Frequently Asked Questions
How does California PACE work?
California PACE financing is similar in nature to municipal financings for public improvements that are paid through assessment charges on property tax bills. Certain cities and counties have authorized the California PACE program and have formed special assessment districts to enable on-tax-bill financing. California PACE gives local property owners access to affordable financing for energy- and water-efficient improvements that can reduce overall utility expenses. The amount of financing available to each property owner is determined by the property's assessed value and requires no money down and no credit check. The financing is paid back annually over a period up to 20 years and is transferrable if the property is sold or transferred.
What kinds of buildings qualify for California PACE?
California PACE is open to commercial and residential property owners whose properties are subject to property taxes. At this time, financing for residential improvements is available only in certain jurisdictions to property owners in one of two circumstances: a) there is no mortgage on the property, or b) there is a non-conforming, or "jumbo," mortgage on the property. Residential property is defined as a single-family dwelling with up to four units. Commercial property is generally defined as any property not used as a single-family residence. Commercial property includes:
- Multi-Family Units (5 or more units)
- Manufacturing/Industrial
- Office
- Warehouse
- Restaurant/Hotel
- Retail/Wholesale
- Shopping Centers
California PACE is designed to include residential properties. However, we are not currently accepting applications for residential properties pending clarification of Federal Housing and Finance Agency concerns pertaining to lien status. We expect this will get resolved soon and will provide residential financing at that time. The financed amount cannot exceed the assessed land value of the property or 10% of the total assessed value of the property. In addition, the property must be current on tax payments.
What projects are financeable under California PACE?
Energy- and water-efficient improvements and renewable energy generators are financeable under California PACE. Eligible projects include energy efficiency upgrades such as adding insulation, installing energy efficient windows, and upgrading heating and air-conditioning systems, for example. Water efficiency upgrades such as installing low-flow plumbing fixtures and efficient pool pumps are also eligible. California PACE financing is also available for installation of renewable energy generation on buildings such as solar photovoltaic systems and fuel cells.
What determines the interest rate if it is not based on a credit score?
The interest rate is set by current market rates for taxable municipal bonds. It is always our goal to provide financing at an interest rate that makes the widest possible range of efficiency improvements cost-effective for our customers. While the interest rate may at times be slightly higher than that of traditional financings such as mortgages or home equity lines of credit, property owners qualify for California PACE financing with no positive equity requirements, no money down, and no credit check. Additionally, if the property is sold or transferred, the balance of the financing is transferrable to the new owner with no due upon sale provisions.
Will the interest rate change over time?
California PACE offers fixed-rate financing. Once the interest rate is set for a particular financing, it will not change.
What will be the amount of increase in a participant's property taxes?
With respect to California PACE financing, the property tax bill will increase by the annual payment amount as determined by amortization of the total financing. All principal, interest, and administrative charges will be reflected in the annual payment amount quoted to the property owner.
For how many years will the participant have to pay the added special assessment?
The payment period shall not exceed the expected useful life of the improvements up to a maximum of 20 years. Property owners may request a shorter payment period if desired.
What happens if the property is sold prior to repayment of the special assessment?
Just as property tax payment obligations transfer upon the sale or transfer of real property, the balance of the special assessment will transfer to the new owner if the property is sold or transferred. The owner of the property may pay off the special assessment early by making a pay off request to Figtree Energy Resource Company.
Can participants deduct California PACE financing costs from their income taxes as they do for other property taxes?
To ensure accurate information, please consult a tax advisor. Respectfully, Figtree Energy Resource Company does not provide tax advice.
Can the property owner use any contractor?
A list of Figtree Independent Contractors can be obtained at any time by visiting our website, www.figtreecompany.com. A property owner may choose any Figtree Independent Contractor to perform the retrofit work. If the property owner's preferred contractor is not currently a Figtree Independent Contractor, the contractor can submit an application to the program through our website.
What is the source of funding for California PACE?
The Pacific Housing and Finance Agency (PFHA), a California Joint Powers Authority, has authorized municipal bonds to finance California PACE energy efficiency retrofits. No taxes or public funds are pledged for repayment of the bonds
