Local Option - Property Assessed Clean Energy

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. The Federal Housing Administration (FHA), a branch of the U.S. Department of Housing and Urban Development (HUD), has released initial guidelines for using PACE with FHA-secured single or multifamily properties. This guidance is independent of FHFA policy. 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.

Property-Assessed Clean Energy (PACE) financing effectively allows property owners to borrow money to pay for energy improvements. The amount borrowed is typically repaid via a special assessment on the property over a period of years. Maine has authorized certain local governments to establish such programs, as described below. 

Maine signed PACE legislation into law in April 2010, authorizing municipalities to establish a loan program to provide financing for clean energy improvements to property owners via local ordinance. The legislation authorizes municipalities to enter into PACE agreements with property owners, provide financing, and collect PACE assessments to repay the loans. Municipalities will be able to use federal grants or other "funds available for this purpose" to establish PACE programs. The law does not restrict municipalities from determining what type of property owners would be eligible, but the current program being supported at the state level is for residential property owners. The legislation stipulates that PACE assessments will be considered subordinate liens, secondary to mortgages. Only homes located within towns that have enacted a PACE ordinance are eligible for the PACE loans. Model ordinances, as well as other related documents, can be found on the Efficiency Maine website.

In April 2010, the state of Maine was selected to receive $30 million through the U.S. Department of Energy Better Buildings Program** program to help support the implementation of its PACE programs statewide. The Efficiency Maine Trust* has developed rules for Maine's PACE programs, and around 180 municipalities have elected to participate in this program. In participating municipalities, homeowners can get PACE loans with a fixed interest rate of 4.99% and a term of up to 15 years, with the amount ranging from $6,500 to $15,000. See the DSIRE entry on PACE Loans in Maine for more information

*Note: The Efficiency Maine Trust was established by legislation in 2009 (L.D. 1485). This entity is responsible for coordinating the state's energy efficiency and renewable energy programs. Programs run by Efficiency Maine of the Maine Public Utilities Commission and the Energy and Carbon Savings Trust were transferred to the Efficiency Maine Trust on July 1, 2010. 

**The Better Buildings Program (originally called the Retrofit Ramp-up program) provided $486 million through competitive grants of the Department of Energy's Energy Efficiency and Conservation Block Grant program. The money was allocated via the American Recovery and Reinvestment Act (ARRA) of 2009.