Loudoun supervisors are mulling a program that would let commercial property owners finance clean energy projects with special loans facilitated by the local government.
Through the Property Assessed Clean Energy Program, a commercial property owner’s loan would be secured by a lien against the property. The loans would be used to finance clean energy or energy-saving projects.
PACE loans generally have longer terms than other commercial loans. According to Arlington County, which is ahead of Loudoun in the process of setting up a PACE program, a typical PACE loan is in the United States is approximately $500,000 and is repaid over 10 to 20 years compared to five years or less for typical commercial loans.
According to Loudoun staff members, it’s difficult to know whether the market is right for a successful PACE program in Virginia. Arlington is the only other Virginia jurisdiction to award a contract to administer a PACE program. There are similar programs in other states.
Supervisors on the board’s finance committee favored a model designed protect the county from any financial risk and minimize its workload. The county would contract a third party to run the program and act as a conduit to a third-party lender.The county would have oversight of the program, and could collect the loan payments through the tax bill and send that money on to the lender.
That system resembles Arlington’s, which is still under development.
“I think overall the approach to this, and in talking with our county attorney’s office staff, is to eliminate the liability to Arlington County,” said Arlington County Community Energy Coordinator Rich Dooley.
Dooley said his county doesn’t even pay its program administrator, Sustainable Real Estate Solutions. Instead, the company is paid a one-time program administration fee, a percentage of the total project cost, by the lender.
The finance committee forwarded the idea to the full board for discussion. County Chairwoman Phyllis J. Randall (D-At Large) said the issue would likely be taken up by the board no sooner than November.
“One of the things we’re going to want to know is, while you may be able to structure this with no liability to the county, I don’t even want a moral liability or a moral obligation,” said Vice Chairman Ralph M. Buona (R-Ashburn). “And that’s a discussion we’re going to have to have.”