Local Option - Special Energy Improvement Districts

January 16, 2024


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 PACENation 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 typically repaid via a special assessment on the property over a period of years. Ohio has authorized certain local governments to establish such programs, as described below. (Not all local governments in Ohio offer PACE financing; contact your local government to find out if it has established a PACE financing program.

Ohio PACE Programs

To be eligible for PACE financing, a local program at the city or county level must be available in your area. Jurisdictional eligibility rules vary by county and municipality; municipalities in an eligible county are not automatically eligible for PACE financing.

Program Provisions

Legislation enacted in Ohio in July 2009 (HB 1) expanded the state's existing special improvement district law by authorizing local municipalities and townships to create special energy improvement districts that offer property owners financing to install photovoltaic (PV) or solar-thermal systems on real property. In June 2010, legislation (S.B. 232*) provided additional authorization to municipalities to allow for financing of geothermal, customer-generated systems (including wind, biomass, and gasification systems 250 kW and below; or 250 kW and above as long as they serve all or part of the owner's on-site load) and energy efficiency improvements that are permanently fixed to the property within a special energy improvement district.

Any municipality choosing to establish a Special Energy Improvement District (SID) is authorized by law to issue bonds (either special or general obligation funds) and/or apply for state or federal money in order to fund such programs. Any property owner who opts in to such a program and installs solar, geothermal, wind, biomass, gasification, or energy efficiency improvements permanently affixed to his/her real property using municipal financing must agree to a special assessment on the property tax bill for up to 30 years in order to pay for the financing secured through this mechanism.

Many other provisions are determined locally.

Program Creation

Municipalities and townships interested in creating such districts and providing financing for property owners must circulate a petition for eligible property owners to opt in to the program and the municipality must approve a special energy improvement district via ordinance or resolution. A special improvement district board of directors must be created (if one did not already exist) to implement the program. Each local municipality must determine specific eligibility criteria, the maximum financing amount and interest rates, and other terms. Unlike regular special improvement districts in Ohio, a special energy improvement district does not have to be comprised of contiguous properties.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: Ohio
Incentive Type: PACE Financing
Web Site:
Start Date: 10/16/2009
Eligible Renewable/Other Technologies:
  • Solar Water Heat
  • Solar Thermal Electric
  • Solar Thermal Process Heat
  • Solar Photovoltaics
  • Wind (All)
  • Biomass
  • Geothermal Heat Pumps
  • Other EE
  • Yes; specific technologies not identified
  • Wind (Small)
  • Geothermal Direct-Use
  • Anaerobic Digestion
Terms: Low-interest, 30-year loan


Name: ORC 1710
Name: ORC 717.25
Name: ORC 4928.66

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.