Addressing Common Myths About Pace in Pennsylvania

Property Assessed Clean Energy financing, which is almost always known as PACE, is a comparatively new financing option – that’s devised to help with energy-efficient upgrades to commercial as well as residential properties. Unfortunately, like most things new, people have various misconceptions pertaining to PACE in Pennsylvania – all of which causes property owners to shy away from PACE and in turn, from affordable environment-friendly renovations.

So, in this blog, we’ll dive a bit into some of the common misconceptions that people have about PACE.

Common misconceptions about PACE financing

As financing of energy-efficient and environment-friendly projects become more common in the US, misconceptions and concerns related to its use as well as oversight have also become more common. Here’s a quick rundown of the same.

Myth #1: PACE loans are a scam.

This couldn’t be further from the truth! While it’s true that there were a few fraud cases in the past, that has changed much over the years. Such fraudulent cases of C-Pace Financing are extremely rare, and are in no way representative of the whole industry. It is worth noting that the PACE financing is regulated at the state level, and thus, commercial real estate developers and property owners should only work with reputed and approved PACE providers.

Myth #2: PACE loans are a burden for future property owners.

PACE loans, irrespective of whether it’s for commercial or residential properties, can be transferred to future property owners when it changes hands/ ownership. However, some people may be hesitant to buy properties with a PACE assessment, as this would significantly up their mortgage payment. So, to address this concern, some states have now made it mandatory for PACE lenders to disclose the loan terms to potential buyers, and if needed, even ask homeowners to settle the remaining PACE assessment before selling the property.

Myth #3: PACE can’t be included into my capital stack.

The Pennsylvania C-PACE Program offers low cost funding for projects that are looking to bring in  sustainable design and energy-efficient upgrades. In fact, most modern commercial properties automatically qualify because they often include different energy-saving means. So, PACE can significantly boost your project’s financing, thereby being an easy and cost-effective alternative to conventional mezzanine funding. It also helps in managing unexpected costs and rising construction expenses under check.

Does C-PACE Financing really help commercial real estate developers?

There are many different reasons why CRE developers and commercial property owners love PACE, but chief among them is the fact that it is a cheaper alternative in the long run and can be used to refinance properties. Moreover, the fact that PACE loans usually have a 20-30 year fixed-rate and self-amortizing terms, makes it all the more enticing.

Construction debt is really expensive these days, and hence, PACE financing comes across as a welcome relief. The non-recourse, long-term, fixed-rate option is a hit among CRE developers and property owners. In short, PACE is the kind of liquidity that most developers seek in this tumultuous market.

Key takeaway

To put it simply, PACE in Pennsylvania is a great financing option for both residential and commercial property owners, who’re looking to make energy-efficient upgrades to the space. And, despite common misconceptions, PACE is quite well-regulated and offers notable benefits such as heightened project funding, lower financing costs, and more. It comes across as a perfect means to manage unexpected construction expenses, thereby providing a more sustainable option to traditional financing sources.

In short, PACE offers a practical solution to high construction debt, ensures liquidity, and brings in financial stability. So, don’t let myths deter you from exploring its myriad benefits.