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Local Option - Sustainable Energy Financing Districts

Last Review: 2013-08-07
Incentive Type: PACE Financing
Eligible Efficiency Technologies: Lighting, Lighting Controls/Sensors, Heat pumps, Central Air conditioners, Energy Mgmt. Systems/Building Controls, Caulking/Weather-stripping, Building Insulation, Windows, Doors, Roofs, Custom/Others pending approval, Solar Water Heat, Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal Electric, Daylighting, Other Distributed Generation Technologies
Applicable Sectors: Commercial
Terms: Re-payment term may not exceed 20 years


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. Louisiana has authorized certain local governments to establish such programs, as described below. (Not all local governments in Louisiana offer PACE financing; contact your local government to find out if it has established a PACE financing program.)

In July 2009, Louisiana legislators enacted SB 224 that enabled local governments to create a Sustainable Energy Financing District (SEFD) via ordinance or resolution. Once established, the owner of any immovable residential or commercial property may consent to include a property in the SEFD and execute a "cooperative endeavor agreement" with the district to receive financing for energy improvements. An owner's consent may be given before or after the initial creation of the district, and the district does not have to be contiguous.

In 2010, Louisiana legislators enacted HB 973 that provided financing qualifications and restrictions for energy efficiency improvement or renewable energy improvement loans. These include:

  • limiting the total amount borrowed by property owners to 10 percent of the reasonable expected fair market value of the property
  • equity must be available in the property, meaning the loan-to-value ratio cannot exceed 100%
  • maximum assessment amount per year shall not exceed the amount of the principal and interest for said year
  • property owners must be current on all outstanding mortgages and demonstrate ability to repay loan
  • energy audit must be conducted and reviewed by the district prior to finance approval
  • the SEFD must make written verification on residential properties that improvements were installed and work is completed prior to loan fund disbursement
  • work must be performed by qualified contractors, subcontractors and tradesmen
  • for loans over $100,000 a written notice must be sent to the mortgagee regarding the proposed program loan. The mortgagee then has 30 to approve or deny proposed program loan. (failure of mortgagee to provide written notice of ruling results in procession of loan)

A SEFD may borrow money, issue bonds or obligations, and pay for the bonds from assessments against property. Loan terms will be decided by the governing body of the district, including interest rates, administrative fees, and maximum loan amounts. The district is permitted to provide a source of revenue for retrofitting and installing improvements, products, systems, devices, or interacting groups of devices installed behind the meter of residential and commercial buildings that conserve energy or produce energy from renewable resources. Eligible technologies are determined locally, but may include:

  • Insulation in walls, roofs, floors, foundations, and heating/cooling distribution systems;
  • Storm and multi-glazed windows and doors;
  • Heat absorbing/reflective glazed and coated window and door systems, additional glazing, reductions in glass area, and other energy-efficient window and door systems;
  • Automatic energy control systems;
  • HVAC system upgrades and replacements;
  • Caulking and weather stripping (up to $1,500);
  • Daylighting and efficient lighting; and
  • Energy-recovery systems.

Renewable-energy improvements that interfere with a right held by a public utility regulated by the Louisiana Public Service Commission are not eligible.

New Orleans plans to create a Sustainable Energy Financing District with the help of a "special projects" grant from the U.S. Department of Energy SunShot Initiative.



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