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Enabling Municipal Financing for Renewables and Efficiency

| Written by John Farrell | No Comments | Updated on Jun 11, 2009 The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/enabling-municipal-financing-renewables-and-efficiency/
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As of August 2010, 24 states have passed or have existing laws that allow municipal energy financing programs and a handful of cities have established operational municipal energy financing programs.  The concept, widely known as Property Assessed Clean Energy (PACE) financing, is sweeping the country as more and more states are enabling the policy and the federal government steps up efforts to offer program design guidelines and seed money through the energy efficiency and community development block grant program.

However, despite hundreds of cities reportedly being in early stages of investigating or designing PACE financing programs they are now all on hold. As of July 2010, the cities are waiting on a resolution of a dispute between state/local governments and the federal housing finance agency (FHFA, e.g. Freddie Mac and Fannie Mae) related to PACE lien seniority and the risk that PACE may have on federally backed mortgages. In August 2010, the good folks at Lawrence Berkeley National Laboratory published a PACE Status Update Report to illuminate the problems and potential solutions surrounding the FHFA’s opposition.

The creation of state enabling legislation has largely consisted of updating existing state laws and codes to amend the authority some or all of the state’s municipalities have to establish special assessment districts. The key components of the enabling legislation are as follows:

  • Permit municipalities to create sustainable energy financing districts
  • Define the permitted types of renewable energy and energy efficiency projects eligible in the districts,
  • Create an opt-in element that allows the districts to consist of non-contiguous, self-selected property owners
  • Grant the authority to municipalities to issue and sell bonds needed to provide homeowners the initial capital

Click on a red-shaded state or municipal/county place marker to get details.  Shaded states have recently passed or already had existing legislation to enable municipal financing. 

 

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About John Farrell

John Farrell directs the Energy Self-Reliant States and Communities program at the Institute for Local Self-Reliance and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. More

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