Pennsylvania Bill Aims to Revamp Energy Efficiency Financing
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Pennsylvania’s Senate Bill 234, also known as the Pennsylvania Property Assessed Clean Energy (PACE) program, was co-introduced this year by state Sens. John Blake, D-22, of Scranton, and Guy Reschenthaler, R-37, of Allegheny County. The bill would allow municipalities to essentially cover the up-front costs of energy efficient upgrades to commercial properties if requested, such as as solar panel installation, insulation upgrades or water conservation technologies.
The money, which would come from either the issuance of municipal bonds or private funding sources, would then be repaid through a tax assessment placed on the property. The assessment would remain even if the property was sold to a new owner.
“Energy and water conservation and doing other 21st century innovations makes properties more valuable,” Blake told this news organization in a phone interview. “(PACE) is all market driven, and it has the potential to create jobs.”
Blake says there are a lot of “wins” to go around if the legislation is passed: businesses save on their energy costs; municipalities recoup their money, including potential markups or fees; lending agencies get their slice; and Pennsylvania’s burgeoning “green job” workforce gets more work.
Blake noted that there is risk in the event that a property owner who requested the loan defaults and can’t pay its assessment, but said that the potential pitfall isn’t particularly worrisome to him.
“It seems to me that (efficiency improvements) would improve its marketability,” Blake said. “It’s a model that has proven its value.”
PACE is not a new concept. First pioneered by California communities, legislation enabling the financial arrangement has been passed in 30 states. Blake said Pennsylvania’s program would differ from many others in that it would make PACE funding available only to commercial properties, and not residential.
Some have been critical of PACE financing, particularly in the residential sector. A January piece in The Wall Street Journal chronicled how some homeowners in other states found themselves unable to keep up with the higher tax assessments implemented through PACE financing. In those cases, municipalities are placed in the unusual situation of having to foreclose on their own residents.
Other analysts said PACE programs have not existed long enough to get accurate data on foreclosure rates and risk, and that some agents have pushed the financing and oversold energy savings potential. Blake hopes to avoid some of the potentials by limiting Pennsylvania PACE to commercial.
Blake said he’s tried to build support for the legislation in Pennsylvania in several past sessions, but believes newly won bipartisan support could get it across the finish line in 2017. The bill is co-sponsored by 24 of the state’s 50 senators, including 12 Democrats and 12 Republicans. Adding to the momentum, Blake said influential committee chairmen have promised to move it along.
Blake said 27 environmental and energy organizations have also voiced their support. He added that because private capital can also be used for PACE funding, with a municipality acting as intermediary, members of the banking sector are also behind it.
“We’ve got a coalition of business interests and environmentalist interests that (support) seeing this happen,” Blake said.