A game-changer for a green economy is closer than you think

By MITCHELL SCHNURMAN

mschnurman@star-telegram.com

Berkeley, Calif., and Boulder, Colo., may seem like unlikely role models for just about anyplace in Texas. Unless the subject is the green economy.

Those bastions of liberalism are among a handful of cities and counties that have embraced a new financing scheme that may be coming soon to a local government near you. It establishes a special taxing district that raises money, usually through bonds, and lends it to residents to buy solar panels, replace old windows and make other improvements in energy efficiency.

The twist is that the debt is attached to the property, rather than the homeowner, and it’s usually repaid along with property taxes or utility bills. This structure often eliminates upfront costs, the biggest hurdle for energy investments, and stretches payments for up to 20 years. When the house is sold, both the bills and benefits transfer to the new owner.

It’s called PACE financing, short for Property Assessed Clean Energy, and it has been promoted as part of the stimulus and President Barack Obama’s broader push for a green economy.

PACE is still in the early stages, but it has already been a game-changer. Spending on energy efficiency — however noble — has always been difficult to justify, because it takes many years to get a good return. New financing models, plus an array of rebates and tax credits, are making it a wise economic move.

Communities have plenty of reasons to encourage the trend. The programs save money, reduce demand for electricity, cut greenhouse gases and generate a lot of good jobs.

The reaction on the ground has been remarkable. When Boulder County started its program, more than 1,700 people and 130 contractors attended briefing sessions. Last April, in the first round of funding, 393 projects got $7.5 million, and recently, the county has been averaging $1 million in applications per week.

Berkeley launched a $1 million pilot program in late 2008, and within 10 minutes of going online, all the slots were taken.

In Sonoma County, Calif., north of San Francisco, the first contract was signed April 16, 2009. Before the end of the year, applicants had submitted requests for $37 million in improvements.

Sound far-fetched for Texas? Last year, lawmakers passed a bill that lets cities move forward on such programs, making Texas one of 16 states that have opened this door.

Less than two months ago, representatives from 25 cities, including 23 in North Texas, attended an information session in Dallas to learn more about PACE programs. Two staffers from Fort Worth were there, and the city is beginning an initial review.

A couple of obstacles have slowed adoption here. The law didn’t settle the status of energy efficiency debt in the lien process; supporters say the debt should be second to tax liabilities and ahead of the mortgage.

How that’s resolved makes a big difference in the interest rate, which affects the monthly payment. The attorney general or a court could weigh in. If necessary, the Legislature may have to refine the bill next year, which would be a painful delay.

Texas could use the programs this year, because they’re proving to be a jobs savior in the beaten-down construction sector. Sonoma, for instance, had an 8.4 percent gain in construction jobs while neighboring counties lost workers, and officials said the PACE program’s extra spending accounted for the gains.

“We’ve been doing a really good job priming the building industry here,” John Haig of Sonoma County told an industry panel at an Energy Department seminar in November.

He called the energy initiative “our own little economic stimulus package.”

In Boulder County, ripple effects are already evident.

“For every dollar that is going through our loan program, at least one of our solar companies is seeing an extra 50 cents coming in,” Ann Livingston, Boulder’s sustainability coordinator, said at the same seminar.

Green programs are striking a chord in North Texas, too. TXU Energy and SolarCity recently unveiled a solar leasing plan with no upfront costs and a low monthly payment. Within the first week, more than 2,000 homeowners had called, and receptionists were swamped by the response.

SolarCity expects to install panels on 200 to 300 homes this year, so the pent-up demand is likely to remain.

City-sponsored plans have the potential to reach many more people, because credit score requirements would not be as high. Other improvements can also be included in PACE financing, including new windows and insulation, and that can increase the savings significantly.

PACE financing has a couple of key principles. Most important, the improvements have to generate enough savings to cover the costs. That helps ensure that homeowners are making high-value investments.

Most programs exclude homeowners who are underwater on their mortgage. Leaders try to make sure that contractors are qualified, that the work is done correctly and that nobody is shortchanged.

There’s one more reason Texas leaders should get moving soon. To make the numbers work on energy efficiency, residents tap a slew of federal, state and local incentives.

With deficits rising, that money won’t be around forever.

A game-changer for a green economy is closer than you think | Mitchell Schnurman | Dalla….

Related posts:

1. San Antonio’s #solar #PACE Program “on the rocks” (#Texas #cleantech #finance) San Antonio’s woulda-been-groundbreaking solar PACE program on the rocks Greg...
2. Will Fanny and Freddy Stop PACE? (Mortgage Lenders vs Property Tax) A national response over lender concerns about green retrofit programs...
3. Property Assessed Clean Energy (PACE) Web Conference from AltaTerra Research April 28, 2010 Web conference, “PACE Funding: Energy Market Breakthrough?”...
4. Podcast: Inside Renewable Energy How Do We Define the Green Collar Economy? Inside Renewable Energy How Do We Define the Green Collar...
5. As Colleges Add Green Majors and Minors, Classes Fill Up Classes are filling up as fast as colleges can add...

Related posts brought to you by Yet Another Related Posts Plugin.