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 by expanding the scope of eligible projects and more clearly defining the process of developing and financing projects. C-PACE allows property owners to finance energy efficiency and clean energy improvements on their properties through a voluntary energy assessment lien that is levied against the owner’s property and repaid to the capital provider. The financing term is typically based on the useful life of the improvements and can extend up to 30 years. 

While the program includes a measure of involvement from the local government, Utah's C-PACE program is administered statewide by Sustainable Real Estate Solutions, Inc. (SRS).

To qualify as an energy 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.

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