WARREN – On Dec. 14, 2010, Property Assessed Clean Energy Bond legislation was signed into law by then Gov. Jennifer Granholm. PACE bonds are a municipal bond where the proceeds are lent to commercial property owners to finance energy efficiency measures and renewable energy systems.
The owners of these energy retrofits subsequently repay their loans over a 10- to 20-year term in accordance with an annual assessment on their property tax bill.
The bill only covers commercial real property so it should not run afoul of the FHFA, Fannie Mae or Freddie Mac, the agencies most opposed to such financing. It?s widely believed Ann Arbor will be the first city to implement a program involving PACE Bonds because Ann Arbor and Washtenaw County officials were instrumental in its support and passage.
PACE bonds function in the same manner as other special assessments (sidewalks, sewer system, parks, etc.) and while the specific program and use has only been around for a few years, PACE is a type of land secured financing district that has a long and storied history in the U.S. to pay for improvements in the public interest.
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