The New York State Legislature has passed a bill authorizing municipalities to establish programs that will finance the installation of solar and other renewable energy systems through Property Assessed Clean Energy (PACE) programs.
PACE programs eliminate the up-front costs of energy improvements by allowing property owners to pay for the improvements over 15-20 years through an increase in their annual property taxes. A total of 15 states have passed PACE-enabling legislation in the past year, according to PACENOW.org, an advocacy and educational non-governmental organization for PACE finance.
The key features of PACE finance involve materially lengthening the repayment period for energy retrofit loans and structuring the loan repayments as annual property tax surcharges. PACENOW.org says these structures result in large benefits to both property owners (positive cashflow in the first year on energy retrofits) and municipalities (no fiscal burden, yet significant job creation).
PACE finance also provides benefits to existing mortgage holders (borrower cashflow improves and the property value increases), and to PACE bond-holders and investors (virtually no risk on investment because the PACE lien is senior in right to mortgage debt).
The New York Solar Energy Industries Association (NYSEIA) notes that it wrote the initial legislation that was previously known as the Green Loans Bill, based on a financing model in the city of Berkeley, Calif. NYSEIA has been lobbying for its passage since May. The final legislation was passed by both N.Y. legislature houses at a special late session.