'''''Note: The Federal Housing Financing Agency (FHFA) issued a [http://www.fhfa.gov/webfiles/15884/PACESTMT7610.pdf statement] in July 2010 concerning the senior lien status associated with most PACE programs. In response to the FHFA statement, most local PACE programs have been suspended until further clarification is provided. '''''
Property-Assessed Clean Energy (PACE) financing effectively allows property owners to borrow money to pay for energy improvements. The amount borrowed is typically repaid via a special assessment on the property over a period of years. Virginia has authorized certain local governments to establish such programs, as described below. (Not all local governments in Virginia offer PACE financing; contact your local government to find out if it has established a PACE financing program.)
Virginia passed legislation in 2009 authorizing local governments to establish a loan program to provide financing for clean energy improvements to property owners via local ordinance. Governments that opt to establish a program must hold a public hearing to solicit feedback on the draft ordinance/plan. Within the final ordinance, local governments must specify which "clean energy improvements" would be covered, they must determine funding sources, establish interest rates and loan terms. Local governments are authorized to include the participation of private lenders. In addition, within the ordinance, the local government must determine the method for collecting the loan repayment, either via water or sewer bills, real property tax assessments, or other billing method. Legislation passed in 2010 (SB 110) clarifying that the locality is authorized to place a lien on the property for the amount of the loan and that a locality may bundle loans and transfer them to a private financial institution, without impacting the lien.