Developing our crowdfunding campaign is giving us an extraordinary opportunity to explore using PACE to revitalize New Jersey communities. By itself, PACE is an innovative business model that creates jobs and economic development while providing the ultimate tool to finance energy efficiency and renewable energy projects on private properties. But leveraging PACE for community development is where the real payoff is, that is to say, for the benefit of the community as a whole.
Over 30 states have now passed PACE legislation that makes it a “public benefit” for energy conservation and renewables projects to be financed on private property for the purpose of reducing carbon emissions and pollution. PACE benefits everyone, while costing the taxpayer nothing. It requires a municipal ordinance, but after that it’s self-funding.
So, why does government—any level of government—need to get involved where private property is concerned? (a) because buildings consume over 70% of our electricity in the U.S. (b) because, up to now, implementing energy efficiency and renewables projects hasn’t made economic sense to the majority of building owners, if they could access the funds, at all, and (c) if the U.S. is serious about reducing carbon pollution, government needs to provide a way to allow the private sector to cut energy consumption and transition to renewable energy in terms that businesses find acceptable. PACE does it, with no public subsidies or give-aways. Now, it’s a “no-brainer” for a lot more building owners to conserve energy and switch to renewables.
PACE law essentially permits local government to establish programs that register a voluntary Special Assessment on a property; this assessment provides repayment security (a “credit enhancement”) for an investor. The property owner can then get 100% long term and off-balance-sheet financing, saving energy and money from day one, and increasing his/her property’s asset value with no adverse tax consequences.
Telling this story in a way that the average citizen gets it, and gets behind it, is what our crowdfunding campaign is all about. From now until September 17, our goal is to raise at least $50,000 — and to get the word out to contractors, property owners, municipal officials, local lenders, and citizen advocates in the state.
From the property owner’s point of view, he or she is getting paid (in the form of reduced energy costs) for doing the right thing, which is also the smart thing. This is a program open to all contractors, including the smaller ones who until now have not been able to offer financing to their clients. From the lender’s or investor’s standpoint, this is a new asset class that offers yields of 5-7% for long-term, highly-secure, investments. In the event of a default, the PACE lien comes ahead of the mortgage, but is not callable in its entirety and so does not disadvantage the mortgage lender. Indeed, the mortgage lender has a claim against a more valuable property, while getting a client who can better afford to make the mortgage payments.
And the community gets jobs, economic development, a better built environment, and an opportunity to do something meaningful about climate change. PACE can finance energy resiliency, clean energy storage and backup facilities, and “smart microgrids.” While we’re adapting to the new realities of extreme and uncertain weather, we’re also mitigating our carbon emissions. This is truly a transformative strategy for cities and towns and suburban “white elephants” (which is what many older industrial and office parks have become).
We say that PACE removes the obstacles for property owners to “do the right thing.” We say it pays owners to improve their properties. As opposed to the “vicious cycle” created by fossil fuel use (in which we become dependent on something that’s increasingly costly, damaging to our environment, and wasteful), PACE creates a “virtuous circle” in which investors provide the resources that property owners and contractors need to improve their properties, reduce their costs, and create a cleaner environment for everyone.
We’re asking people to invest in a platform that administers PACE programs openly, transparently, and in the public’s best interests. That’s why we decided to establish New Jersey PACE as a 501c3 nonprofit. We’re not a charity that’s trying to alleviate the suffering which the modern economy inflicts on communities and individuals. We’re a charity that’s committed to building a better and more prosperous world in which fewer people suffer; as thriving communities, we can afford to do more for those less fortunate.
If you can think of a better way to regenerate communities, we’d like to hear about it. And if you agree that this is one way, one very powerful way, to do something meaningful in our corner of the world, then please support our campaign. Give generously, and spread the message to your friends. You can get a first glimpse of how the campaign is shaping up at http://njpace.causevox.com; and create your own personal fundraising page with a few clicks of the mouse. If you can help us, we want to hear from you, and we want you to be informed, inspired, and moved to action.