Local Option – Energy Efficiency & Clean Energy Districts

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 PACENation for more information about PACE financing and a comprehensive list of all PACE programs across the country.

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

Owners of private property (zoned for residential, commercial, industrial, or “other” uses, excluding residential property containing less than five units) may opt in to an energy financing district after such a district has been created and may obtain funding for a broad array of energy efficiency upgrades and/or renewable energy investments that are permanently affixed on or off the property. Energy improvements must be installed by qualified contractors after an energy audit is conducted.

In November 2010, the town of Durham became the first in New Hampshire to establish a PACE financing program.

History

New Hampshire enacted legislation in June 2010 (H.B. 1554) authorizing the state’s cities, towns, and village districts to establish energy efficiency and clean energy districts. To create such a district, a local government may incur debt (including through issuance of municipal revenue bonds, Qualified Energy Conservation Bonds or Clean Renewable Energy Bonds), establish revolving funds, provide financing, and collect assessments to implement the program. H.B 532, enacted in August 2014, allows additional flexibility to obtain financing from private individuals or institutions. The act also requires the municipality to notify and get consent of any prior mortgages or liens that exist in the property before providing a municipal lien. 

H.B. 205, enacted in June 2015, further amended New Hampshire’s PACE legislation, removing the authority for municipalities to provide financing, so that PACE financing can only be provided by private entities. This bill also removed the requirement for municipalities to establish a loss reserve account and removed the caps on financing amounts. Legislation enacted in June 2023 (H.B. 576) specified that PACE liens have senior lien status.