Frequently Asked Questions

General Information


  1. How does PACE Financing work?
  2. What is PACE Financing?
  3. Who is eligible for PACE Financing?
  4. How do I apply for PACE Financing?
  5. Can I use PACE Financing for my business property, or just my house?
  6. What if the property owner is a trust?
  7. The improvement I am planning requires a building permit. Can I get that from the Energy Independence Program also?
  8. Can I be paid for doing my own improvements on my property?
  9. If a city adopts the Sonoma County program, can that city still participate in another AB811 program?
  10. What action defines the start of my project, (which would preclude my participation in PACE Financing)?
  11. Can I use PACE Financing to “flip” houses?
  12. Can PACE Financing be used for work that is already completed?
  13. How much financing is available to me? What are the terms?
  14. What is the interest rate being charged to participants?
  15. How might the long term financing strategy of the program impact my assessment contract?

Program Finance Information


  1. Why should I participate in PACE Financing, as opposed to a regular home equity loan?
  2. Is there an early payment penalty? If so, how much is it?
  3. Can I participate in PACE Financing if my property is under water?
  4. How long does it take to receive payment once my project is finished?
  5. Is PACE Financing subject to simple interest?
  6. Can I include energy and water evaluation/audit costs in my financing application even if they are paid beforehand?
  7. How do any rebates or tax credits associated with my improvements affect the amount requested for financing?
  8. When does the County place the assessment lien on my property?
  9. If the improvements increase my property value, will my property taxes go up?
  10. My mortgage company pays my property taxes. Will they take care of this, too?
  11. What happens if I can’t make the payments?
  12. What happens if I sell my property before the assessment is paid off?
  13. Are my tax dollars being used to improve someone else’s property?
  14. Is my PACE assessment tax deductible?

Eligible Improvements Information


  1. What improvements are eligible for PACE Financing?
  2. What if my improvements are a mixture of repairs and energy improvements?
  3. I want to remove sheetrock to install better wall insulation. Will PACE Financing cover the removal, replacement and painting work, or just the insulation?
  4. If I am building an addition onto my house and doing energy upgrades at the same time, can I still apply for PACE Financing?
  5. Is artificial turf or xeriscaping covered eligible for PACE Financing?
  6. Are greywater systems allowed?
  7. Can PACE Financing be used to finance solar leases or PPA agreements?

General Information (Answers)

  1. Q. How does PACE Financing work?Property owners apply for the program, describing the energy and/or water saving improvement(s) they wish to make. If approved, the county and the property owner enter into an assessment contract and implementation agreement, through which the county pays the final cost of the improvements. The county places an assessment lien on the property, and the property owner repays the county for the improvements as an assessment on his/her property tax bill over a 10 or 20 year period.

  2. Q. What is PACE Financing?The Sonoma County Energy Independence Program (SCEIP) offers PACE Financing to allow property owners the opportunity to finance energy and water efficient property improvements through the property tax system. It is an innovative effort to improve a building’s energy efficiency, water conservation and renewable energy generation, thereby reducing greenhouse gas emissions.

  3. Q. Who is eligible for PACE Financing?Any residential, commercial, agricultural or industrial property owner in Sonoma County may participate in the program provided the following requirements are satisfied:
    • Applicant(s) is/are legal owner of the property described in the Application (the “Property”).
    • Property is developed and located within Sonoma County. Mobile homes that are not affixed to real property and subject to secured property tax are not eligible.
    • Property Owner is current on all property taxes.
    • Property Owner is current on mortgage(s)1. For commercial property,2 lender has given consent to PACE Financing;
    • Property Owner is not in bankruptcy and the property is not an asset in a bankruptcy3
    1. If property is subject to loan modification because of default or delinquency, additional restrictions apply. See Program Report for details.
    2. For PACE Financing, “residential property” is defined as single-family properties with 1-to-4 residential units; “commercial property” is all other property.
    3. If property owner has been in bankruptcy in the past three years, additional requirements apply. See Program Report for details.

  4. Q. How do I apply for PACE Financing?Property owners may use the online application tool found on the Energy Independence Program website, www.sonomacountyenergy.org. Alternatively, hard copy applications may be obtained at the SCEIP storefront at 2300 County Center Dr., Ste A105, Santa Rosa or downloaded from the SCEIP website.

  5. Q. Can I use PACE Financing for my business property, or just my house?PACE Financing is intended for improvements on residential, commercial, and industrial properties. You do, however, have to be the property owner, not a tenant.

  6. Q. What if the property owner is a trust?Property owners must supply documentation that the party(ies) signing the documents are authorized to sign legal documents on behalf of and bind the trust.

  7. Q. The improvement I am planning requires a building permit. Can I get that from the Energy Independence Program also?No. You or your contractor must obtain all required permits from your local authority.

  8. Q. Can I be paid for doing my own improvements on my property?Licensed, professional contractors working on their own property may request PACE Financing for materials, cost of their work crew’s labor and overhead but not for their own time. The labor and time of the contractor is not included. Since labor can only be paid if work is done under a licensed contractor, unlicensed owner-builders cannot pay themselves or anyone not performing labor under the supervision of a licensed contractor. For example, you may not pay your handyman for the installation of a tankless water heater, unless your handyman is working under the supervision of someone with a valid contractor’s license.

  9. Q. If a city adopts the Sonoma County program, can that city still participate in another AB811 program?Yes.

  10. Q. What action defines the start of my project, (which would preclude my participation in PACE Financing)?A project is defined as “started” and not available for participation in the program when labor associated with the construction or installation of improvements has occurred on-site. Actions not defined as “starting” include: audits, estimates, being ‘in contract’ with a vendor, and the delivery of materials. Labor should never begin prior to contract signing and receipt of a Notice to Proceed letter. Sonoma County Energy Independence Program is not responsible for any expenses incurred if your application is not approved for some reason or other issues arise prior to contract signing.

  11. Q. Can I use PACE Financing to “flip” houses?If a property is already on the market to be sold, or expected to be listed “for sale” prior to the disbursement of funds, then it is not eligible for PACE Financing. Funds are available if a property owner chooses to make energy/water efficient improvements to the property before it is put on the market; however, all work must be completed and the final disbursement must take place prior to listing the property for sale.

  12. Q. Can PACE Financing be used for work that is already completed?No, AB 811 does not allow us to fund improvements that have already been installed. A project where the permit has been “finaled” cannot be accepted by the program. AB 811 also prohibits using the program for refinancing improvement costs.A property owner that has already pulled a permit and/or has a bid or signed contract for a project may apply to the program as long as no work has been started and no other funding has already been provided.

  13. Q. How much financing is available to me? What are the terms?Assessment amounts cannot exceed 10% of the current market value of the property. The minimum PACE Financing request is $2,500. The repayment period for amounts from $2,500 to $4,999 is10 years. Projects over $5,000 may be repaid over a term of either 10 or 20 years, at the property owner’s option. Projects of $60,000 up to $500,000 require approval by the Program Administrator. Projects over $500,000 require specific approval by the Board of Supervisors.

  14. Q. What is the interest rate being charged to participants?The current interest rate for PACE assessment contracts is 7% simple interest. The interest rate is fixed at the time the assessment contract and implementation agreement are signed and will not go up.

  15. Q. How might the long term financing strategy of the program impact my assessment contract?The bonds that finance disbursed projects are currently issued by the Sonoma County Joint Powers Authority, and held by (purchased by) the Sonoma County Treasury. For the sustainability of the program, the County is exploring long-term financing of these bonds. Selling these bonds to open market investors would replenish our initial funding supply. In seeking long-term solutions, every opportunity to reduce the interest rate and apply that lower rate to existing contracts will be explored.

Program Finance Information (Answers)

  1. Q. Why should I participate in PACE Financing, as opposed to a regular home equity loan?PACE Financing has several advantages that you may want to consider:
    • Easy and simple to qualify
    • Financing is not based on the owner’s annual income
    • Assessments do not appear on your credit report
    • Assessments are paid semi-annually along with your property taxes
    • Assessments may be passed to subsequent property owners, if your buyer’s new lender agrees.

    For financial reporting, these transactions would be treated the same as other assessments on your property.


  2. Q. Is there an early payment penalty? If so, how much is it?The initial bond financing your improvements is held by the Sonoma County Treasury, and there is no penalty while the County Treasury holds the note. However, in order to continue to provide funding for Program growth, this investment will at some point be converted to long-term bonds. Bond purchasers generally require an early payment penalty/premium of up to 3%, based on current conditions. Please note that while you can pay your assessment off completely, the County of Sonoma cannot accept partial prepayments.Because PACE Financing is through the sale of bonds, any early payoff would need to include interest due until the next semi-annual bond payment date, which under state law is either March 2 or September 2.

  3. Q. Can I participate in PACE Financing if my property is under water?No. Emerging Federal guidelines for Property Assessed Clean Energy (PACE) programs such as SCEIP require that we consider the amount of debt on a property relative to the market value of the property. In order to be eligible for PACE Financing, the sum of all liens against the subject property cannot exceed 100% of the market value of the property. If your debt exceeds this limit, you may resubmit your application with a recent appraisal by a California licensed appraiser certifying a property value that will achieve the 100% limit calculation.The federal guidelines reflect the concern raised by mortgage lenders in this depressed real estate market. We regret that this restriction may prevent or delay some very worthwhile projects from obtaining PACE Financing, and we would encourage property owners to reapply when the real estate market recovers some of its value.

  4. Q. How long does it take to receive payment once my project is finished?Residential projects: Sonoma County processes checks from a special residential Revolving Loan Fund on the first County business day of every week. To ensure timely payment, property owners (or their contractors) should submit all necessary paperwork regarding the completion of the work to SCEIP by 4 pm Wednesday for disbursement the following week.Commercial projects: Sonoma County processes checks for commercial projects on the first County business day of every month. Note: this is for the first payment only; for multiple disbursement projects ($40,000 and over), subsequent check requests may be processed at any time throughout the month. To ensure timely payment, property owners (or their contractors) should submit all necessary paperwork regarding the completion of the work to SCEIP at least 5 county business days before the end of the month.

  5. Q. Is PACE Financing subject to simple interest?Yes. However, because taxes are calculated once a year on September 2, there will be a component of interest that will be added to your principal (“capitalized interest”). Capitalized interest is calculated from the day your payment is funded (the bond date) through September 1. Simple interest is then charged on this new principal amount for the duration of the assessment.

  6. Q. Can I include energy and water evaluation/audit costs in my financing application even if they are paid beforehand?Yes, expenses for evaluations, audits, real estate appraisals and engineering are all recoverable.

  7. Q. How do any rebates or tax credits associated with my improvements affect the amount requested for financing?Rebates or other incentives that are received at the time of project completion or shortly thereafter (by either the property owner or the contractor) so as to reduce the costs of a project at the outset will not be included in the financing amount. For example, if the total cost of solar project is $50,000 and the owner is entitled to an immediate rebate of $10,000, SCEIP financing will be limited to $40,000. However, rebates that are contingent on performance or that are not available to the property owner at or shortly after completion of the project, so as to be available for use to pay for the project, do not affect the amount of PACE Financing.Tax credits that may eventually be available to a property owner and would vary based on applicable tax brackets are not taken into account in determining the PACE Financing amount.

  8. Q. When does the County place the assessment lien on my property?Based upon the notarized signing of the assessment contract and implementation agreement, the lien is placed upon the conclusion of the contract rescission period (three business days). 

  9. Q. If the improvements increase my property value, will my property taxes go up?This can be a complicated issue, but the short answer is generally no. Certain projects are exempt. Applicants are encouraged to call the Sonoma County Assessor’s Office at (707) 565-1888 for clarification.

  10. Q. My mortgage company pays my property taxes. Will they take care of this, too?Yes, however you need to advise your lender of the assessment on the property, so that the proper amount can be set aside for both your taxes and the PACE assessment. It is a good idea to check with your lender before you apply for PACE Financing, as some mortgages might prohibit participation without your lender’s consent.

  11. Q. What happens if I can’t make the payments?Failure to pay the PACE assessment would be just like failing to pay your property taxes. Penalties and interest charges would apply until the assessment is paid. The county would, ultimately, have the right to foreclose on your property.

  12. Q. What happens if I sell my property before the assessment is paid off?Because PACE Financing is an assessment against the property and not a personal lien, under state law the assessment can stay with the property until it is paid off. However, recent directions from the Federal Housing Finance Agency, Fannie Mae and Freddie Mac have led many lenders to require that the entire assessment be paid before property is transferred. The assessment will appear on any title search of your property. State law requires disclosure of the assessment in any negotiation about the sale of your property.

  13. Q. Are my tax dollars being used to improve someone else’s property?No. PACE Financing participants will repay Sonoma County’s treasury investment, with interest. The County of Sonoma will, in turn, charge participants an interest rate and administrative fees that ensure the program’s costs are recovered. Therefore, the program will be revenue neutral to Sonoma County.

  14. Q. Is my PACE assessment tax deductible?Although we cannot give tax advice, we believe the United States Code is fairly clear:Title 26, United States Code, section 164(c) Deduction denied in case of certain taxes.
    • No deduction shall be allowed for the following taxes:
      • (1) Taxes assessed against local benefits of a kind tending to increase the value of the property assessed; but this paragraph shall not prevent the deduction of so much of such taxes as is properly allocable to maintenance or interest charges.

      An allocation between annual payments of interest and principal is provided at the time of disbursement. If you have any questions, you should of course contact your tax adviser.


Eligible Improvements Information (Answers)

  1. Q. What improvements are eligible for PACE Financing?Improvements must be permanently affixed to the property. For a comprehensive list of eligible improvements, click here. In general, the type of improvements funded by PACE Financing would include:
    • High efficiency windows
    • Solar and/or tankless water heaters
    • Solar panels
    • Upgraded wall and roof insulation
    • “Smart” irrigation controllers
    • High efficiency HVAC systems
    • Cool roof
    • Multiple improvements for deep energy savings (for example, Energy Upgrade California)

     

    Owners may also propose improvements that are not on the list as “custom” applications. These will be reviewed on a case-by-case basis, with the ultimate goal of increasing energy and water efficiency.

    None of these measures would typically cause an increase in property tax assessment of the property.


  2. Q. What if my improvements are a mixture of repairs and energy improvements?State law limits PACE Financing to energy and water efficiency improvements. Repairs and/or new construction outside the improvements do not qualify. Therefore, if certain repairs need to be done before, during, or after the improvement project takes place, you must bear the cost of those repairs outside of the PACE assessment.An example would be dry rot discovered during the installation of energy efficient windows. The cost of the new windows and their installation would be covered, but the repair of the dry rot would not. Program staff can assist in clarifying these types of issues.

  3. Q. I want to remove sheetrock to install better wall insulation. Will PACE Financing cover the removal, replacement and painting work, or just the insulation?Maybe. Energy Independence Program staff will need to review these kinds of issues on a case-by-case basis evaluating the age of building, framing, and wall materials such as the plaster, and existing insulation.

  4. Q. If I am building an addition onto my house and doing energy upgrades at the same time, can I still apply for PACE Financing?The program cannot finance the construction of the new addition. You may, however, apply for PACE Financing to cover the energy upgrade portion. You should obtain separate bids for the energy improvements and the new construction. Energy improvements eligible under the program could include solar for the entire structure, upgrades to windows and insulation in the existing structure, and system wide improvements to HVAC and water heating.

  5. Q. Is artificial turf or xeriscaping covered eligible for PACE Financing?No, but high efficiency irrigation controllers and some irrigation components are covered.

  6. Q. Are greywater systems allowed?Some local jurisdictions permit greywater systems. Please check with your local jurisdiction before applying. Your application would then be reviewed by Program staff to insure that it met other Program criteria (i.e., saves water).

  7. Q. Can PACE Financing be used to finance solar leases or PPA agreements?Yes. However, financing is between the property owner and the County, not a third party such as a Power Purchase Agreement (PPA) company. In addition, the contract used by the PPA company must include certain PACE requirements and the company must be on the Energy Independence Program approved PPA list. For further information about contract requirements, click here.

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Sonoma County Energy Independence Program
2300 County Center Dr.,
Suite A105
Santa Rosa, California
95403-3009

Phone: (707) 565-6470
Fax: (707) 565-6474
Email: sceip@sonoma-county.org

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