy Efficiency Projects, published in February 2010

As of September 2015, no community in North Carolina offers PACE financing. Contact your local government to find out if it has considered establishing a PACE financing program.