Picking Up the PACE: Loans for Residential Climate-Proofing

Residential Property Assessed Clean Energy (PACE) loans allow homeowners to fund investments in green residential projects through their property tax payments. We collect new PACE loan-level data and develop a novel approach to 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 tax delinquency rates among borrowers. 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.

Keywords: PACE lending, property taxes, green retrofitting, home equity loans, delinquency, liens, securitization

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