On March 6^th, Hartford voters will be asked to establish a town-wide PACE (Property Assessed Clean Energy) District.  The following provides answers to frequently asked questions.

 

1.    What is a PACE District?  It is a designated area (usually a town) in which residential property owners can take advantage of the PACE mechanism to fund energy efficiency and renewable energy changes to their homes.

 

2.    How does the PACE funding mechanism work? People interested in making qualified energy efficiency and renewable improvements to their homes apply for a loan through a special PACE fund and repay it over time through a special assessment on their tax bill. The loan is tied to the property, not the homeowner and can be for 10, 15, or 20 years. The lien automatically transfers to a new owner, making it easier to sell a house. Year to year, the energy savings likely will be greater than the PACE payments. This is a selling point for a house, but if a purchaser wishes to have the lien removed, it can be paid in full with no penalty. 

 

3.    Will it cost the Town (and its taxpayers) anything to establish a PACE District?  No. All loan repayment, financing and program administration costs are paid entirely by property owners who obtain the PACE loan.  If the District is approved on March 6th, non-participants have no financial obligation to the District.

 

4.   Why is a PACE District needed? Some major barriers to making these investments are a lack of sufficient upfront capital, or the owner may sell the property before a full financial payback can be realized.  PACE addresses these barriers by allowing future payments to be transferred to future owners automatically at the time of sale, combined with straight forward qualification, attractive interest rate, and a relatively long repayment term. 

 

5.    What would I be voting for if I vote “yes” on this item? If approved, you would be authorizingTown officials to set up a mechanism for Hartford residential property owners to use the PACE funding option described above. Voters are not being asked to approve the expenditure of any funds or approve their own participation in the program. An affirmative vote creates the district and thus the opportunity for homeowners who decide to take advantage of the PACE financing mechanism.

 

6.    If the Hartford Pace District is approved on March 6^th, what happens then? Town officials go to work to get the details in place.  The Town can elect to administer the PACE program, or it can contract with Efficiency Vermont to perform most of the administrative functions associated with PACE. Efficiency Vermont will be running the statewide PACE loan program with administration and financing provided by its parent organization Vermont Energy Investment Corporation (VEIC). The costs for providing these services are incorporated into the loan repayment charged to program participants. 

 

7.    What happens if people default on their loans? The state legislation set up two loan loss reserve funds to protect towns in case of defaults. The first is from a 2% charge that is part of the loans, and the second is 5% of the state's income from the Regional Greenhouse Gas Initiative (RGGI) fund. These funds are for the uncollectable payments only, not the balance of the lien, which will be taken over by the new owner.

8.    What types of projects can the PACE mechanism fund? Homeowners who live in a PACE District can use the PACE mechanism to finance renewable energy or energy efficiency improvements, such as insulation and air sealing, heating system improvements, solar hot water systems, biomass energy heating systems (e.g. wood pellets/chips and cord wood), small wind systems, micro-hydro, solar electric system (photovoltaic), and solar space heating systems. Health and safety measures, such as heat recovery ventilation, also are eligible if needed to meet the energy savings of the project. Improvements must be permanently attached to the property and the “net energy” requirements for the affected building must be reduced.   Efficiency Vermont (the state’s energy efficiency utility) has a complete list of eligible energy efficiency projects on their website www.efficiencyvermont.com/pace. 

 

9.    What are other benefits of establishing a PACE District in our Town?  In addition to having the opportunity to pay less for heat and electricity for your home, a PACE District also contributes to preserving air quality, and generates new jobs (up to $20M in projects estimated state-wide).    All of these objectives are part of the Town’s Master Plan.

 

10.How many homeowners would likely use the PACE program?  Based on national statistics, Vermont Energy Investment Corporation has estimated that about 24 houses a year in Hartford will use PACE. 

 

11.What would I need to do to get a PACE loan? A homeowner would have a qualified contractor do an estimate and then submit an application and a reasonable application fee to the designated person or agency. Once the application is approved, the homeowner signs an agreement with the Town to have a lien attached to the property. After the finished project is inspected, a check is issued for payment to the contractor.

·        Efficiency Vermont has a list of weatherization contractors, and Renewable Energy Vermont has a list of renewable energy partners. Do-It-Yourself projects are not eligible.

·        The PACE interest rate will vary with the market each year, and is predicted to be 1-2% higher than a 30 year fixed rate mortgage.  Once a PACE loan is issued, the rate is locked in for that loan and will not vary for the life of the loan.

·        The PACE legislation (Vermont Statute Title 24, Chapter 87, subchapter 2, 3261-3271) has 5 criteria for loans, and towns are allowed to make these limits more restrictive if they choose:

 - PACE can be used for residential properties of 1-4 units, condo units, or mobile homes, but not for commercial properties.

 - The maximum amount that can be financed is 15% of the assessed value of the property, with a cap at $30,000.

 - The total amount of the PACE loan plus any other mortgages cannot be more than 90% of the assessed value of the property.

 - A homeowner has to have made all property tax payments on time during the 3 years prior to the PACE application.