More Towns Pick Up the PACE

More Towns Pick Up the PACE

This essay was published in the Time Argus/Rutland Herald on March 25, 2012. By Jake Brown

PACE Cities and Towns

With 23 towns approving PACE districts this past March 6 at town meeting, Vermont now has 35 communities looking at advancing this innovative energy-financing program, including:

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, click here.

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.

Nearly two dozen towns approved the new “Property Assessed Clean Energy,” or PACE program at town meetings on March 6.

Twenty-three towns across the state voted to create PACE districts, which is the first step toward offering the creative municipal financing. This brings the total to 35 towns in Vermont that have voted to create PACE districts.

“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.Twenty-three towns across the state voted to create PACE districts, which is the first step toward offering the creative municipal financing. This brings the total to 35 towns in Vermont that have voted to create PACE districts.

Tillinghast says that while some people may be motivated by the environmental and greenhouse gas reduction benefits of energy efficiency and renewable energy investments, the costs of these benefits are exceedingly high. Homeowners can now save lots of money by making improvements made easier because of the PACE programs.

Nuts and Bolts

If you are a property owner, live in a town that has a PACE program and want take advantage of the program, here is how it would work.

You would work with a contractor to identify specific energy improvements you want to make to your home, and then apply to get financing from your municipality. Assuming your application is approved, you would then work with a contractor to get the project done. Once the contractor completes the improvements to your home, the municipality would pay the contractor. The town then places an “assessment lien” on the property.

Then, depending on your agreement with the town, you would repay the amount financed over a 10, 15, or 20-year time period at an interest rate expected to be about 2 percent higher than the rate for 30-year fixed mortgages.  As long as you owned the house, you would pay that extra charge until the financing was paid off. If you sold the house in the meantime, the new owner would start paying the charge. And, at any time, the entire lien could be paid off without penalty. The maximum amount a homeowner could finance through PACE would be 15 percent of the assessed value of the property, capped at $30,000.

For town officials who have to play a role in making PACE possible, many have wondered: “How can my community possibly administer this program?”

It’s a good question and, thankfully, there is a good answer: For no cost to the community, towns can choose to use a third party – Efficiency Vermont –to help administer the program. EVT will be able to manage the lion’s share of the logistics for the program, helping to create and process the applications, approve contractor payments, manage customer billing and more.

PACE offers several important benefits compared to traditional bank loans. People who have a limited ability to borrow money or are unwilling to take on personal debt can be good candidates for the program. The program also allows property owners to pay back the financing over a longer period — 10, 15 or 20 years — than a typical bank loan would allow. This can help the property owner maintain a positive cash flow. Also, under PACE, the expected energy savings of the investments are considered in calculating eligibility, something that banks generally do not do.

Next Steps for PACE Communities?

For the 35 Vermont towns that have created PACE districts — and the Vermonters eager to do the energy improvements — the next most essential steps are to:

– Review the program parameters. (Amend or modify as community sees fit.)

– Determine how the community will administer the program. (Receive administrative support from Efficiency Vermont  or manage the program in-house.)

– Adopt the program! (That requires an authorized agent — i.e. Selectboard — to pass a resolution to adopt the “PACE Program Description and Guidelines” .)

Potential timeline for customers to be able to apply for PACE?

For those towns that have chosen Efficiency Vermont to act as their administrator:

– End of June 2012 – Work scopes submitted to Efficiency Vermont for review.

– July – mid August 2012 – Approval process

– Late August – mid October 2012 – Work is completed

Additional subscription periods will be scheduled for 2013 in the next few months.

For those towns not using Efficiency Vermont as the administrator, the timeline will be up to them.

All PACE-related information, including the “PACE Program Guidelines” (which can be found on the “Updates” page) is on the PACE Wiki here.

One of the big barriers for people making energy saving investments in their homes has been the fact they aren’t sure they will remain in the house long enough to reap the benefits of the investment. They are understandably reluctant to take the plunge and borrow money to make the investments. PACE or bank?

In the PACE system though, the assessment runs with the property and is not a personal debt. That means that homeowners who don’t know how long they will stay at a property can still benefit. If they sell their house before the town has been paid back, the new owners assume the payments.

State Treasurer Beth Pearce is a strong proponent of the PACE program. Advocates for PACE say they appreciate her support, noting that it lends the program real credibility.

Efficiency Vermont is following up with towns and working with the Vermont Natural Resources Council, the Vermont League of Cities and Towns and others to put the essential pieces in place for successful PACE implementation, including maintaining a web site — — that is a one-stop-shop for all 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 what the program can offer the 35 communities that have created districts and what it might offer towns down the road.

“Vermonters are biased toward action and the continuing enthusiasm for this program proves that,” Adamczyk said.