The long-awaited New York City PACE Program Guidelines (“Guidelines”), which provide further details on how PACE will be administered in New York City, were released late last week, on April 22. With the release of the Guidelines came some good news along with some bad news:
The good news: The Request for Qualifications (“RFQ”) for Qualified Lenders was also released at the same time. The RFQ provides the lender qualifications and requirements for capital providers interested in becoming a Qualified Lender for the NYC PACE program and outlines how a capital provider can apply to be a Qualified Lender. These requirements are fairly detailed and comprehensive and include the requirement that the PACE Lender enter into a Master Lender Agreement with NYCEEC (the form of this agreement is not available yet).
The bad news: The original April 22, 2021 PACE “go-live” date for the PACE program has been indeterminately postponed and delayed. The release of the Guidelines and the RFQ on April 22 signals that there is still much work to be done before the PACE program will be ready to go, starting with the application review and approval of Qualified Lenders for the program. After so many fits and starts, we are no longer willing to venture a guess as to the actual go-live date; however, we remain hopeful it will be soon.
The good news: Retroactive PACE financing will be available in New York City. This is huge news, and all owners who have renovated their buildings in the past 3 years should take notice. A project completed after the later of (a) May 19, 2019, or (b) 3 years prior to the PACE loan will be eligible for PACE financing retroactively. This could be a crucial lifeline for distressed owners who happened to complete PACE eligible improvements on their building in the past 3 years and are now in need of quick rescue capital.
The bad news: The PACE program is not available for new construction yet. Although the State and City PACE law was amended to include new construction, the Guidelines currently only provide for existing buildings. We expect an amendment to the Guidelines to be forthcoming to include new construction.
The good news: Condo sponsor units are eligible for a PACE loan until such unit is sold. The Guidelines confirm that residential condo units owned in common by a commercial entity are eligible for PACE loans unless and until an individual unit is sold.
The bad news: It is unclear right now if a PACE borrower must be a fee owner. The Guidelines state that the PACE borrower must be a fee owner. But the PACE statute says otherwise. Therefore, it is unclear if PACE loan applications from ground lessees will be rejected by the PACE administrator. We hope and expect that the Guidelines will be amended to comport with the PACE statute, which clearly permits any party with a recordable property interest to be a PACE borrower.
Please stay tuned, and we will continue keeping you informed on the progress of the PACE rollout in New York City. In the meantime, owners should be weighing the benefits of PACE for their projects, especially those owners who have completed projects in the last 3 years who can take advantage of retroactive PACE. Our firm has been advising owners all over the country on PACE (and retroactive PACE), so please do not hesitate to reach out to our PACE team with questions:
• Thomas O’Connor (PACE Finance Co-Chair) 212-692-7383 / email@example.com
• YuhTyng Patka (PACE Finance Co-Chair) 212-692- 5532 / firstname.lastname@example.org
• David Gardner (PACE Finance Partner) 212-692-7394 / email@example.com
• David Miller (PACE Finance Associate) 212-692-7365 / firstname.lastname@example.org
• Bruce Stachenfeld (Firm Chairman) 212-692-5550 / email@example.com