The impact of the Property Assessed Clean Energy (PACE) obligation and the improvements financed on the property value must be determined by a qualified appraiser. There are a variety of factors that can affect property value, including the local neighborhood and housing market. In an FHA transaction, where the Mortgagee determines that the Property is subject to a PACE obligation, it must notify the Appraiser that the PACE obligation will be paid off as a condition of loan approval.
The appraiser will determine the value, subject to the PACE obligation being extinguished.
For additional information see Handbook 4000.1 II.A.1.a.iii(B)(6)(e) available at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh