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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.

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Presentation on theme: "1 Implementing PACE 2.0 in Vermont Addison County Regional Planning Commission October 27, 2011 Peter Adamczyk, Energy Finance and Development Manager."— Presentation transcript:

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

2 2 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? 2

3 3 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? 3

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

5 5 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 5

6 6 PACE financing authorized by the state* Source: / October 2011 CA: 2008 NM: 2009 CO: 2008 WI: 2009 ME: 2010 VA: 2009 OK: 2009 TX: 2009 LA: 2009 IL: 2009 NV: 2009 OR: 2009 NY: 2009 NC: 2009 FL: 2010 HI: Existing Authority 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) 6 MA: 2010 WY: 2011 OH: 2009 CT: 2011

7 7 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 7

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

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

10 10 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: Vermont’s PACE lien status 10

11 11 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 11

12 12 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 12

13 13 PACE implementation Once per municipality Once per property that opts in Once per property tax payment Once per debt payment Property Owner Support 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 program with municipality Provide documents Underwrite application Collect special assessments from town Make interest payment Financing Source Add town to intermunicipal agreement Provide funding to all participants in cycle Receive interest payment 13

14 14 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 14

15 15 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 15

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

17 17 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 Quick Start Communities 17

18 18 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?

19 19 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 19

20 20 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 20

21 21 Peter Adamczyk Energy Finance and Development Manager Vermont Energy Investment Corporation 802-540-7631 Vermont PACE information More information 21

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