USGBC Ky. chapter keeping pace with EPAD
Graphic courtesy of USGBC
With the April passage of an ordinance in Louisville, Kentucky now has seven Energy Project Assessment Districts (EPAD), called Property Assessed Clean Energy (PACE) elsewhere in the United States.
Thanks to the efforts of many, Kentucky now counts itself among the 35 states that have enabled legislation for EPAD projects, reports Nancy Church of the Kentucky chapter of the U.S. Green Building Council. In fact, the state’s first EPAD transaction has already been completed in Covington, and Bowling Green, Belleview, Owensboro, Greensburg, Greenville and Louisville have adopted the local ordinance necessary to proceed with job-creating projects of their own.
EPAD, a mechanism that holds promise for clean energy advocates from around the country, isn’t a complex financial instrument. Rather, it lets building owners pay for money-saving, value-enhancing energy upgrades to their buildings through the same mechanism they’ve paid for a road, water line or other public benefit: on their property tax bill.
This is the key innovation behind the Commonwealth’s EPAD, Church writes. PACE has been around since 2007, when a city staffer in California devised a way to facilitate projects to help meet ambitious energy efficiency and emissions goals by enabling buildings to use less energy or generate it on-site through technologies like solar PV or other renewables. Less than a decade later, PACE financing is now causing a storm of its own: more than $2 billion in projects have been completed for health care facilities, multi- and single-family homes and hospitality and commercial buildings in recent years, creating thousands of jobs.
Like PACE, EPAD optimizes the vaunted public-private partnership format by using existing public infrastructure (property tax collection) in collaboration with private capital to produce what one speaker at the recent PACENation Summit called “the ideal small government financing policy.” An article in Bloomberg last year went further, describing the broad appeal of PACE financing as “no mandates, no subsidies, states’ rights and local control.”
Kentucky has traditionally enjoyed relatively low electric rates, making it challenging for efficiency improvements to “cash flow” within the life of a customary business loan. When major equipment is necessary to achieve significant savings, the cost of new HVAC systems, for example, often do not achieve the desired simple payback periods that bank-offered short loan terms require. EPAD loans, by contrast, can be extended for up to 20 years, which equates to “day one payback” on upgrades, with the up-front investment repaid from the energy savings over the full life of the improvements. Moreover, the EPAD loan transfers to the new owner upon sale of the property, freeing a business owner to make business-enhancing improvements without the fear of a stranded investment.
Topics: Architectural Firms, Associations / Organizations, Building Owners and Managers, Construction Firms, Engineering Firms, Great Commercial Buildings, Incentives - Rebates / Tax Credits / Other, Sustainable Communities, Urban Planning and Design, USGBC
Companies: U.S. Green Building Council