As the winter heating season begins, many Vermonters are considering improvements that could be made to improve their home’s energy efficiency.
And now a new financing mechanism is available to people living in 18 Vermont towns. That’s because their towns have been designated as Property Assessed Clean Energy districts, or PACE districts.
The program is administered by Efficiency Vermont in some towns.
“It’s a property tax,” Peter Adamczyk of the Vermont Energy Investment Corporation explained, “it’s a way for a town to provide a service for properties in the town, so banks provide money to people, towns provide services to properties, so it’s a way for a property owner to access financing to increase the energy fitness of their home. And it’s seen by many people as an appropriate use of financial services just like plowing the roads or providing other services.”
PACE allows homeowners to finance energy efficiency and renewable energy projects by borrowing money and making payments to the loan through their property taxes.
“Comparing to a bank, when a bank loans money to you, if you own a home they say that’s great, we’ll use that as collateral. But if you go to sell your home, the bank says you need to pay off the loan in full, because they’re about to lose their collateral. A town has a persistent relationship with properties within that town that goes on regardless of who owns it. So just as if you sell your house to me your property tax bill becomes my property tax bill, in the same way, a PACE assessment would pass to me, which makes sense because I’m getting the energy savings.”
PACE is available in the towns that have approved it. 65 towns have discussed the issue. 45 towns have voted on it. 18 towns have appointed Efficiency Vermont to administer their town’s PACE program.
PACE programs have been considered for years, in Vermont and in other states. Vermont lawmakers first approved a program in 2009. But a lawsuit ended the program, because mortgage companies were concerned that the PACE assessment took senior lien in a foreclosure situation. Vermont made changes that allowed the program to move forward. It says the lien securing the PACE assessment sits below any mortgages on the property.
“So essentially we addressed the bankers’ concern of the equity. That change went into effect in 2012. Now we’re being the first PACE subscription period. We have the only program in the country for which this regulator, FHFA, has agreed to have no issues,” Adamczyk explained.
There are towns considering PACE, but even some who have approved the program are not taking action just yet. Adamczyk says he believes as the early adopter towns find that the program works for some of their residents, other towns will get more comfortable.
Homeowners have until the end of October to apply for the first round of PACE loans.
