Property Assessed Clean Energy Finance

Is probably one of the best ideas out there for how to encourage people to start retro-fitting their homes for renewable energy. The concept is relatively brilliant. Even if you have gobs of money lying around squirelled away in the trunk of your Bentley, prudent investment advice dictates to use someone else’s money whenever you can - ie. get a loan. Loan’s on renewable energy for a home or a commercial property are tough, what if you default, is the finance company going to come and repo the panels from your roof? Maybe. But what if they damage the roof in the process. And besides, to be truly cost effective the loan needs to be spread out over 20 years or so and what if you decide to sell the home? Different states and cities of different norms as to what appliances go with a property. Not to mention the average American doesn’t have a Bentley stuffed with cash in the trunk, so solar is kind of expensive. To put it simply, it gets dicey and leaves too much room for chaos and confusion. Let’s keep it simple.

PACE financing is an easy concept to understand. The consumer wants tp put solar or wind on their property, they go to their local renewable energy company, get it installed and the city that they live in pays the solar company. In exchange, the cosumer pays the city back with an increase in their property taxes. The cost of the system is spread out over 15 or 20 years, the energy savings offset the increased cost of the property taxes. When the home owner moves, the PV system stays with the house and the new owner simply takes over the payments by way of the property taxes. No problem with having to “repo” the system, if you can’t pay your property taxes than the home goes to the tax collector anyway. The project is completely opt-in, only those who want to be a part of it are a part of it.

There are a number of cities and municipalities out there that are experimenting with the concept - it should come as no surprise that Berkeley California is the model city for the program.

I apologize in advance, the next page is going to go into some of the technical details as to how the program works, not sexy, but very informative for the uninitiated, so please read on.

For the most part, municipalities are not simply allowed to levy whatever taxes they want to against real property in order to pay for improvements. In order for a municipal finance model to work, the local government needs to create a Community Facilities District, which will give them the authority to raise property taxes.

The City needs to choose a banking and a bond partner. Set up the application process for those interested property owners to sign up for the program - it is the property owners responsibility to go out and get a quote for the system to be installed.

I could write on ad nauseam about the process, but that’s not really the point here, it’s to get the idea flowing into people’s heads - into our city oficials heads so that they can get the ball rolling and into the voting publics heads so that they can call up their city officials and ask them why they’re not pursuing this and finally to, of course, the consumer so that when the time comes they sign up for the program.

As I mentioned earlier, the Federal Government has done a lot to get the ball rolling on renewable energy, now here’s the part that the municipality can contribute. This is an important part of any renewable energy innitiative for any city.

Do we all think it’s too much work and too much to ask, funny enough, the guys who created the concept and implemented it for Berkeley created Renewable Funding which offers turnkey services to start the process in any local. They will work with partners to create the program and then help with the administration and financing of it.

Unfortunately, recent events have perhaps halted this brilliant mechanism in it's tracks - Fannie May and Freddie Mac have refused to accept second position to a PACE loan, effectively cutting out the millions of individuals who rely on these organizations to keep the mortgage market moving.

If a renewable energy future and affordable solar, wind power, efficiency is something that you are interested in, it would help to do your research on the topic and contact your local municipal leaders to start a discussion and perhaps set up a program.