Tennessee C-PACER 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 PACENation 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 to pay for energy improvements. The amount borrowed is typically repaid via a special assessment on the property over a period of years. H.B. 667 established Tennessee's commercial property assessed clean energy and storm resiliency (C-PACER) programs. This legislation allows jurisdictions to voluntarily implement programs aimed at financing energy efficiency and resiliency improvements for owners of agricultural, commercial, industrial, and multifamily residential properties. Qualifying improvements and projects must:

1. Decrease energy consumption or demand through the use of efficiency technologies
2. Support the production of clean, renewable energy
   
3. Decrease water consumption or demand and address safe drinking water through the use of efficiency technologies
4. Allow for the reduction or elimination of lead from water that may be used for drinking or cooking; or
5. Increase water or waste water resilience

Tennessee's program distinguishes itself from other similar initiatives by emphasizing resiliency improvement opportunities for property owners. Financing is available for both new and existing buildings. However, residential property consisting of four or fewer dwelling units does not qualify for financing under the C-PACER program. Additionally, the legislation states that the period of the amount of the assessment must not exceed the weighted average of the useful life of the qualified project that is the basis for the assessment.

Not all counties or cities have PACE programs. Consult your local government to determine whether yours does.