Clean & Green: Keeping PACE With Energy Improvement Legislation

Lawmakers “efficiently” approved Act 1074 in the last legislative session. It’s a bill known as the Property Assessed Clean Energy act, or PACE for short.

In essence, the law allows a government entity, such as a city council or group of cities or counties, to establish energy improvement districts, which would allow for low-interest loans for acquiring or installing energy efficiency improvements in neighborhoods or regional areas.

Ken Smith, policy director for the Arkansas Advanced Energy Association, explains.

“It allows counties, local government, even the state to form energy improvement districts. In turn, those districts can issue general revenue bonds that can fund energy efficiency improvements to commercial and residential buildings, water improvement projects, such as point-source hot water heaters, and renewable energy projects, such as solar panels or ground-based heat systems,” said Smith. “They can borrow the money with no up-front costs and pay it out over a long period of time.”

Participants would make those payments through their property tax bills, which would have a line item explaining the assessment. Only the property owners voluntarily taking advantage of the energy improvements would be required to pay.

For example, say Fayetteville wanted to create a PACE district to allow homeowners or commercial building owners to finance solar panels on rooftops and install geothermal HVAC system upgrades. Instead of paying out of pocket, those energy savings projects could be financed by bonds, and building owners who participated would pay back the bonds through an assessment on their annual property tax bills over a period of say 10 or 15 years.

The goal is cost savings for end users, and projects that would never have been able to be financed by individuals can pool the power of government-backed bonds to make them happen.

Smith says in the end, cities and counties will hopefully lead these laboratories of renewable energy experimentation.

“That’s where it’s going to start. These local counties and cities that have been leaders in the state on a lot of the energy and environmental issues – they’ll start working on this legislation, work out all the bugs, then we’ll have good role models and examples that we’ll be able to share with other jurisdictions in the state of Arkansas,” he said.

Listen to our full report here, learn more about PACE legislation at this link or check out a larger list of sustainability efforts at KeepArkansasBeautiful.com.