P.A.C.E. Financing -
(Property Assessed Clean Energy)
As an alternative to a cash purchase, many of Ideal’s business customers utilize the PACE program to finance the purchase of their solar array.
PACE is a federal program administered by the State of Minnesota that provides low-cost off balance sheet financing for qualifying energy efficiency (roofs, siding, windows, etc.) and renewable energy improvements (includes on-site solar). Property owners love PACE because it provides upfront capital to fund 100% of a solar project and requires no out of pocket costs. With the financial tax benefits immediately vesting upon start-up, PACE renders ROI and short-term investment horizons for major green initiatives obsolete.
The installation costs are paid with the proceeds from the PACE special assessment form the local property jurisdiction pursuant to a joint power agreement (Joint Power Agreements are currently in place for both Hennepin and Anoka County). The installation costs are amortized over a period of 5 to 20 years, and PACE payments are paid bi-annually along with property taxes otherwise due. The first PACE assessment is due in May in the year after start-up. The special assessment is not a liability of the property until the assessment becomes due.
PACE Program Highlights
- Provides immediate cash injection by providing tax benefits vested upon start-up
- Provides positive cashflow at all times
- Paid bi-annually along with property taxes
- Does not require a corporate or personal guarantee
- Can finance up to 20% of building’s assessed value with PACE
- 5 to 20 year amortization term selected by the customer
- Favorable fixed interest rates
- Bank approval from existing mortgage holder (if any) required
- Legal liability for the PACE assessment is tied only to the property
- Off balance sheet
- Only the current payment due is shown as a lien against the property on the title report
- The PACE assessment runs with the land and transfer to new owners
- Does not require pre-payment upon the sale of the property
- Solar array fee title can be owned by either building owner or operating entity so that tax benefits are aligned with corporate requirements