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Local Option - Improvement Districts for Energy Efficiency and Renewable Energy Improvements

Last Review: 2013-06-27
Incentive Type: PACE Financing
Eligible Efficiency Technologies: Lighting, Lighting Controls/Sensors, Heat pumps, Central Air conditioners, Heat recovery, Energy Mgmt. Systems/Building Controls, Caulking/Weather-stripping, Building Insulation, Windows, Solar Water Heat, Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal Electric, Geothermal Heat Pumps, Daylighting, Small Hydroelectric, Ethanol, Biodiesel, Fuel Cells using Renewable Fuels
Applicable Sectors: Commercial
Terms: Locally determined
Website:

Summary:

Note: The Federal Housing Financing Agency (FHFA) issued a 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. Colorado has authorized local governments to establish such programs, as described below. (Not all local governments in Colorado offer PACE financing; contact your local government to find out if it has established a PACE financing program.)

Colorado enacted legislation in May 2008 (H.B. 1350, Session Law 229) that amended Colorado counties' and cities' existing authority to create improvement districts. The new law allows a city or county board to propose an improvement district specifically for clean energy improvements via resolution or ordinance. Senate Bill 100 (2010) amended the law to allow multiple counties, even non-contiguous counties, to form a single improvement district.

House Bill 1328 (2010) further expanded the potential for counties and cities to create PACE programs. The bill created an improvement district encompassing the entire state of Colorado. Some aspects of this law were later amended by SB 212 (2013). The improvement district is to have an 11-member board of directors, most of whom are yet to be determined, to oversee the management and operations of the improvement district. The bill also authorizes the improvement district to issue up to $800 million in bonds to fund PACE financing programs. Cities and counties wishing to provide PACE financing programs to their citizens may, by resolution, opt to join the statewide improvement district and tap the bond revenue raised by the improvement district. The bill also established many other rules to govern the design and function of future PACE programs financed by the improvement district.

The law includes a long list of eligible technologies from which a local government may choose, including:

  • Solar water heating
  • Solar thermal-electric
  • Photovoltaics (PV)
  • Wind
  • Biomass
  • Hydroelectric
  • Geothermal-electric
  • Biodiesel and ethanol
  • Fuel cells that do not use fossil fuels
  • Insulation
  • Windows and doors
  • Automatic energy control systems
  • HVAC systems
  • Caulking and weather stripping
  • Lighting
  • Daylighting
  • Energy-recovery systems
  • Geothermal heat pumps


Local governments are authorized to issue bonds to fund the PACE programs, however voter approval is required. Once the program is established and funding is available, property owners within an improvement district may voluntarily apply and if selected, execute a contract for a loan. The property owners then repay the loan via an assessment on the property. The local government must specify the procedures within the resolution or ordinance governing their PACE program.


In Colorado, Boulder County was the first county to implement a program utilizing this property assessed financing mechanism. Learn more about the Boulder County ClimateSmart Loan Program.


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