New Buildings Eligible for Clean Energy Financing

July 11, 2023

Kelsey Schiller, 857-325-3477
kschiller@massdevelopment.com 

BOSTON – MassDevelopment today announced an expansion of Property Assessed Clean Energy (PACE) Massachusetts, making both new construction and existing buildings eligible to finance energy efficiency and renewable energy projects through the program. Launched in July 2020, PACE Massachusetts is a long-term option for financing energy projects at commercial and industrial properties and multifamily buildings with five-plus units. The original PACE Massachusetts statute – Section 23M – authorized financing for existing buildings; language included in the August 2022 Partnerships for Growth legislation modified the statute to also allow new construction buildings to be eligible for financing. Today’s announcement follows a public review and comment period on amended program guidelines that reflect the 2022 legislative change, which now go into effect.

“PACE Massachusetts is an important resource that helps improve efficiency, curb greenhouse gas emissions, and advance our economic competitiveness in Massachusetts,” said Economic Development Secretary Yvonne Hao, who serves as chair of MassDevelopment’s Board of Directors. “Expanding this program to serve both new and existing properties will ensure our building stock is modernized to help meet our climate goals.”

“Our PACE Massachusetts program is a ‘two-for,’ helping property owners make their buildings more energy efficient and save money,” said MassDevelopment President and CEO Dan Rivera. “This change to make new construction buildings eligible for financing will significantly expand the program’s reach and further advance the Commonwealth’s goal of reaching net-zero emissions by 2050.”

“With MassDevelopment’s expanded program, owners of new construction can access the same lower cost PACE financing and pay for their clean energy investments over time, with the savings from reduced energy costs—making clean energy investments even more attractive,” said Climate Chief Melissa Hoffer. “This financing will help make project economics work for decarbonized new building construction—and that’s a huge win for the climate and property owners.”

“Reducing emissions from the building sector is vital to meet Massachusetts’ climate goals,” said Department of Energy Resources Commissioner Elizabeth Mahony. “Through its alignment with the updated stretch energy code and the new Specialized code, the expansion of the PACE program to include eligibility for new construction will encourage and support new commercial and multi-family buildings that are both highly energy-efficient and have a clear pathway to decarbonization.”

PACE Massachusetts enables commercial property owners to fund energy efficiency and renewable energy projects by agreeing to a betterment assessment on their property, which repays the financing. Offering more flexibility than a direct loan, PACE Massachusetts allows property owners to undertake comprehensive energy upgrades without adding new debt to their balance sheet and through longer financing terms of up to 20 years. Projects eligible for financing include solar panels, energy management systems, geothermal, lighting, insulation, HVAC systems, and more; the 2022 legislative change also removed eligibility for natural gas line extensions, which were previously allowed. MassDevelopment administers PACE Massachusetts in consultation with the Massachusetts Department of Energy Resources (DOER). More information about the program is available at massdevelopment.com/PACE.

Massachusetts cities and towns are required to opt into PACE Massachusetts by a majority vote of the city or town council or the board of selectmen, as appropriate, in order for a property within that municipality to be eligible for the program. Sixty-eight cities and towns, including Boston, have opted in. Projects that have received PACE Massachusetts financing include 440 William M. McClellan Highway and 480 William M. McClellan Highway in East Boston and 56 Bank Row in Greenfield. 

MassDevelopment offers a number of green finance products, including Green Bonds, Sustainability Bonds, and PACE Massachusetts. On June 13, 2023 the Healey-Driscoll Administration announced the launch of the Massachusetts Community Climate Bank, the nation’s first green bank dedicated to affordable housing. The Climate Bank is located within MassHousing, and will work in partnership with the Massachusetts Clean Energy Center and MassDevelopment. 

On August 11, 2022, the Commonwealth passed “An Act driving clean energy and offshore wind” into law (Chapter 179 of the Acts of 2022), which includes many aggressive climate measures aimed at assisting the Commonwealth with meeting its ambitious 2050 net-zero goals. The Executive Office of Energy and Environmental Affairs has crafted a detailed Clean Energy and Climate Plan for 2050 to identify cost-effective and equitable strategies to ensure Massachusetts reduces greenhouse gas emissions by at least 85% by 2050, and achieves net-zero emissions.

MassDevelopment, the state’s development finance agency and land bank, works with businesses, nonprofits, banks, and communities to stimulate economic growth across the Commonwealth. During FY2022, MassDevelopment financed or managed 356 projects generating investment of more than $1.69 billion in the Massachusetts economy. These projects are estimated to create or support 11,080 jobs and build or preserve 1,778 housing units.