New Law: Energy Improvement Assessments

A part of the jobs legislation signed by the Governor last Thursday includes authorization for local governments to establish PACE bond programs.  To recap, the purpose of the program is to allow building owners to borrow money for energy upgrades and repay the loan through a property tax assessment.  Along with potentially more favorable rates, this arrangement would tie the debt to the property instead of the individual, making larger projects more attractive to owners.  The program is entirely voluntary, and does not require the creation of special districts.

Getting a program started will require a local ordinance incorporating the minimum requirements from the statute, as the power to assess is related to the city’s ability to assess for service charges and similar items in 429.101.  At a minimum, project requests must be supported by an “energy audit” or “renewable energy system feasibility study,” the improvements must be installed by licensed contractors, and energy-generating improvements have to be barred from selling their excess energy or transferring it offsite.  The building owner’s credit is not a factor, but the local government is required to look at “ability to repay” before approving a project.  The law then authorizes the local government to issue revenue bonds to pay for the approved projects, backed by the assessment agreements with participating building owners. 

The provisions of the law went into effect April 2, so local government programs can get started.

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