Highlights

  • Assessed the potential for expanding commercial property assessed clean energy (C-PACE) financing to tax-exempt entities in jurisdictions with active PACE markets (CivicPACE).
  • Developed public materials defining CivicPACE, enabling practices and procedures, ideal organizational segments, market conditions, lender participation, financing and contractual arrangements, and engagement strategies—including sample contracts, guides, and checklists—allowing for program replicability.
  • Established at least two pilot solar projects of small commercial scale (10-100 kW) for different types of tax-exempt organizations (e.g., schools, affordable housing, and houses of worship).
  • Distributed lessons learned and best practices from the pilot projects, and developed replicable plans summarizing the structure, development, and implementation process for CivicPACE projects to serve as case studies for program designers and practitioners nationwide.

Background

While C-PACE has experienced national growth in recent years, many potential adopters face constrained access—or erroneously assume they are ineligible—due to their status as tax-exempt organizations. The CivicPACE project provided tools to address underwriting and access challenges for tax-exempt entities—including houses of worship, nonprofit affordable housing, community clinics, and educational institutions—in jurisdictions with active PACE markets.

The CivicPACE program worked with over a dozen local jurisdictions, their PACE administrators, and affiliated organizations as well as federal agencies with jurisdiction over affordable housing—like the Department of Housing and Urban Development (HUD) and the Department of Agriculture—to demonstrate the potential for expanding C-PACE financing to civic organizations across the country.

The project team focused on maximizing their geographic impact. To do this, they prioritized underserved solar markets, as well as property owners with national reach. The team worked extensively on two pilot projects in Washington, D.C. that addressed questions of property-type viability (e.g., houses of worship) and policy applicability (e.g., federally subsidized housing).

Resources

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Report:
CivicPACE Project Factsheet CivicPACE Project Factsheet
Author:  CivicPACE

An overview of the CivicPACE project and financing mechanism.

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Video:
CivicPACE: Bringing Solar to N... CivicPACE: Bringing Solar to Nonprofits
Author:  The Solar Foundation

Overview of CivicPACE and how nonprofits across the country have utilized PACE to finance solar and energy upgrades.

Launching and Expanding CivicPACE

The project team—comprising The Solar Foundation, Urban Ingenuity, and Clean Energy Solutions, Inc.—supported the development of CivicPACE markets in several states by implementing replicable CivicPACE-financed solar projects; sharing lessons learned from active and completed CivicPACE projects; providing policy recommendations; and engaging financing, legal, solar+storage, and nonprofit stakeholders.

The CivicPACE team released the report CivicPACE: Enabling Policies & Procedures – Exploring The Treatment of Commercial Property Assessed Clean Energy for Solar on Tax-Exempt and Public, which advanced an understanding of the PACE regulatory landscape by exploring the legal and policy environment surrounding tax-exempt organizations and outlining how these organizations can take advantage of PACE financing.

The CivicPACE team worked to provide a legal understanding of how tax-exempt capital might support projects by public housing authorities, and how to deploy this type of capital into appropriate transaction structures for faith-based institutions and other nonprofits. The team, together with a law firm, completed a memo discussing several factors, including various financing options, the underlying legal basis for financing, potential limitations and policy barriers to PACE financing, key target areas and certain considerations with respect to HUD policies and HUD-related housing programs, including Rental Assistance Demonstration programs and Freddie Mac and FHA lending issues. The CivicPACE team used this memo to provide education and engagement on PACE for tax-exempt organizations.

The project team published Civic Power: A Primer on PACE-Secured Solar Power Purchase Agreements, exploring how securing solar power purchase agreements (PPAs) with PACE financing may offer a particularly useful tool for nonprofit organizations. PACE-secured PPA offers an approach for nonprofit community-based organizations to lead the way in bringing solar energy to small and mid-sized commercial buildings.

Resources

Report:
CivicPACE: Enabling Policies & Procedures – Exploring ... CivicPACE: Enabling Policies & Procedures – Exploring The Treatment of Commercial Property Assessed Clean Energy for Solar on Tax-Exempt and Public
Author:  CivicPACE

This report explores the legal and policy environment surrounding tax-exempt organizations and outlining how these organizations can take advantage of PACE financing.

Report:
Options for PACE Financing Alternatives Options for PACE Financing Alternatives
Author:  Ballard Spahr, LLP

This memo provides a legal understanding of how tax-exempt capital might support solar projects for public housing authorities and nonprofits.

Pilot Projects

Case study:
Phyllis Wheatley Young Women’s Christian Association’s Redevelopment ... Phyllis Wheatley Young Women’s Christian Association’s Redevelopment Project
Author:  CivicPACE

This case study details the first use of PACE financing for a U.S. Department of Housing and Urban Development assisted mixed-finance public housing property.

The project team completed their first project in Washington, D.C.—an active PACE market with a steady pipeline of projects—to engage potential stakeholders and create sustained interest in CivicPACE. The Phyllis Wheatley Young Women’s Christian Association’s redevelopment project included $700,000 in financing for the installation of solar and energy efficiency equipment—the first use of PACE financing for a HUD-assisted mixed-finance public housing property. The PACE financing, authorized for solar power and deep energy and water upgrades, helps the property run more efficiently. Savings from those improvements will help pay for the new equipment and reduce the building’s utility costs.

Case study:
Elsie Whitlow Stokes Community Freedom Public Charter School ... Elsie Whitlow Stokes Community Freedom Public Charter School Project
Author:  CivicPACE

This case study describes how a nonprofit organization used Property Assessed Clean Energy (PACE) financing to add solar and upgrade efficiency measures.

The CivicPACE team also completed a case study on the PACE-financed solar and efficiency retrofit project at Elsie Whitlow Stokes Community Freedom Public Charter School, a school of 350 preschool and elementary students in Washington, D.C. The energy- and water-saving mechanical upgrades, in conjunction with a rooftop solar PV system, will provide the school nearly $10,000 in benefits per year at no upfront cost. This project represents an innovative opportunity for many schools to immediately see positive cash-flow results that can be used to improve the lives and education of their students.

Key Takeaways and Next Steps

The lessons learned and best practices from the CivicPACE team’s work is featured in a CivicPACE Toolkit and Replication Guide intended for program designers and practitioners nationwide and shows how PACE can be an effective financing tool for solar development for tax-exempt organizations such as schools, churches, and multifamily affordable housing. Major takeaways include:

  • Tax-exempt organizations can finance through PACE. They can voluntarily accept a special tax assessment.
  • The solar installation can be owned by the tax-exempt organization, or ownership can reside with a third party through a lease or PPA.
  • In third-party ownership, the third party finances, installs, and maintains the solar system, providing power for a rate that is typically below the market rate. The third party benefits from the federal investment tax credit and other incentives, presumably passing some of those savings on to the property owner.
  • PACE can be combined with a PPA to create a PACE-secured PPA or even a prepaid PACE-secured PPA.
  • PACE can finance solar for affordable multifamily housing, including public housing properties in the HUD Rental Assistance Demonstration program.
  • PACE financing may be used in conjunction with private activity bonds, low interest rate bonds issued by a government agency for private purposes.