Last week (February 20, 2017) VAEEC participated in the first Mid-Atlantic PACE Alliance (MAPA) kick-off meeting in northern Virginia. MAPA is the result of a U.S. Department of Energy grant to support the development, implementation, and utilization of Commercial Property Assessed Clean Energy (C-PACE) programs throughout Virginia, Maryland, and Washington, D.C. The Virginia Department of Mines, Minerals and Energy is leading this effort between private and public stakeholders to develop and promote best practices, which will make the development of PACE programs more effective and will accelerate the growth of C-PACE programs throughout the region.
Educating stakeholders and standardizing templates and models are two key focuses of the MAPA team. Partners will use grant money to educate primary stakeholders (localities, property owners, lenders and borrowers, and contractors) about PACE. The second focus is to develop streamlined, consistent practices that will propel the adoption of PACE across Virginia while supporting the expansion of existing programs in Maryland and Washington, D.C. This includes the creation of consistent, cost-effective practices for program administration, drafting ordinances, financial underwriting guidelines, measurement and verification requirements, contractor training, and overall support.
This grant will enhance the work the VAEEC is already doing to further promote and advance PACE throughout the Commonwealth.
Click here to learn more about MAPA and here to read a copy of Governor McAuliffe’s press release about the grant.
Lowell Ungar, Senior Policy Advisor with the American Council for an Energy-Efficient Economy, wrote the following blog post on what the future of energy efficiency looks like under the Trump administration.
Barely one week into the new administration, we are far enough into the water to see dim shapes of the future ahead—some look more like sharks, some like rocks. Here’s some of what we see as of now:
Department of Energy programs face an undertow. In his confirmation hearing Secretary-designee Rick Perry was surprisingly supportive of DOE’s research and the national labs (for someone who once called to axe the entire agency). But President Donald Trump ordered a broad hiring freeze as a first step toward reducing the federal workforce. There is also reportedly a proposal to eliminate the whole Energy Efficiency and Renewable Energy Office (among others) in a broad budget outline that may be released in February. We are gearing up to support the efficiency programs when Congress takes up funding bills for the rest of 2017 in April and for 2018 later this year.
Appliance standards may be treading water for now. Although three recent standards could be subject to repeal under the Congressional Review Act, they do not appear to be prime targets, based on several meetings with congressional staff. On the other hand, five standards that were finalized but not officially published (as well as a manufactured housing standard that was under final review) may be caught in a temporary moratorium on regulations issued by Trump’s chief of staff Reince Priebus.
Vehicle standards face submerged reefs. The standard for trucks and buses also could be subject to congressional repeal, but it does not appear to be at the top of the target lists. On the other hand, Trump suggested he will ease regulations on car companies, which could include the fuel economy and tailpipe emissions standards for cars and light trucks. In any case, California will very likely maintain its emission standards, which apply in 12 other states as well.
Clean Power Plan may be dead in the water. The new White House website says Trump is “committed to eliminating…the Climate Action Plan,” and Environmental Protection Agency Administrator-designee Scott Pruitt said he continues to oppose the Clean Power Plan rules on carbon emissions from existing power plants. The next step may depend on an imminent ruling from the DC Court of Appeals. But regardless of the fate of this rule, the critical issues of clean air and public health will remain.
Tax reform and infrastructure are about to dive in. Trump continues to talk about infrastructure investment and cutting taxes as ways to spur economic growth. Congress is interested in tax reform but concerned about increased spending. These issues may be paired, starting with a 2018 budget resolution in late spring but extending into the fall. We have joined with other efficiency supporters to send up proposals for tax reforms and investments that increase efficiency. Still on shore is a farm bill that could foster efficiency in rural areas.
Regulatory reform is making waves. Trump signed an executive order directing that for every new rule, two be repealed, and limiting the combined cost (no mention of benefits) of the new and repealed rules, unless prohibited by law. He also has continued his statements against regulations, including a perhaps hyperbolic intent to “cut regulations by 75%, maybe more.” The House has already passed a few bills to make it more difficult to issue new rules or easier to repeal recent ones, but they do not appear to have the 60 Senate votes needed to overcome a filibuster. We and other efficiency supporters sent a letter cautioning Congress not to lose the benefits of appliance standards.
Federal efficiency policy may indeed be in troubled water, but we will seek to keep vital policies and programs afloat while also working at the state and local levels, which are partly sheltered. Following the example of our founders like Art Rosenfeld, our focus will remain on empirical research and analysis, which we trust will show that energy efficiency remains a crucial support for economic development, job creation, and consumer benefits.
The Virginia Energy Efficiency Council is diligently working to build a coalition of support for Property Assessed Clean Energy financing, or PACE, and to provide guidance and resources to localities interested in developing PACE programs. To assist with this effort, VAEEC has initiated a series of events across the Commonwealth suitably called “PACE Lunch + Learns”. Each event is open to anyone interested in learning more about PACE; however, these events target commercial property owners, contractors, lenders, and local government officials. Knowledgeable speakers from the field will provide attendees with information on PACE and answer PACE-related questions. VAEEC is teaming up with different sponsors to host the events and provide a complimentary lunch to all in attendance.
On Monday, December 5, VAEEC and Williams Mullen kicked off the first Lunch + Learn for the Hampton Roads/Norfolk area with a diverse group of nearly 30 people in attendance. Speakers included Abby Johnson, Bill Nusbaum, and Rich Dooley. Abby Johnson is the President and founder of Abacus Property Solutions, an independent real estate advisory firm. Abacus provides PACE project development and consulting and works with capital partners to identify PACE opportunities and develop PACE programs. Bill Nusbaum is an attorney with Williams Mullen, a full-service law firm, which is a key stakeholder in developing PACE financial underwriting guidelines with the Department of Mines, Minerals and Energy along with Abacus and VAEEC. Rich Dooley is the Community Energy Coordinator with Arlington Initiative to Rethink Energy (AIRE) in Arlington County. AIRE’s goal is to cut greenhouse gas emissions from County operations. Arlington County is the first locality in the Commonwealth on track to develop a PACE program.
The presentation provided a wealth of knowledge for all in attendance as it covered many different aspects of PACE. Here are my key take-aways:
- PACE provides a win-win opportunity for property owners, contractors, localities, and lenders. Through PACE financing, commercial and multifamily property owners can receive 100% project funding for energy efficiency, renewable energy, and water conservation upgrades. The loan is paid back as a line item on the property tax bill, and in most cases, the utility savings from the funded projects cover the costs of the loan. Additionally, as a senior lien status, PACE assessments stay with the property upon sale.
- Contractors benefit from PACE through increased sales volume and improved profit margin. By helping customers reduce costs and improve the value of their property, customers are able to spend more on additional building improvements.
- PACE spurs economic development within localities. Not only does PACE provides jobs, it improves building stock and increases property values, which produces more revenue for the jurisdiction. PACE serves as a redevelopment tool for older buildings at little to no cost to the locality; third party providers carry the cost of starting and maintaining the program. Furthermore, PACE helps decrease a locality’s carbon footprint.
- Based on the types of questions posed by the audience, the advantages of PACE to lenders is perhaps the hardest to grasp. In order for a PACE program to be full-fledged and offer the most benefits to all parties involved, the existing mortgage holder must consent to allow PACE to take senior lien status. However, PACE is still beneficial to lenders because it increases the value of their collateral. Moreover, PACE improves a property’s net operating income (through reduced utility bills), and the project is cash flow positive (the loan payment is typically less than the energy savings). In fact, over 200 lenders nationwide have already consented to make their mortgage junior lien status because they recognize these benefits.
- Arlington County is on track to become the first locality within the state to develop a PACE program. Other localities, such as Norfolk, the City of Fairfax, and Richmond have expressed interest in developing PACE programs.
- To facilitate interest in and garner support for PACE, Arlington engaged with the real estate community and coordinated with the private sector and several County departments. By building a relationship with these groups, there was enough interest in PACE to begin developing a program. Currently, Arlington is in the midst of finalizing a Program Administrator. The program is on track to launch in early 2017.
Our next PACE Lunch + Learn is scheduled for Tuesday, January 31 in Ashland. Stay tuned for a Lunch + Learn event in your area.