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Massachusetts

Massachusetts

Incentives/Policies for Energy Efficiency

Printable Version
Local Option - Energy Revolving Loan Fund   

Last DSIRE Review: 07/22/2013
Program Overview:
State: Massachusetts
Incentive Type: PACE Financing
Eligible Efficiency Technologies: Locally determined
Eligible Renewable/Other Technologies: Solar Water Heat, Photovoltaics, Locally determined
Applicable Sectors: Commercial, Industrial, Residential
Terms:Financing amount locally determined; 20-year financing term
Authority 1:
Date Enacted:
Date Effective:
M.G.L. ch. 44, ยง 53E 3/4
07/27/2010
07/27/2010
Summary:

Note: In 2010, the Federal Housing Finance Agency (FHFA), which has authority over mortgage underwriters Fannie Mae and Freddie Mac, directed these enterprises against purchasing mortgages of homes with a PACE lien due to its senior status above a mortgage. Most residential PACE activity subsided following this directive; however, some residential PACE programs are now operating with loan loss reserve funds, appropriate disclosures, or other protections meant to address FHFA's concerns. Commercial PACE programs were not directly affected by FHFA’s actions, as Fannie Mae and Freddie Mac do not underwrite commercial mortgages. Visit PACENow for more information about PACE financing and a comprehensive list of all PACE programs across the country.

Property-Assessed Clean Energy (PACE) financing effectively allows property owners to borrow money to pay for energy improvements. The amount borrowed is typically repaid via a special assessment on the property over a period of years. Massachusetts has authorized local governments to establish such programs, as described below. (Not all local governments in Massachusetts offer PACE financing; contact your local government to find out if it has established a PACE financing program.)

In July 2010, Massachusetts established PACE financing as part of a larger "Municipal Relief Bill" (H.B. 4877). This law authorizes local governments to establish an "Energy Revolving Loan Fund" to provide financing to private property owners (including condominium owners, as long as the improvements include part of the common areas/facilities) for energy efficiency and renewable energy improvements. The law permits local governments to consult with the Division of Green Communities (part of the Massachusetts Department of Energy Resources) to determine which improvements should be eligible, but in November 2010 the Division of Green Communities announced that it was not providing PACE guidance until the FHFA situation has been resolved.

Local governments interested in establishing an Energy Revolving Loan Fund must first hold a public meeting. Then, the local government must pass an ordinance or by-law to create the program and identify the fund's administrator. Local governments are allowed to enter into agreements with other local governments to create and administer a program. After establishing an Energy Revolving Loan Fund, the administrator is authorized to provide financing to property owners for energy efficiency and renewable energy improvements, provided those property owners have had an energy audit* and meet any additional energy conservation requirements. Property owners that opt in to a local program will enter into a "betterment" agreement and are responsible for repaying the assessment according to the agreement's terms.


* An energy audit must be performed for facilities that have not undertaken such an audit after July 1, 2008.

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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

Copyright 2013 - 2014 North Carolina State University, under NREL Subcontract No. XEU-0-99515-01. Permission granted only for personal or educational use, or for use by or on behalf of the U.S. government. North Carolina State University prohibits the unauthorized display, reproduction, sale, and/or distribution of all or portions of the content of the Database of State Incentives for Renewables and Efficiency (DSIRE) without prior, written consent.