PACE stands for Property Assessed Clean Energy. PACE is an innovative means of financing energy efficiency such as roofing, insulation upgrades, daylight harvesting, HVAC upgrades, rooftop photovoltaics and other energy improvements. In areas with PACE legislation in place municipal governments offer a specific bond to investors and then turn around and loan the money to consumers and businesses to put towards an energy retrofit. The loans are repaid over the assigned term (typically 15 or 20 years) via an annual assessment on their property tax bill. PACE bonds can be issued by municipal financing districts or finance companies and the proceeds can be used to retrofit both commercial and residential properties. One of the most notable characteristics of PACE programs is that the loan is attached to the property rather than an individual making PACE finance an off balance sheet method of finance.
PACE programs help building owners pay for the upfront costs of green initiatives which decrease the energy cost and increase the property Net Operating Income. This allows property owners to begin saving on energy costs while they are paying for their energy upgrades. This usually means that property owners have net gains even with increased property tax.