The goal of Open Market PACE is to create an industry-owned administrative platform that offers standard procedures based on best practices and makes these services available to every PACE jurisdiction in the state, at no cost. The intention is to streamline administrative costs and maximize competition in interest rates and value-added services from the private sector.
The proposed NJ statewide platform would be low cost, fair, neutral and self-policing, being operated by and for the principal stakeholders in the PACE ecosystem—property owners/developers, capital providers, municipalities, energy services contractors, related professional service firms, and non-profits. A management committee of stakeholder representatives would oversee the development, operation, and continuous improvement of the platform. A back-end processor would be hired by the platform to perform the legal and administrative roles; this processor would have no financial or other interest in the development or financing of projects, and would be prohibited from disclosing proprietary information.
The benefits of this proposed approach are: (a) industry players will have transparency into, and a voice in the administrative process for PACE (b) low costs (c) keeping the services provided by the platform to a minimum, allowing maximum participation from the marketplace (d) confidentiality of information and no conflicts of interest. This is in contrast to many government-controlled PACE administrative programs and privately-operated non-profit or for-profit programs, which tend to be (a) “opaque” so that users have little visibility to the process, (b) can have costly overhead or fees, (c) may have requirements that the industry believes are unnecessary, or, (d) importantly, create conflicts of interest by financing deals, putting themselves in competition with other capital providers, and able to see the transactions of their competitors.
Open Market PACE, the proposed consortium platform, would be the “Program Administrator,” providing identical documents, statewide, that streamline time and costs, maximizing transaction volume. In NJ, municipalities collect taxes, and municipalities would be encouraged to “join” or “subscribe to” the platform as a way of ensuring that all market players have open, confidential and conflict-free access to the program. Open Market PACE would also be marketed to counties and county improvement authorities.
Several organizational models are possible: Open Market PACE could be operated by an industry association, or it could be a formal cooperative, partnership, LLC, or corporation. The eventual organizational structure is to be decided by the members. The point at the outset is to form a core group of industry players, with representatives of key stakeholder groups, to develop the initial design of the platform and pay the startup costs.
If the model is successful, the industry participants may then wish to replicate the platform and adapt it for other states or regions where PACE is lagging to maximize the economic, social and environmental impact of PACE in every community.
Learning from other PACE Programs
This proposal is being put forward by New Jersey PACE (NJPACE), a 501(c)(3) nonprofit that has been the principal advocate for PACE in New Jersey since the passage of the original law in 2011. The mission of NJPACE is to facilitate the implementation of PACE and to assist communities in leveraging PACE for sustainability and local economic development. NJPACE is prepared to assist in the development of the proposed platform, and would be a key player and eventual user of “Open Market PACE,” but would not be the platform Administrator.
It has been the experience in many states that it takes three years of operating in the red to stand up a PACE Administrative platform. NJPACE does not have the funds nor the grants to do this.
Once the Open Market PACE platform is established, NJPACE will (a) assist in getting it adopted by towns; (b) turn it over to a separate stakeholder cooperative or nonprofit organization (while remaining a member), and (c) focus on financing clean energy and resiliency projects through the platform, especially those in underserved markets, that are brought to us. This financing may include not only PACE but also our alternative structured finance models. (See www.RegenerativeFinancing.org for more details.)
NJPACE is willing to act in a consulting role to the stakeholder body to oversee the development, membership and marketing of the platform.
Current Status and Immediate Action Steps
Where are we in the process? We have expressions of interest from three of the national PACE capital providers, and we’re seeking to expand these conversations. One of these has tentatively committed to providing $20,000 to the initiative, including some in-kind legal services.
New Jersey PACE will circulate this proposal and some other materials to key industry players and stakeholders for feedback. NJPACE will then modify and update the proposal and enroll an executive team to design and implement a stakeholder-based organization.
In the meantime our focus remains that of getting the amending legislation (S1611/A1902) passed and signed into law, as model legal documents cannot be finalized until all the details of the law are known. Our web site, NewJerseyPACE.org, is being updated to solicit industry and public support for getting the legislation passed and signed by the Governor.
We need your help to make this a reality. We’re asking you to join us in creating this new form of administrative platform that serves all stakeholders in a fair and impartial way and maximizes the impact of Commercial PACE in New Jersey.
For our comprehensive implementation plan, see ImplementingPACEinNJ-22Sep2018.