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 operating with loan loss reserve funds, appropriate disclosures, contractual subordination or other protections meant to address FHFA's concerns. The Federal Housing Administration (FHA), a branch of the U.S. Department of Housing and Urban Development (HUD), has released initial guidelines for using PACE with FHA-secured single or multifamily properties. This guidance is independent of FHFA policy. 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 for a comprehensive list of all PACE programs across the country.

Property-Assessed Clean Energy (PACE) financing effectively allows property owners to borrow money from the 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. Connecticut has authorized local governments to establish such programs, as described below. (No local governments in Connecticut currently offer residential PACE financing.)

In July 2011, Connecticut passed omnibus energy legislation. In section 100, the state authorizes municipalities to create "Sustainable Energy Programs" within their respective jurisdictions (known as PACE).  Municipalities that wish to establish Sustainable Energy Programs must first declare the public need for a program, then publish its intention to create a program via public notice and solicit and consider public comment. Once a program is established, the municipality is authorized to enter into a contractual assessment on the property for the amount required to complete the requested energy upgrades. The assessment is considered a lien on the property and the municipality may collect payments in a manner consistent with how the municipality collects property taxes. To finance the programs, municipalities may issue bonds, secure private funding, or state or federal funds (or a combination of these).

In June 2012, Connecticut passed the Commercial PACE or "C-PACE," which is specific to non-residential property owners. The Clean Energy Finance and Investment Authority is working to administer the C-PACE financing program.