Recently, New York State passed legislation that creates the mechanism for the PACE model of green financing in New York. PACE stands for Property Assessed Clean Energy and is a new approach to addressing the issues of ‘first cost’ that too often prevent property owners from retrofitting their properties.
The way PACE works:
An owner of an existing building who seeks to upgrade the performance of his/her building obtains a loan from the municipality (provided by Federal bonds) to cover the cost of an energy audit and subsequent green retrofit. The loan is then repaid through a surcharge on the property’s tax bill. The cost of the loan is designed to be lower than the savings obtained through the retrofit.
If the property owner sells the property, the green benefits stay with the property (obviously), as does the property tax surcharge.
The PACE model is a win for property owners, a win for the state and its municipalities, and a win for the green retrofit industry.
This enabling legislation sets the stage for municipalities to create their own PACE loan programs to leverage Federal stimulus funds for this purpose.
PACE programs already exist in a small handful of municipalities (Babylon and Binghamton New York, Boulder Colorado, and Berkeley California, among others).
New York City has not yet created a program to take advantage of the this new legislation, but in light of the Greener, Greater Buildings Plan, property owners surely hope that a program will be developed.
We will keep you posted as developments in the field continue to unfold.