IL PACE Financing Expands, Promoting “Green” Improvements

Tech Tips

PACE provides low-cost financing for energy efficiency and renewable energy projects.

The Cook County Commercial Property Assessed Clean Energy (CPACE) Program was launched in February, providing new funding for a variety of commercial building improvements. It joined a recently launched Will County program, as well as programs in Winnebago, McHenry, Kane, DuPage, and Kankakee counties.

The City of Chicago also has an active PACE financing program, inaugurated in June 2019. Efforts in additional Illinois counties and municipalities are in the development stages. The first commercial PACE financing deal in the state of Illinois, providing $318,000 to fund a solar project in DuPage County, closed in August 2019.

PACE financing offers affordable financing for energy efficiency, renewable energy, water conservation, and resiliency projects. Up to 100% in up-front financing is available from private capital providers. Potential upgrades include HVAC, lighting, and solar photovolataic systems as well as other improvements, and cover both existing buildings and new construction. Typical annual PACE financing payments are exceeded by annual utility savings, helping to ensure positive cash flow.

The loan term can be as long as the useful life of the eligible improvements, potentially up to 30 years. The financing is secured by a special assessment lien on the property, and payments are made as a line item on the property tax bill. The special assessment, linked to the property, does not accelerate or become due upon sale.

As noted on Cook County’s CPACE website, key benefits of PACE financing are:

  • No up-front costs in most cases (100% financing, including hard and soft costs).
  • Long-term, fixed interest rate financing (up to 30 years) resulting in lower annual payments.
  • In many cases, cash flow positive within the first year.
  • Shared costs and benefits with your tenants (if allowed by lease).
  • Potential for off-balance sheet treatment.
  • Reduces capital expenditure budget – upgrades paid through operational savings.
  • Eligible measures cover broad capital and facility improvements.
  • Extends building lifespan.
  • Enhances the value of the property.
  • No required payoff upon sale.

Illinois’ county PACE programs are being administered by the Illinois Energy Conservation Authority NFP (IECA), an Illinois nonprofit. See their CPACE webpage here. Links to other participating counties are also avilable at the IECA site.

GBA stands ready to assist with your sustainability improvements, and to help you explore and navigate PACE financing. Contact us for advice.

Source for PV array image: https://www.energy.gov/eere/articles/eere-success-story-setting-pace-commercial-solar-growth

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