Residential Property Assessed Clean Energy in California: Feasibility of Studying Impacts on Mortgage Performance and Energy Savings

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Policy Brief

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Property assessed clean energy financing (PACE) is a highly secure form of financing that can be used to fund clean energy and other improvements on private property. PACE assessments are repaid through property tax bills, transfer from one property owner to the next, and can accommodate long-payback projects. Over 47,000 residential PACE assessments worth nearly $960 million have been placed across California.
Several important but unanswered research questions surround PACE financing. Because PACE assessments in California are senior to mortgages, a PACE assessment might reduce the funds available to repay a mortgage holder in the event of default and foreclosure. PACE payments also introduce a new expense that may impact homeowners’ overall ability to pay.
Many stakeholders question how PACE may impact mortgage performance. Understanding actual (versus projected) energy savings attributable to PACE-funded projects, for comparison to other financing-and non-financing focused energy-saving interventions, is also of interest.

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