Utah Commercial PACE financing program

Summary

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.

Senate Bill 221 of 2013 authorizes local governments to adopt Commercial* Property Assessed Clean Energy (C-PACE) financing programs. Senate Bill 273 of 2017 made several amendments to this program. C-PACE allows property owners to finance energy efficiency and renewable energy improvements on their properties through a special assessment on their property tax bill, which is repaid over a period of time not to exceed 20 years. 

While the program includes a measure of involvement from the local government, Utah's C-PACE program is administered statewide by the Office Energy Development (OED).  S.B. 273 expanded the scope of eligible projects. The legislation also more clearly outlined the process of creating and financing projects.

To qualify as a voluntary assessment area, the owner of the property must provide:

• The written consent of each person or institution holding a lien on the property
• Evidence that there are no delinquent taxes, special assessments, or water or sewer charges on the property
• Evidence that the property is not subject to a trust deed or other lien on which there is a recorded notice of default, foreclosure, or delinquency that has not been cured, and 
• Evidence that there are no involuntary liens, including a lien on real property, or on the proceeds of a contract relating to real property, for services, labor, or materials furnished in connection with the construction or improvement of the property.

Renewable energy systems eligible for financing are limited to those up to 2 Megawatts (MW), and those above 2 MW serving load the the public utility does not already serve.