Tuesday, February 3, 2015

PACE is a way for property owners to pay for efficiency upgrades and renewable energy systems on their property. It’s an ingenious program that achieves two benefits:

  • provides access to secure loans backed by the property and the municipal bond that has made the funds available.
  • allows the property to be sold, if necessary, before the upgrades or energy systems have paid for themselves.

How does PACE work?

PACE stands for “Property Assessed Clean Energy”. It’s called “property assessed” because it allows local communities to create a fund and loan it to propoerty owners who have agreed to pay it back through a “special assessment” on their property tax bill. It is completely voluntary and it’s not a tax. The only person’s tax bill that’s affected is the person who has borrowed the PACE funds. The property owner simply makes the payments to the city or county tax clerk who puts the money back into the fund so it can be loaned to someone else.

How Do I Apply?

PACE has just been passed by the Missouri Legislature. It has not been signed by the governor yet, but it will be very soon. Unfortunately, there will be a bit of a wait while local governments set up the “PACE Councils” that will authorize the bonds that jump-start the program. So, the short answer is “you can’t”. Not yet, at least. Could be 2011…could be 2012 before any programs are up and running. The billpassed by the legislature is simply “enabling” legislation. It says that this program is endorsed and suppported at the state level, and gives the general guidelines about how to set up the PACE councils.

The rest is up to us. Get in touch with your local representatives–County Commissioners, Aldermen, etc. and let them know you want PACE in your area. It may take some grass-roots work, but it will happen. This was the least contentious bill of the past legislative session. Anyone who is against it simply doesn’t understand it. Several counties are on record as supporting PACE and all it can do to help people reduce their usage and save money on energy. Go to Renew Missouri’s web site for more information.

I Rent My Home. Can PACE Help Me Reduce My Bills?

The first thing to remember is that efficiency and solar energy benefit whoever pays the utility bill. A rental tenant can certainly pay for efficiency upgrades or an alternative energy system, but they will only benefit if that tenant pays the utility bill _AND_ is able to live in the dwelling long enough to get through the “payback” period of the intial investment. However, they must also get the property owner’s agreement before making a major modification like that to the property.

A property owner who pays for an upgrade or a system can only benefit if they include utilities with their rents. In such a case, the tenants don’t see the change in electricity expenses. However, they will probably be aware that a solar electric system has been installed and might increase their usage since they think the landlord is now getting “free” electricity. The sunlight is free, for sure, but capturing and converting it to electricity isn’t. If the tenants don’t change their habits and continue to use the same amount of energy, then the property owner benefits. If the tenants do start using more energy, then the property owner will have to raise rents to compensate. In this scenario, no one benefits.

Reducing your carbon footprint or doing your part to clean up the noxious discharges from power plants are worthwhile whether you’re a renter or not. Due to the complexities highlighted above, though, there is little motivation for rental property owners to invest in efficiency or distributed generation (like a wind turbine or solar panels on the roof).

Because PACE’s primary mechanism is a lien on the property, PACE is exclusively for the property owner. A tenant can’t obligate their landlord to pay a property assessment. Trying to apply PACE to rental property is a bit like using a computer as a doorstop. Yes, it can be done, but it’s not what the tool was designed for.

Soryy about that. We really wish it were different. Perhaps a clever person will figure out how to make it work.

For the meantime, PACE is a way for property owners to install efficiency upgrades or renewable energy systems onto their properties. This tends to favor owner-occupied properties rather than rentals.

Contact Us to find out how PACE might be able to help you reduce your carbon footprint–and your utility bills–in a way that fits your needs.

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