President, Los Angeles Business Council
California’s homes are being strengthened with clean technology – solar power to generate electricity and efficiency measures to do more with every watt and every drop of water. Decades of work by Los Angeles businesses, local leaders and environmentalists have led to environmental and economic success: California has more solar energy capacity than any state, and a larger economy than any state.
A key to this success is creating an environment where private companies and entities can simultaneously create financial value and environmental benefits. This includes the Feed-in Tariff for rooftop solar installations authorized by the LA City Council in 2012. This policy has attracted hundreds of millions in private investment, created good jobs and reduced carbon emissions.
Similarly, Property Assessed Clean Energy (PACE) financing is smart policy that leverages private dollars to create positive impact in our clean economy. With long repayment terms, competitive interest rates, and zero upfront dollars needed, PACE has enabled more than 140,000 property owners to improve their homes and business properties with solar, water and energy efficiency, and seismic resilience measures. PACE was invented in California, with the majority of PACE financing happening here in our state.
PACE financing is different than other financing methods like a credit card or home equity loan. Property owners pay nothing at the time of the property or home improvement – instead, PACE program administrators use private capital to pay 100% of the upfront costs to install the solar panels, new roof, or other property upgrade. The property owner then pays for the upgrade as a new line item on their property tax bill. Interest rates are fixed and homeowners have up to 30 years to repay the PACE assessment. PACE removes the upfront cost barrier for environmentally-friendly and potentially money-saving home improvements, putting them in reach for more Angelenos.
To date, PACE financing has created 4,800 jobs in Los Angeles County by generating nearly $500 million in economic activity. These are steady jobs that cannot be outsourced overseas, since they involve working on local homes. The water and greenhouse gas emission savings from PACE financing in Los Angeles has also been a huge benefit to our region: PACE has decreased water consumption in LA County by more than 13 million gallons annually. Fossil fuel usage has been cut by more than 105 million kilowatt-hours annually4, which is equivalent to taking more than 10,000 cars off our roads. In fact, PACE has been cited by many state leaders and experts as the most successful energy efficiency financing program in history.
Aiming to take a great program and make it even better, Assemblymember Matt Dababneh (D-San Fernando Valley) and State Senator Nancy Skinner (D-Oakland) spearheaded legislative efforts to add additional protections for California consumers while strengthening oversight of the PACE financing industry.
Two companion bills (SB 242 and AB 1284) that recently passed overwhelmingly in both the California Senate and Assembly give power to the California Department of Business Oversight (DBO) to oversee licensing requirements regulations for the PACE industry. PACE program administrators will have to report their program activity to local governments. The legislation also creates new underwriting and marketing standards along with additional requirements to protect homeowners and businesses. These efforts were the result of input from a diverse group of stakeholders, including consumer groups, local governments, environmentalists, clean energy groups and the banking industry, to help make PACE an even more successful program for our city and state.
This legislative achievement will provide huge payoffs for California and for Los Angeles. With new standards in place to strengthen the PACE financing program, more LA residents than ever before will be confident in using PACE to upgrade their homes with efficiency and solar power measures. This will lead to more job creation, more environmental benefits, and more comfort and security for our neighbors and families.
The story of PACE in Los Angeles has been one of success: PACE has proven to be a great opportunity for thousands of Los Angeles County families and businesses. Thanks to Assemblymember Dababneh, Senator Skinner and their colleagues in the legislature, the future looks even brighter. With a strengthened PACE program, Los Angeles is ready to continue leading and setting the pace on clean energy.
The following sources were used for this article: