We’re doing something that seems almost counter-intuitive: we’re asking you, and hundreds of other ordinary people, to donate money to an unusual kind of charity, to help us start what should become a major economic boost to the New Jersey business community.
Normally we’d expect this kind of initiative to be undertaken by government, or alternatively by private enterprise; and in some ways we are a social enterprise startup. Why we’re a 501c3 nonprofit, however, is that the role we are trying to play is really something that both government and private enterprise ought to be doing, but isn’t. If we’re going to prepare communities for the realities of climate change we need to invest in better buildings, better infrastructure, and better ways of doing things. This is what NJPACE is all about.
Our mission, in fact, is “to facilitate the transition to clean energy in New Jersey, by educating our stakeholders about PACE financing, establishing an open administrative platform on behalf of interested local governments, and financing eligible projects in these municipalities.” The Center for Regenerative Community Solutions was founded, in the wake of Superstorm Sandy, to do three things: educate communities, assist local governments, and provide funding to reduce and ameliorate present and expected climate change effects, especially in low and moderate-income communities.
In case you aren’t exactly sure how PACE works, here’s a 90-second intro:
Innovative. Voluntary. Efficient.
PACE is, in concept, a way of using the local government’s tax-collection ability to finance energy improvements on private property, without actually costing the taxpayer anything. So it’s not a subsidy.
It’s similar to a loan, in that the money is being advanced to the property owner to pay for upgrades that will, over the long run, save energy, save money, and cut carbon pollution. But in a sense it’s a loan to the property, since it doesn’t go against the owner’s credit; there’s in fact no individual recourse against the owner, it can’t be accelerated, and it’s transferred to the new owner when the property is sold. It’s also similar to an investment, in that it’s expected to produce a return that is, over time, greater than its original cost. And because it’s backed up by the special assessment mechanism, private investors are more than willing to provide the funding, and PACE is attracting an increasingly amount of attention in the financial community.
But in order to make it possible a number of things have to come together that are somewhat innovative, and for some people are quite challenging. To start with, local elected officials are not that savvy about commercial energy use, nor are they necessarily comfortable with financial innovation. (“Isn’t that what got us in trouble in the financial crisis?” Well, no, actually. We’re not talking derivatives or sub-prime mortgages; we’re talking about real physical improvements, such as more efficient HVAC equipment and solar PV systems. What’s innovative is really the business model that makes PACE investments possible.) So municipal governments, as well as a range of other stakeholders, need a lot of educating.
Secondly, the programs need to be designed and operated properly. As with any new approach which could potentially involve millions of dollars, there are ways to “game” the system. Conceivably, owners could try to take the money, and not do the improvements (leaving the obligation to a subsequent owner if they can); or the work could be done poorly; or the owners may be paying more than they should be, and doing things that actually make their properties less saleable. These and other potential downsides need to be prevented by carefully designing the rules that govern these transactions.
Thirdly, NJ’s current legislation poses some special obstacles. It requires towns to get approval from the state’s municipal watchdog before they can even set up a program. Of the 30 other states with PACE legislation, none require this kind of pre-approval. And the only financing mechanism actually foreseen in the legislation is through municipal bonds (which no town wants to authorize if they don’t have to) or county improvement authority bonds — which brings another entity, with its own interests, into the picture.
We’ve proposed amending legislation that will eliminate some of these barriers, legislation that’s supported by a majority in both houses of the State Legislature but is not certain to get the Governor’s approval. But to get things going we need to get programs approved under the existing statute.
All of this requires time and effort and an inordinate amount of patience. People in government, who have their own interests, prejudices, and responsibilities, need to be persuaded. Contractors, property owners, and financial institutions need to be educated. A large number of players need to be coordinated in order to make it possible for there to be a meaningful uptake of the program. For these reasons, it’s been difficult to get programs started in many states, and to get them to a reasonable scale once they are started.
We can’t do this without support, so that’s one reason we’re asking for money. Almost as importantly, however, we think it’s necessary for the public to be informed as well, so they know both what’s they’re getting and what they’re missing by not having these programs available in their community.
We realize this is not the kind of cause that typically uses crowdfunding; it’s not obviously sexy, or easy to understand, or simple for people to get behind. But it is capable of making a real difference. So if you’d like to see meaningful change in the way we produce and use energy in New Jersey, a small donation, from many hundreds and thousands of people, can actually provide us with powerful leverage.
Getting the wider public behind this, and getting them to understand its potential, is another step in using it to revitalize communities. Once people understand that PACE can be used to create local jobs, to create local profits, and to shift our communities to clean energy, it will become unstoppable.
Our role is to make things work, as simply and cost-effectively as possible. We get paid from the proceeds of the project (except for the application fee, everything is included in the financing), and in order to get the maximum number of projects going, we aim to keep our transaction fees to a minimum. Because we don’t have investors for whom we need to generate a profit, we can charge enough simply to recover our costs on an ongoing basis. Unlike government, however, we don’t have the money to invest up front in building the program.
This is where you come in. We’re asking you to visit our crowdfunding page at http://njpace.causevox.com and donate as generously as you can. Even better, create your own personal fundraising page, import your contacts, and see how much you can help us raise. The $30,000 goal is pretty modest; what we could actually use is closer to $300,000. But every contribution helps. And the sooner we can get the program to stand on its own, the sooner we can focus on using it to leverage further social change at a community level.
We’ll be blogging for the campaign every day for the next thirty days — telling our story, trying to make it engaging, and inviting you to take us up on our invitation to get involved, as a supporter and a stakeholder in the outcome. Use our contact page to leave us a message. And thank you.