New York City Will Offer Loans for a New Clean Energy Program
New York City’s Property Assessed Clean Energy (PACE) is set to be unveiled during April. This program will offer financing for energy efficiency and renewable energy projects. The hope is that property owners will use PACE loans to fund improvements that will help them comply with the emissions limits mandated by the Climate Mobilization Act (CMA), which we have discussed in last month’s and previous Client Advisory.
PACE loans are non-accelerating and instead create a lien on the underlying real property similar to an ordinary tax lien, based on the property owner’s agreement to have a separate charge placed on its annual tax bill. Because the lender’s security is provided by the real property itself, PACE financing may become attractive to some cooperatives (subject to the consent of existing mortgage lenders) and rental buildings. It is unlikely to be a feasible option for most condominiums.
New York City’s PACE program was originally authorized as a cornerstone of the CMA. The rulemaking process was delayed, in part due to COVID, but in February 2021 the Department of Finance issued final program rules, and NYCEEC, the “green bank” that administers the program, has indicated that PACE should be up and running on or about April 22, 2021 – i.e., Earth Day, and exactly two years after the CMA was passed.
In addition, the New York City Council recently passed an amendment expanding eligibility for PACE loans to new construction projects. That amendment awaits the Mayor’s signature. We will report on important developments concerning the CMA and PACE in future issues of this Client Advisory.