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It has been nearly a year since we last wrote about PACE, or Property Assessed Clean Energy, a means by which an assessment against a parcel’s property tax is used to pay for Clean Energy improvements, including solar. At that time, PACE for residential properties had been dealt a mortal blow by Fannie Mae and Freddie Mac which refused to subordinate their loans to the PACE assessment. (Never mind that by lowering a property owner’s utility bills you made it far less likely that the owner would default on their loan. Wonder who benefited the most from Fannie and Freddie’s actions? Certainly not consumers.)
Residential customers are still out in the cold, but for non-residential property owners the situation, at least in LA County, is far more promising and this may be just what is needed to get commercial and non-profit building owners into the game. The basic idea is this: any property owner who pays a property tax bill - including non-profits like private schools - can participate. They hook up with a funder - Wells Fargo is actively participating, for example - and the County issues a bond to that funder in exchange for the proceeds to fund the project. The property owner then pays off the bond by a property tax assessment that “runs with the land” so it is not a personal obligation of the property owner.
Part of the beauty of this program is its flexibility. The funder and the property owner reach mutually agreeable terms for the project including interest rate and payback period. (Indeed, we see this as a great way for a SunCorp to assist a non-profit entity in going solar.) The County simply determines that the proposed project qualifies for the program and then acts as the bill collector.
There are requirements for participation, but they are not particularly onerous:
Notably, there are no program requirements regarding equity in the building (although the funder may impose some) or other financial hurdles. The program can finance up to 100% of the project cost, including engineering reports and permit fees. To qualify, the building must either be in the unincorporated areas of the County or in one of the 79 cities (some 90% of the County) that have approved the program.
The County is actively trying to get the word out to building owners throughout the region. They have launched a website, and will be offering an outreach meeting for interested contractors sometime in August (we will post the details when we have them). In the meantime, you can request more information by emailing them at: pace@ororkeinc.com.
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