California and San Francisco have been at the forefront of environmental policy for years. Both the state and our city have helped to kickstart the emerging clean and renewable energy economy and industry that we see today providing thousands of jobs, while reducing greenhouse gas emissions and combating climate change. Back in 2008, what started as an experiment in Berkeley quickly spread across the country into a strong financing mechanism and environmental policy known as property assessed clean energy, or PACE.
PACE financing allows property owners to borrow money for clean and renewable energy upgrades to their homes and pay it back over time as a line item on their property tax bill. PACE financing can come through in two different ways: one for commercial buildings, which is referred to as commercial PACE, and one for residential buildings of four stories or less, which is referred to as residential PACE.
PACE’s special form of financing has helped to overcome market barriers that exist to energy-efficiency upgrades by spreading cost recovery with savings realized over the life of the improvement. This special form of financing allows property owners to responsibly finance the upgrades with extremely favorable terms and competitive interest rates – all at no cost whatsoever to the city. Because the capital for the loans is provided by private entities, there is little to no financial risk or exposure to any jurisdiction looking to implement PACE.
Former Mayor Gavin Newsom was an early adopter of PACE. His administration rolled out the residential PACE program in 2010 known as GreenFinanceSF, but it quickly had to scrap the efforts just after a couple of months because of concerns from the Federal Housing Finance Agency (FHFA), which believed that the loans posed an unacceptable risk to mortgage lenders should homeowners default. The FHFA still has concerns, but since 2010 PACE has spread to numerous states throughout the country and in most of the major counties in California. For example, in Riverside County, more than 5,500 people have used it to finance home upgrade projects worth a total of more than $100 million.
The success of residential and commercial PACE in other counties and states could not be more evident, and I want San Francisco to share in that success. In other jurisdictions that have implemented PACE programs, the upgrades property owners made save money not only on repair costs to crucial home energy services, but also on monthly utility bills to the tune of thousands of dollars saved annually – all while creating new jobs and reducing greenhouse gas emissions.
To share in the known success of residential PACE, I partnered with Mayor Lee, our Department of Environment, and workforce training advocates to craft a new and improved residential PACE program. I recently passed legislation at the Board of Supervisors to restart residential PACE here in San Francisco under the same GreenFinanceSF brand that former Mayor Newsom created.
From the beginning of the process, Mayor Lee and I wanted to ensure that this environmental policy and finance tool had a strong workforce component tied to it that put local residents to work on local projects in an emerging industry. We know the potential that the clean energy economy has in store, and we want our local workers to have the skills necessary to take part in that emerging industry while also providing them opportunities for upward mobility. We know that the clean energy economy could trigger a market transformation as profound as the information and technological revolution that we are currently experiencing, and I look forward to our city’s workers sharing in that success.
By this point you may be asking when you might be able to take advantage of this program. Due to our collective efforts on the city’s end, we expect our residential PACE program to be fully functional and up-and-running by March. The city has dedicated staff within the Department of Environment that will be available to walk property owners through the process from start to finish. I also plan to do outreach about our residential PACE program in tandem with the Department of Environment at property owner and neighborhood association group meetings throughout the city to educate them about this program and answer any questions they may have. In the meantime, you can visit sfenvironment.org/residentialpace to learn more.
GreenFinanceSF is one of the environmental solutions that we have been searching for in San Francisco to build local renewable energy sources and create local jobs. GreenFinanceSF will further cement San Francisco’s national role as a leader in reducing the adverse effects of climate change, and it will make it easy for property owners in our neighborhoods to make energy efficiency upgrades to their homes while saving energy and money.