Alabama rebuilt its PACE financing program — and kept condominiums shut out
Alabama rebuilt its PACE financing program — and kept condominiums shut out
2026-09-10 · Alabama · Legislation
Alabama reworked its property-assessed financing statute in 2026 to bring in private capital. Condominium and cooperative associations remain outside it, and the exclusion is written into both the definition and the applicability clause.
HB 163 became Act 2026-265, signed on March 17, 2026 and effective June 1, 2026.1 It passed the House 99–0 and the Senate 30–0. It renames the Property Insurance and Energy Reduction Act of Alabama as the Property Insurance Reduction and Capital Expenditure Act of Alabama, amends Ala. Code §§ 11-81-240 through -246 and -249, adds §§ 11-81-251 and -252, and repeals §§ 11-81-247 and -248.
The exclusion
The definition of qualifying property at § 11-81-241 and the applicability clause at § 11-81-242 both carve out the same properties. The program
“excludes residential property consisting of fewer than five units and individual residential units of condominiums or cooperatives and limited common elements and common elements attached to or related to the condominium or cooperative units.”
That reaches further than the unit. Limited common elements and common elements — the roof, the envelope, the shared mechanical plant, the very components a wind-mitigation or energy retrofit would target — are named.
This is the only enacted Alabama act in the past fourteen months that uses condominium terms operatively rather than in a passing list.
What the act opened up
For everyone else, the program got considerably more usable. The act lets private capital providers finance qualified improvements, requires liens to be placed on qualifying property to secure assessments assigned to those providers, adds new construction and adaptive reuse to the categories of qualified project, bars public money from funding private loans, and repeals the loss-reserve-fund and state-regulatory-jurisdiction provisions.
What it changes for boards and managers
The practical answer is short: an Alabama condominium or cooperative association cannot use this program to finance work on its buildings, and a multifamily building of five or more units that is not a condominium or cooperative regime can.
That distinction is worth stating precisely, because it turns on the form of ownership rather than on the building. Two identical five-storey coastal buildings, one held as a condominium and one held by a single owner and rented, sit on opposite sides of this line.
For an association that has been told PACE-style financing might help fund a roof replacement or a resilience retrofit, the answer is no, and the statute says so twice.
Why the exclusion matters more than it used to
The point of the program, as its new name says, is property insurance reduction and capital expenditure. It is designed to finance exactly the work that lowers a building's wind and hazard exposure — and Alabama condominium associations are, at this moment, the property owners under the most acute pressure to do that work.
They are also excluded from the state's other principal mitigation subsidy. Strengthen Alabama Homes pays up to $10,000 toward an IBHS FORTIFIED designation, and its governing rule requires the property to be “an owner occupied, single-family, primary residence,” adding that it “cannot be a condominium or mobile home.”
So the two state-level mechanisms that exist to help Alabama property owners pay for wind mitigation both exclude condominiums by their terms. An association facing a hardening master-policy market funds mitigation from reserves, from a special assessment, or from conventional association borrowing.
What we are not saying
We are describing what the statute excludes, not predicting how any particular association's financing question comes out. Whether a specific project at a specific property qualifies depends on the ownership structure, the local government's participation in the program, and the terms a capital provider offers — and those are questions for the association's counsel and its lender, not for a statute-reading exercise.
Nor is the exclusion new. What is new is the surrounding statute: the program has been rebuilt around private capital and extended to new construction and adaptive reuse, which makes the boundary of who may use it more consequential than it was when the program was smaller.
What to watch next
Two things would change this picture, and neither is currently moving.
An amendment removing or narrowing the condominium carve-out would require a bill in the 2027 Regular Session, which convenes February 2, 2027. Nothing can be prefiled before January 12, 2027, and we found no legislator on record proposing it.
The other route is the Alabama Coastal Commercial Insurance Joint Interim Study Commission, whose 2025 authorising resolution listed “targeted tax credits or grants for businesses that invest in wind-resistant construction, fortified roofing, flood mitigation insurance” among the measures it should consider for coastal commercial and multifamily properties. That is the forum where a condominium-eligible mitigation-finance mechanism would most plausibly originate. The Commission has published no report, and we found nothing scheduled.
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