Getting Your Municipality Onboard with PACE in 2018

Now that PACE seems certain to be approved in New Jersey in 2018, the biggest question facing us is that of municipal adoption. With 565 municipalities, getting a PACE ordinance approved and a program established could take months if not years — unless there is a concerted effort to get the word out to cities and towns about how they can benefit from PACE, giving them a simple way to do it on their own.

There are several state-wide organizations that can play a major role — by supporting a grassroots effort by economic development committees, green teams, and local environmental groups. There are also several key stakeholders — commercial property owners, energy efficiency and solar energy service providers, and local Chambers and business organizations — who can become effective advocates for the adoption of the ordinance in their cities and towns.

Our goal, therefore, is to equip each of these constituencies with the knowledge and the tools to bring Property Assessed Clean Energy to their municipality.

To begin with, here are the key reasons for your municipality to adopt the ordinance:

  • Immediate economic benefits to commercial, industrial, agricultural, multifamily, and nonprofit properties
  • Significant carbon emission reductions
  • Better and more resilient infrastructure and built environment

In addition, it’s important to stress that there is no cost to the town or to the taxpayer, and that PACE is an example of a public-private-nonprofit partnership that brings economic development and jobs, providing private capital to finance improvements, and leveraging the town’s administrative capacities for the public good. Here’s the official rationale for PACE in New Jersey:

Preamble to the New Jersey PACE Bill:

The Legislature finds and declares it to be the public policy of this State that:

a. The implementation of and investing in energy and water efficiency improvements to, and flood and hurricane mitigation projects for existing properties is a critical component in conserving natural resources and mitigating the effects of floods and hurricanes, and is financially beneficial over time; and upfront costs are a barrier to major energy improvements;
b. PACE legislation provides an innovative way for property owners to finance energy and water efficiency improvements which, in turn, result in property owners saving a significant sum in energy costs and which also helps communities create local jobs, results in lower mortgage foreclosures, and stimulates local economies and lower emissions; and
c. PACE financing will allow New Jersey municipalities to contribute  toward meeting community sustainability, greenhouse gas emissions reductions, and energy goals, and will provide a valuable service to the citizens of their communities.

Municipalities do need to understand the major provisions of the law. These provisions are not very complicated, but they do require that the ordinance specify the form of the special assessment agreement entered into with PACE program participants, and identify one or more entities that will implement, finance, and manage the PACE program. The ordinance will also require (a) evidence of legal ownership and approval, (b) that property taxes are current and that the property is not the subject of a default or bankruptcy, (c) a maximum loan to value ratio of no more than 90% (including existing mortgages and the PACE improvement loan) of the appraised value after improvement, (d) an appraisal if not already required by the lender, and (e) a maximum duration of the assessment of no more than 30 years.[1]

Our immediate goal, therefore, is to provide a “muni kit,” that includes an information sheet for municipalities, a model ordinance, program guidelines, and a helpline for assistance in getting a municipal program approved. Please contact us if you’d like to receive a copy of the kit for use in your city or town.


[1] The language in the current bill reads:

      1. The municipal ordinance shall establish a form of special assessment agreement to be entered into with PACE program participants, and identify whether the PACE program will be implemented, financed, and managed by the municipality, county, or by a county improvement authority, or by another public entity or private entity.
      2. The municipal ordinance shall prescribe criteria for participation in the PACE program at the time of the initial financing, which criteria shall include, at a minimum, the following:
            1. (a) that PACE financing recipients are either the legal owners of the underlying property or provide the written consent of the legal owners of the underlying property, are current on mortgage and property tax payments with respect to the underlying property, and are not the subject of a default or in bankruptcy proceedings, and
            2. (b) an appropriate ratio of the assessment to the value of the property, but in no circumstance may the combination of a PACE financing and the existing loan-to-value ratio on a property exceed 90 percent of the appraised value of the property including the value of the PACE project. The municipal ordinance shall also require that an appraisal shall be required if one is not conducted by the lender for the PACE project. The ordinance may establish standards for the maximum amount, or duration of PACE special assessments, or both, but in no event shall the maximum duration of a PACE special assessment exceed 30 years.


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