MassDevelopment expands clean energy financing program to include new construction

Photo | Courtesy of Google Maps 440 William F. McClellan Highway in East Boston is one building which has benefitted from MassDevelopment's PACE program.

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By Timothy Doyle

MassDevelopment has expanded its Property Assessed Clean Energy Massachusetts program, once available only to existing buildings, to include new construction projects.

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, according to a Tuesday press release.

“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 Massachusetts Climate Chief Melissa Hoffer in the press release. “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.”

A betterment or special assessment is a special property tax that is permitted by general or special law where real property within a limited and determinable area receives a special benefit or advantage, other than the general advantage to the community, from the construction of a public improvement, according to a 2021 informational release by the Massachusetts Department of Revenue.

MassDevelopment says that the program offers more flexibility than a direct loan. It 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.

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 have opted in, including Central Massachusetts communities Clinton, Devens, Dudley, Fitchburg, Franklin, Gardner, Grafton, Hudson, Leicester, Southbridge, Westborough.

The PACE program is one of a number of green finance products offered by MassDevelopment, including Green Bonds, and Sustainability Bonds.

On June 13, 2023 the Gov. Maura Healey 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.