Local Option - Property Assessed Clean Energy

Program Local Option - Property Assessed Clean Energy
Category Financial Incentive
Implementing sector State
Last Update
State Michigan
Technologies Solar Water Heat, Solar Space Heat, Solar Photovoltaics

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 PACENow 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 repaid via a special assessment on the property over a period of years. With the passage of HB 5640, Michigan has authorized local governments to establish such programs, as described below. (Not all local governments in Michigan will choose to offer PACE financing; contact your local government to find out if it has or intends to establish a PACE financing program.)

The State of Michigan signed PACE legislation into law on December 14th of 2010, authorizing municipalities to establish a loan program to provide financing for clean energy (energy efficiency and renewable energy project) improvements to commercial and industrial property owners via local ordinance. The legislation authorizes municipalities to enter into PACE agreements with commercial and industrial property owners, provide financing, and collect PACE assessments to repay the loans. Municipalities may choose to use federal grants, such as Energy Efficiency and Conservation Block Grants (EECBG), or other "funds available for this purpose" to establish PACE programs.

Michigan counties have commercial PACE funding under the Lean and Green Michigan Program. Refer to their website to see which counties qualify and for contact forms. 

Michigan's legislation stipulates that PACE assessments for property owners with outstanding mortgages must receive written consent from mortgage holders. In addition, qualifying energy efficiency technologies may include electric vehicle charging and water reduction infrastructure costs.

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