By Jake Brown
Thousands of Vermonters now have a new way to pay for insulating their homes, putting solar panels on their rooftops or installing wood pellet heating systems. A total of 35 towns have now approved the new “Property Assessed Clean Energy,” or PACE program (23 in last month’s town meetings). In voting to create PACE districts, they took the first step toward offering this creative financing to their residents.
“What (the votes) mean is that there is strong demand – that people recognize that these investments are a huge, untapped opportunity,” says Tig Tillinghast, vice chair of the Thetford Select Board and strong proponent of the PACE program.
The cost of renewable energy and energy efficiency investments is high but is now made easier with PACE.
Nuts and Bolts
If you are a property owner and live in a town with a PACE program, here is how it works. You get an estimate from a contractor for your project and then apply for financing from your municipality. When the application is approved, the contractor completes the project and then the town pays the contractor. The town then places an “assessment lien” on the property. Projects must be installed by a contractor.
Then, depending on your agreement with the town, you repay the lien amount over a 10, 15, or 20-year time period at an interest rate expected to be about 2 percent higher than the rate for a 30-year fixed mortgage. For as long as you own the house, you pay that extra charge until the lien is paid off. If you sell the house, the new owner starts paying the charge. And, at any time, the entire lien can be paid off without penalty. The maximum amount a homeowner can finance through PACE is 15% of the assessed value of the property, capped at $30,000. Some town officials have wondered: “How can my community possibly administer this program?” Good question. Thankfully, there is a good answer: At no cost to the community, towns can choose to use a third party – Efficiency Vermont – to help administer the program. EVT can manage much of the program logistics: create and process the applications, approve contractor payments, manage customer billing and more.
PACE or Bank?
PACE offers several important benefits. People with a limited ability to borrow money or unwilling to take on personal debt can be good candidates. PACE provides a much longer payback period than a typical bank loan. Also, under PACE, the expected energy savings of the investments are considered in calculating eligibility. Banks generally do not allow this.
One big barrier for folks considering these investments is they aren’t sure they will remain in the house long enough to reap the benefits. With PACE, though, the lien stays with the property. So, not only do homeowners benefit immediately from their investment, but if they sell their house, the new owners assume the payments.
EVT is following up with towns and working with the Vermont Natural Resources Council (VNRC), the Vermont League of Cities and Towns and others to prepare for successful PACE implementation, including maintaining a web site: www.pacevermont.wikispaces.com A one-stop-shop for PACE related information and a forum for answering questions.
Peter Adamczyk, managing consultant at Efficiency Vermont and Vermont’s leading PACE expert, is hopeful about the PACE program. “Vermonters are biased toward action and the continuing enthusiasm for this program proves that,” Adamczyk said.
PACE Cities and Towns
PACE now has 35 communities looking at advancing this innovative energy-financing program: Albany, Barre City, Brookfield, Burlington, Calais, Cornwall, Craftsbury, Dorset, East Montpelier, Ferrisburgh, Glover, Halifax, Hartford, Hartland, Hyde Park, Manchester, Marlboro, Montpelier, Middlebury, Monkton, Newport town, Norwich, Plainfield, Putney, Richmond, Ripton, Sharon, Strafford, Thetford, Tunbridge, Vershire, Waitsfield, Westminster, Weybridge, Woodstock.
For all current PACE-related information, visit: www.pacevermont.wikispaces.com