Picking Up the PACE: Loans for Residential Climate-Proofing

Residential Property Assessed Clean Energy (PACE) is an innovative financing program that allows homeowners to borrow for energy efficiency or resilience upgrades and repay the loans through their property tax bills. We collect new Florida PACE loan-level data and recover households’ home improvement investment decisions from permit descriptions. PACE projects are capitalized into home values, but expansions of the property tax base are partially offset by an uptick in borrowers’ tax delinquency rates. Lenders in PACE-enabled counties expand mortgage credit access, indicating improved recovery values despite a PACE lien’s super seniority. Overall, PACE adoption increases local fiscal income while improving climate-proofing of the housing stock and lowering homeowners’ insurance costs.

Keywords: PACE lending, climate retrofitting, home equity loans, delinquency, liens, homeowners insurance, property taxes

JEL Classification: G21, G51, Q54, R21, R28

Suggested Citation: Suggested Citation

Bellon, Aymeric and LaPoint, Cameron and Mazzola, Francesco and Xu, Guosong, Picking Up the PACE: Loans for Residential Climate-Proofing (April 19, 2024). Proceedings of the EUROFIDAI-ESSEC Paris December Finance Meeting 2024, Available at SSRN: https://ssrn.com/abstract=4800611 or http://dx.doi.org/10.2139/ssrn.4800611