O n June 12, 2018, that allows lenders to offer better - PDF document

government RELATIONS Property Assessed Clean Energy Equipment Financing in Pennsylvania: Proceed With Caution O n June 12, 2018, that allows lenders to offer better associations and trust companies, but Pennsylvania enacted interest rates and longer repayment also mortgage bankers and brokers, legislation that terms than are otherwise available. insurance companies, employee authorizes counties Before proceeding to implement health and welfare funds, and any and municipalities to or participate in C-PACE financing, type of business association engaged finance commercial clean energy however, these claims deserve in development or improvement of and water conservation projects and careful scrutiny. real property. The law even allows alternative energy systems using the a property owner to finance its own proceeds of voluntary assessments C-PACE Basics improvements using assessments on real property that are collected The Pennsylvania legislation (Act that will continue in effect after sale and enforced by local governments 30 of 2018) allows any county or a of the property to a new owner. In in the same manner as property municipality with a community or Pennsylvania, financing for C-PACE taxes. The U.S. Department of Energy economic development department programs will most likely be provided reports that similar commercial to implement a PACE program by non-governmental capital providers. property assessed clean energy by adopting an ordinance, which Each C-PACE project is (C-PACE) programs are in effect designates a district in which the implemented through the execution of in 18 other states and are in the program will operate and establishes an agreement between the property process of implementation in 10 criteria and procedures to determine owner and a sponsoring municipality states, including Pennsylvania. Plans the eligibility of participating or its program administrator. Before an to implement C-PACE programs in property owners. Counties and other assessment is imposed, notice must Pennsylvania are currently under municipalities establishing PACE be given to all holders of liens on the development or consideration in at programs may establish whatever property to be assessed, and approval least 16 counties. criteria and procedures they deem must be obtained from all lien holders. Proponents of C-PACE programs advisable, provided that each project Based on the recommendations of the claim the programs allow commercial must (1) have an energy consumption Pennsylvania Bankers Association, the property owners to obtain low-cost, baseline, energy savings projections notice and consent requirements apply long-term financing for energy and a scope of work determined by not just to mortgages (as is the case of efficiency improvements that can a qualified contractor; (2) comply many other states), but to all types of cover 100 percent of project costs with national clean energy standards; liens that secure payment obligations. and will generate energy savings and (3) have the completion of If consent is granted by property greater than construction and construction verified by a qualified owners and lien holders, C-PACE financing costs. The programs are inspector. In lieu of establishing assessments will enjoy the same promoted as being beneficial to their own criteria and procedures, first-priority status as local property property owners who wish to make municipalities may also select a tax liens and the obligations to long term investments in building program administrator to establish pay assessments will be treated as energy efficiency projects while and operate a PACE program. taxes imposed by the sponsoring passing on the costs to pass for The law allows local governments municipality or county. Assessments the improvements to subsequent to provide bond financing for C-PACE must also be recorded with title, purchasers. C-PACE financing is also projects, but also allows any type and public notice must be given touted as beneficial to investors of “financial institution” to also regarding project financing. because the programs provide provide financing. The term "financial A prominent feature of Act 30 is financing repaid on the property tax institution" is defined very broadly that the legislation does not provide bill that will provide strong security to not only include banks, savings any mechanism for state regulatory 30 » PA Bankers Association pabanker.com