OTHER FEATURES
PACE must be shown through a review by Xcel Energy or a private
licensed professional engineer to meet national standards for
energy efficiency, and the total amount of the PACE loan cannot
exceed 20 percent of the completed tax assessed market value of
the property. Further, most commercial mortgages have a Due
on Encumbrance clause that gives the mortgage-holder the right
to call the loan due if additional debt is placed on the property
without the lender's consent. A PACE loan is "unsecured" in
the traditional sense because no mortgage is recorded against the
property. However, as a property tax special assessment that runs
with the land, the payment stream for a PACE loan actually has
a "super priority" over even a first mortgage. Because of this, it
is crucial to make use of an experienced PACE lending attorney
to prepare documentation so as to appropriately manage risk and
security interests when using PACE financing.
Summary
PACE financing is a fairly new and flexible mechanism for adding
equity to old projects, providing necessary capital inputs into
new projects and extending commercial financing over a longer
period than is available with most traditional commercial real
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estate financing products at this time. Inevitably, commercial
701.371.3355
lenders and banks will need to become familiar and ultimately
comfortable with the use of PACE financing both alone and in
Gary Keller
combination with other more traditional products. Commercial
PACE is here to stay and will likely become much more common
Based in Fargo, ND,
in commercial financing in the years to come.
serving North Dakota,
Minnesota, Iowa and Colorado.
Editor's Note: The MBA supports Commercial PACE in Minnesota.
However, during the 2017 Legislative Session, the MBA helped pass
legislation that would suspend existing Residential PACE language
due to numerous concerns around the country regarding the lack of
consumer protections. In addition to suspending the existing language,
the legislation created a task force to address the consumer protections
concerns, which includes the ability to repay, lien position and
disclosures. The MBA worked with the Minnesota REALTORS, Legal
Why choose Bell as your
Aid and the Center for Energy and Environment on the legislation and
bank's lending partner?
continues to work on the PACE task force.
We'd love to hear about
how we could team up with
your bank. We can make
Meghan Marty
Attorney
local loan decisions as
Messerli & Kramer P.A.
rapidly as you need them.
612-672-3697
Together,let's make it happen.
Daniel Schleck
Attorney
Messerli & Kramer P.A.
· Commercial & ag participation loans
612-672-3683
· Bank stock & ownership loans
· Bank building financing
· Business & personal loans for bankers
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