The P.A.C.E Needs to Quicken

Wednesday

Feb242010

Wednesday, February 24, 2010 at 10:05AM

We are happy to have to have Advisory Board member, Ted Kohnen, share his thoughts about a new energy efficiency initiative for homeowners. You can find out more about Ted on the B2S team page. Add your thoughts to the comment section below!

How many programs do you know of that make banks happy, homeowners happy and the city they live in happy? Oh, and let’s not forget the environment. Not many, right? The PACE (Property-Assessed Clean Energy) initiative is doing just that. PACE is a way to finance energy efficiency retrofits, whereby the city provides the homeowner a loan to install solar panels, new windows, etc. and the homeowner repays through property tax bills over a set period of time. Here’s the beauty of it; because the energy savings will outweigh the property tax, there’s a low risk of loan default.

So far, PACE programs, or variations of it, have made it to 19 states – from California to New York. But, there’s always a catch. Not a catch so much, as a hurdle. For PACE to be offered in a particular town or city, local law must be changed. For example, one town in NY state, Babylon, Long Island has passed PACE legislation (AB 40004A). It’s great that Babylon did this (and it should be noted that the town of Babylon jumped on this very quickly in 2008), but consider how many towns/cities NY state has (62 counties made up of 932 towns and 62 cities). At this rate, New York will have this available to all residents in 120 years. Too long.

I think PACE is the kind of program that state governments (not local) or even the federal government should endorse (via legislation) to speed up the rate of adoption.

The benefits to all parties? Pacenow.org sums them up nicely on their website:

"Our Nation:
    * Significant job creation
    * Accelerates movement toward energy independence & reduces GHG emissions
    * Very low fiscal cost & high probability of success

Property Owner:
    * Lower energy bills and substantially reduced upfront costs for energy retrofits
    * Improved return on investment/positive cash flow on retrofits (annual savings > cost)

States, Cities & Municipalities:
    * Immediate job creation
    * No credit or general obligation risk
    * Obligation is liability of real estate owner
    * Greenhouse gas reductions/energy independence
    * Opt in: Only those real estate owners who opt in pay for it

Existing Mortgage Lenders:
    * Borrowers cash flow/credit profile improves (energy savings > annual tax cost)
    * Property/collateral value increases

Lender:
    * Virtually no risk of loss as property tax liens are senior to mortgage debt
    * 97% of property taxes are current & losses are less than 1%"

Raquel |

5 Comments |

tagged

energy efficiency,

homes,

property tax,

retrofits

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