PACE (PROPERTY-ASSESSED CLEAN ENERGY) YGRENE ENERGY FUND, THE LARGEST OF THE THREE APPROVED PACE FUNDING AGENCIES IN ALACHUA COUNTY, REPORTS THAT OVER $141 MILLION IN VARIOUS ENERGY EFFICIENCY UPGRADES HAVE BEEN FUNDED IN FLORIDA TO DATE, CREATING AROUND $237 MILLION IN ECONOMIC STIMULUS AND 1,425 JOBS.
Demand for solar energy has never been higher, and while solar prices have hit record lows, many businesses find themselves in a situation where their desire to have solar is stymied by the challenges of traditional financing. PACE is a financing alternative that may help.
PACE stands for Property-Assessed Clean Energy. It is a relatively new financial tool for businesses in Alachua and Marion counties. PACE provides property owners with funding for projects such as energy efficiency or solar. These funds are repaid annually through a special assessment added to the property tax bill over a term of up to 20 years.
Eligibility is primarily based on the available equity in a property, not on the property owner’s credit score, proof of employment, income or financial statements.
PACE FUNDING OFFERS SOME SPECIFIC AND UNIQUE BENEFITS:
- Finances up to 100 percent of the project costs
- Up to 20-year terms
- Doesn’t impact credit worthiness — PACE is technically not a loan, so it is “off-balance sheet
- Follows the property rather than the property owner • Interest payments can be tax-deductible
- Can be used by nonprofits as an assessment on non-ad valorem tax
- First payment is made when property taxes are paid, which may be a year away
- Allows for joint finance opportunities with traditional lenders where guidelines are unaffected by assessment in property tax
SPECIFIC CONSTRAINTS OF PACE:
New construction typically does not qualify
- Borrowing rate is high compared to other options — averaging 9.5 percent
- Solar equipment may not qualify for 5-year accelerated (Modified Accelerated Cost Recovery System) depreciation
- Interest is still accruing in the sometimes lengthy time between project completion and the first payment
- Doesn’t work well with complicated property ownership situations (i.e., one company owns the property, another owns the building and a third is the tenant)
While it’s important to emphasize these constraints, they don’t seem to be slowing down PACE’s growth in Florida. Ygrene Energy Fund, the largest of the three approved PACE funding agencies in Alachua County, reports that over $141 million in various energy efficiency upgrades have been funded in Florida to date, creating around $237 million in economic stimulus and 1,425 jobs.
Frank Corrales leads the North Florida market for Ygrene Energy.
From his perspective, “The biggest advantage with PACE is the fact that it doesn’t show up in the balance sheets. That gives businesses the ability to leave structured programs in place without being affected. It allows for some leverage that might otherwise not exist.”
PACE funding will be a good fit for some and not for others. Solar is ultimately a financial question, and in order to make an informed decision, you should work with a qualified accounting professional to evaluate whether solar is a good fit for your business.
Want to learn more? You can use the Florida Solar Energy Industries Association website at www.flaseia.org to find a solar contractor in your area that will help you determine if PACE can make sense for your business.
NOTICE: This article is for informational purposes only, as the writer is not a tax professional. Please consult a qualified accountant or other financial adviser when making your financial decisions.
To learn more about the PACE funding agencies available in Alachua county visit http://pacenation.us/pace-in-florida/
MIKE GARRETT is the Director of Sales and Marketing for Gainesville-based Solar Impact, a Board Member with the Florida Solar Energy Industry Association, and the Event Coordinator and Founder of Tree Fest (treefestfl.com). He also served locally on the Gainesville Chamber of Commerce Business Advisory Council, the Gainesville Energy Advisory Committee, the Wild Spaces & Public Places Citizen Advisory Committee, the Gainesville-Alachua County Cultural Affairs Board, and is a graduate of Leadership Gainesville Class #38. He can be reached at email@example.com.