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Implementing PACE 2.0 in Vermont

Implementing PACE 2.0 in Vermont. Addison County Regional Planning Commission October 27, 2011 Peter Adamczyk, Energy Finance and Development Manager. Why do we need PACE?.

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Implementing PACE 2.0 in Vermont

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  1. Implementing PACE 2.0 in Vermont Addison County Regional Planning Commission October 27, 2011 Peter Adamczyk, Energy Finance and Development Manager

  2. Why do we need PACE? • Nationally, participation in energy finance programs has been less than 0.5% per year, mostly because homeowners are reluctant to risk upfront cost • Energy financing programs frequently serve those who least need them • Short-term consumer financing (less than 7 years) is not effective unless there are substantial subsidies 2

  3. How does PACE work? • Voluntary mechanism allowing property owners to opt in to a special assessment district created by their municipality • Funds may be used for eligible energy efficiency and/or renewable energy improvements • Repayment period up to 20 years • Special assessment transfers to the new owner when the property is sold, or can be paid in full at time of transfer 3

  4. How the money flows Financing Source PACE District Property Owner Property Owner Property Owner Property Owner Property Owner Opts In Opts In Opts In 4

  5. Vermont PACE parameters • The cost of the project financed through PACE cannot exceed $30,000, or 15% of the assessed value of the property (AVP), whichever is less • The loan-to-value ratio of any outstanding mortgages, plus the amount of the PACE assessment, cannot exceed 90% of the AVP 5

  6. Where PACE has been authorized ME: 2010 MN: 2010 MI: 2010 (C&I Only) NH: 2010 NY: 2009 OR: 2009 VT: 2009 WI: 2009 MA: 2010 WY: 2011 CT: 2011 NV: 2009 OH: 2009 MD: 2009 IL: 2009 CO: 2008 DC DC: 2010 CA: 2008 VA: 2009 MO: 2010 NC: 2009 NM: 2009 OK: 2009 GA: 2010 TX: 2009 LA: 2009 27 states + DCauthorize PACE FL: 2010 HI: Existing Authority PACE financing authorized by the state* *The Federal Housing Finance Agency (FHFA) issued a statement in July 2010 concerning the senior lien status associated with most PACE programs. In response to the FHFA statement, most local PACE programs have been suspended until further clarification is provided. Source: www.dsireusa.org / October 2011 6

  7. National PACE developments - FHFA • Federal Housing Finance Agency (FHFA) issued a letter on July 6, 2010 regarding PACE: • instructed Fannie Mae and Freddie Mac to use more restrictive mortgage underwriting standards for all borrowers in jurisdictions with PACE programs • property owners that participate in senior-lien residential PACE programs will violate standard mortgage provisions and could trigger a mortgage default. 7

  8. Traditional lien position Special assessments are typically subordinate to property taxes and senior to mortgages 8

  9. VT PACE Lien position In Vermont’s legislation, PACE assessments are subordinate to property taxes and mortgages 9

  10. Vermont’s PACE lien status • 24 V.S.A. § 3255 • Special assessments … shall constitute a lien on the property against which the assessment is made in the same manner and to the same extent as taxes assessed on the grand list of a municipality, and all procedures and remedies for the collection of taxes shall apply to special assessments. • (source: ww.leg.state.vt.us/statutes/fullsection.cfm?Title=24&Chapter=087&Section=03255) 10

  11. Vermont’s new PACE legislation • PACE lien will be subordinate to any existing property-secured liens currently in place • Subordinate to a subsequent first mortgage (i.e., a refinance) • No accelerated payments • Residential only at this time 11

  12. Vermont’s new PACE legislation, continued • Creation of a reserve account is mandatory – 2% from participating property owners • Creates a statewide loan loss reserve mechanism – 5% from RGGI funds, up to $1 million • Efficiency Vermont available to act as PACE administrator for towns • Effective Jan. 1, 2012 12

  13. PACE implementation 13

  14. Process requirements • Property owner notifies municipality of desire to opt in • Municipality “underwrites” property – not owner • Property owner has analysis performed to: • quantify project costs and energy savings • quantify estimated carbon impacts • determine annual cash flow • Energy Efficiency Utility reviews and approves analysis • Written agreement and analysis filed with the land record 14

  15. PACE in Vermont – current implementation by towns • Vermont Energy Investment Corp (VEIC) obtained additional Direct Congressional Funding through support of Sen. Bernie Sanders for statewide ‘Quick Start’ implementation assistance • Any Vermont municipality may join to determine whether they want to move forward with the creation of a PACE district • VEIC will provide materials and services necessary for the successful implementation of this program. 15

  16. Vermont PACE Districts • Albany • Burlington • Cornwall • Craftsbury • East Montpelier • Halifax • Marlboro • Montpelier • Newport town • Putney • Thetford • Waitsfield • Westminster 16

  17. Quick Start Communities • Barre City • Barre Town • Berlin • Brattleboro • Cabot • Calais • Charlotte • Dorset • Dummerston • Essex Town • Ferrisburgh • Hardwick • Hartford • Hartland • Jericho • Killington • Middlebury • Middlesex • Middletown Springs • Norwich • Randolph • Richmond • Ripton • Shoreham • South Burlington • South Hero • Topsham • Underhill • Westford • Wilmington • Woodbury • Woodstock • Worcester 17

  18. What can you do? • If your town has not already done so, join PACE Quick Start project – no cost or obligation • Receive all the documentation and materials and READ THEM! • Get PACE on your Selectboard’s agenda • Get a PACE question on your town’s ballot for Town Meeting Day 2012

  19. Benefits for Vermont property owners • Can overcome a key financial hurdle for major energy efficiency and renewable energy investments • Incremental special assessment payments are low and fixed for up to 20 years, with no upfront cost • No costs to property owners who do not participate • Electricity and fuel bills are lower than they would be without the improvements 19

  20. Benefits to Vermont’s economy • Could inject millions of dollars directly into the Vermont economy, to make lasting energy and building infrastructure improvements • Provides a steady and growing demand for good-quality sustainable jobs that cannot be outsourced • Decreased energy costs will increase disposable income of Vermonters, allowing money to be saved or spent on other essentials 20

  21. More information • Peter Adamczyk • Energy Finance and Development Manager • Vermont Energy Investment Corporation • 802-540-7631 • padamczyk@veic.org • Vermont PACE information • http://pacevermont.wikispaces.com/ 21

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