ADDISON COUNTY — Five Addison County towns are weighing whether they should join a program that aims to make it easier for property owners to obtain financing for energy efficiency improvements
On Town Meeting Day, residents in Ferrisburgh, Middlebury, Monkton, Ripton and Weybridge will vote on articles that would make their respective towns Property Assessed Clean Energy, or PACE, districts.
PACE is an energy-efficiency program supported and likely administered by Efficiency Vermont, an energy-efficiency agency run by the nonprofit Vermont Energy Investment Corporation. The program provides homeowners with financing for home energy efficiency improvements like added insulation and renewable energy additions such as a solar hot water heater.
Currently, there are a range of federal and state tax rebates available for home energy-efficiency improvements, but some homeowners still need extra help paying for these alterations. To help pick up the slack, PACE essentially provides homeowners with low-interest loans via tax assessments. Rather than paying the loan directly to a bank, homeowners will pay it back via a town tax mechanism.
The reason town residents must vote on PACE is because the Legislature mandated voter approval, according to Middlebury Planner Fred Dunnington. But he assured voters that the program doesn’t threaten the town’s fiscal or administrative vitality.
“There’s no risk or impact to the towns,” he said. “The article is worded in a way so that it’s no cost to the town … It’s just another opportunity for financing for homeowners to save money and conserve energy.”
PACE Program Manager Carol Weston of Efficiency Vermont, explained that the only people this program will affect are those homeowners who participate in it.
“People are just voting to enable the town to do this program. They’re not voting to create a special tax for themselves,” she said. “There’s no money associated with people who don’t participate in the program.”
So where’s the money coming from? The banks.
According to Weston, “The State Treasurer took a look at the program and the legislature saw enough merit in the program where they decided the state was going to help find this money.”
They convinced banks to lend money to homeowners via the PACE program by creating what are called loan loss reserve funds. These funds offer financial cushioning to banks so they aren’t hung out to dry if a homeowner defaults on payments.
In the event that a homeowner doesn’t pay his or her installment, the town is required to use the same methods it uses to collect delinquent taxes to collect unpaid PACE installments, said Weston.
But the program isn’t meant to create added work for towns, especially if they opt to allow Efficiency Vermont to administer the program, which is the direction most towns are moving. Dunnington explained, “If someone is delinquent then the town authorizes (Efficiency Vermont) under (the town’s) authority to deal with the person like a delinquent taxpayer.”
The program shouldn’t create new delinquents, said Dunnington. Not only are there tight fiscal regulations in place to prevent homeowners who might default from obtaining this funding, but also, before a homeowner participates in the program Efficiency Vermont conducts a cash-flow analysis of the property. Energy efficiency savings are meant to offset the cost of the home improvements.
Fran Putnam, chair of the Weybridge Energy Committee, supports the program and said it shouldn’t lead to tax delinquency.
“Your energy savings are supposed to be greater to or more than your loan payments every year,” she said.
Each town will have a certain level of autonomy over how this program is implemented. In Middlebury, for example, the town would require PACE participants to sign up for direct payment to repay loans, where money is automatically withdrawn a participant’s bank account each month. That money would be withdrawn monthly so people could weigh their energy savings against the cost of the project each month. This step also simplifies things for the town, which would let Efficiency Vermont administer the program in Middlebury if voters approve it.
“We don’t need to do any more accounting,” said Dunnington. “We don’t need to be in the collection business.”
According to Weston, the Vermont Department of Banking, Insurance, Securities and Health Care Administration is ironing out the final parameters of this program, and the PACE program should be up and financing by this summer.
Reporter Andrew Stein is at [email protected].