The PACE Program and Its Effect on Your Contracting Business

Three construction workers with hard hats examining blueprints for a contractor project.

Property assessed clean energy (PACE) programs offer a way for property owners to finance special upgrades to structures and systems. This guide explains the basics of the PACE program, and how this kind of financing might affect your contracting business.

Why Is Clean Energy Important?

Reducing energy consumption by switching to more sustainable forms of energy can be a big win for people generally. Residential and commercial property owners who retrofit their buildings to rely on clean energy sources like solar can save a lot of money on their energy use. Improvements that decrease water consumption could help to take the pressure off California’s periodic drought conditions. By engaging in these kinds of upgrades, businesses and homeowners create opportunities for contracting businesses.

What Is PACE?

Of course, paying for these kinds of upgrades costs money. Although the federal government has offered tax incentives in the form of credits for people to make energy-efficient improvements, they rarely cover the entire expense of the project. This is where PACE programs come in. With a PACE program in the area, property owners have an option to finance as much as 100 percent of the retrofit in a loan sponsored by the state. People who worry about tapping home equity, or who might need a longer term to pay it off, could still participate in efficient upgrades.

Who Can Use PACE Programs?

Virtually any property owner has the ability to take advantage of PACE programs. This means that homeowners with small homes, and commercial property owners of a variety of sizes, may all be able to use the program. The trick is that there has to be a PACE program available in the area. California currently has 12 active programs. Each program is somewhat individual, and may only apply to certain cities or regions of the state.

How Does PACE Financing Work?

Since the programs are all a little different, the financing guidelines may vary from program to program. In general, people who are interested in using financing for PACE upgrades need to:

The organization actually providing the funds may be a bank or other lending institution. Some options rely on a municipal bond for funding. Once the application is approved, the loan acts as a lien on the property.

Do All PACE Programs Offer the Same Options?

When people buy a property, they quickly realize that every lending institution offers different interest rates, application requirements, and loan options. This is true for California’s PACE programs as well. Many of the programs available allow property owners to obtain a loan without a down payment, for terms as long as 25 years. Some allow applicants to get a loan without a minimum credit score. People should look at the individual program to confirm which types of upgrades are available for PACE funding.

As a contractor, you are always looking for ways to grow your business. If you are already involved in the energy services industry or you are working toward a career in a relevant field, knowledge of PACE programs in your area may help you market your business. Some programs even offer marketing materials that you can use in your work with potential clients, so long as you meet the requirements of the program. Helping clients to secure reasonable funding for their energy-efficient improvements protects their interests and yours, and provides a better future for the local environment.

Keeping your contracting business thriving means that you need to understand different funding programs for your line of work. By knowing how property owners can use the PACE program, you can be a vital part of necessary innovations and ensure a steadier stream of work for your business. To start building your construction career today, contact CSLS.