implementing pace 2.0 in vermont
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Implementing PACE 2.0 in Vermont
Addison County
Regional Planning Commission
October 27, 2011
Peter Adamczyk, Energy Finance and Development Manager
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• 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
Why do we need PACE?
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• 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
How does PACE work?
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Financing Source
PACE District
Property Owner
Property Owner
Property Owner
Property Owner
Property Owner
How the money flows
Opts In Opts In Opts In
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• 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
Vermont PACE parameters
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PACE financing authorized by the state*
Source: www.dsireusa.org / October 2011
CA: 2008
NM: 2009
CO: 2008
WI: 2009
ME: 2010
VA: 2009
OK: 2009
TX: 2009 LA: 2009
IL: 2009NV: 2009
OR: 2009NY: 2009
NC: 2009
FL: 2010
HI: Existing Authority
27 states + DC authorize
PACE
27 states + DC authorize
PACE
DC
MN: 2010
VT: 2009
MD: 2009
GA: 2010
DC: 2010
MO: 2010
NH: 2010
*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.
Where PACE has been authorized
MI: 2010 (C&I Only)
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MA: 2010WY: 2011
OH: 2009
CT: 2011
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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.
National PACE developments - FHFA
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Traditional lien position
Special assessments are
typically subordinate to
property taxes and senior
to mortgages
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VT PACE Lien position
In Vermont’s legislation,
PACE assessments are
subordinate to property
taxes and mortgages
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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)
Vermont’s PACE lien status
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• 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
Vermont’s new PACE legislation
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• 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
Vermont’s new PACE legislation, continued
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PACE implementation
Once permunicipality
Once per property
that opts in
Once perproperty
tax payment
Once perdebt
payment
Property OwnerSupport creation of district
•Identify measures•Apply for financing•Sign agreement
Pay special assessment
Municipality•Design program•Hold vote(s)
•Receive application•Attach lien to property•Disburse funds
Collect special assessment with property tax
Efficiency Vermont
•Design programwith municipality•Provide documents
Underwrite applicationCollect special assessments from town
Make interest payment
FinancingSource
Add town to intermunicipal agreement
Provide funding to all participants in cycle
Receive interest payment
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• 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
Process requirements
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• 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.
PACE in Vermont – current implementation by towns
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Vermont PACE Districts
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Quick Start Communities
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• 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
What can you do?
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• 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
Benefits for Vermont property owners
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• 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
Benefits to Vermont’s economy
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Peter Adamczyk
Energy Finance and Development Manager
Vermont Energy Investment Corporation
802-540-7631
padamczyk@veic.org
Vermont PACE information
http://pacevermont.wikispaces.com/
More information
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