Under the PACE model, cities and counties are allowed to create special districts where property owners in the district may voluntarily agree to add an assessment to their property tax. These clean-energy districts are authorized as an extension of the Mello-Roos Community Finance Facilities Act of 1982.
In the words of californiataxdata.com: ”In 1978 Californians enacted Proposition 13, which limited the ability of local public agencies to increase property taxes based on a property’s assessed value. In 1982, the Mello-Roos Community Facilities Act of 1982 (Government Code §53311-53368.3) was created to provide an alternate method of financing needed improvements and services. The Act allows any county, city, special district, school district or joint powers authority to establish aMello-Roos Community Facilities District (a “CFD”) which allows for financing of public improvements and services.”
According to Ygrene: “In 2008, the California State Legislature adopted…AB 811, [which] authorizes cities and counties to enter into voluntary contractual assessments with property owners for eligible energy efficiency, renewable generation and water conservation improvements that are permanently attached to private property. The legislature determined that installation of these improvements enhances the environment, creates jobs and stimulates the economy, and thereby provides a public benefit.”