Clean Energy Loan Programs Popular Throughout The State

Several Maryland counties are creating financing programs to enable installation of green energy projects on commercial properties – known as Property-Assessed Clean Energy (PACE) programs.

PACE programs provide financing for improvements that improve properties’ energy efficiency, and counties collect the payments for the loans on behalf of the lender through a surcharge on the property owner’s property tax bill. This unpaid surcharge is considered a lien on the real property on which it is imposed and is given first priority for repayment in the same manner as the local property tax. The State passed legislation authorizing counties to enact these programs in 2009 and revised it in 2014.

According to The Baltimore SunBaltimore City and Baltimore, Charles, Frederick and Harford counties have passed legislation authorizing the program, and Anne Arundel, Garrett, Howard, Kent, Montgomery and Queen Anne’s counties are already accepting PACE loan applications. Such programs have spurred $280 million in clean and efficient energy improvement projects across the country.  From The Sun: 

Anne Arundel County was among the first of what are now 11 Maryland jurisdictions that have authorized PACE, and Maryland is among 19 states and the District of Columbia that have active PACE lending programs.

The arrangement aims to encourage energy-saving investments that otherwise wouldn’t happen because the loans are considered too risky by lenders or charge interest rates too high for borrowers to handle. Folding project costs into property tax bills gives lenders much stronger legal footing to go after delinquent borrowers, and that security allows them to charge lower interest rates over longer periods — about 6 percent over 20 years, for example. …

PACE financing is paying for about 800 projects in commercial buildings around the country, all launched since the program began seven years ago, according to PACENation, a national industry group.

The state’s first PACE-funded project is located at a Comfort Inn in Gaithersburg, funding a $1.4 million energy efficiency project. That project will be finished soon, reports The Sun. 

Pursuant to  House Bill 387 (Chapter 593), Clean Energy Loan Program – Residential Property – Study, passed last session, MACo participated in a work group over the interim that was convened and chaired by the Maryland Clean Energy Center which reviewed “optimal design and implementation strategies for a residential clean energy program in the State” – i.e., expanding the PACE program to residential properties. The Sun points out:

Residential projects have been more difficult to launch because so much of the market for home loans is controlled by the federal government. Federal housing regulators have raised concern that because PACE loans are given a higher legal priority than mortgage liens, they could limit the government’s ability to collect if a home is sold in foreclosure.

That has been less of a concern with commercial mortgages, but advocates for commercial building owners still encourage caution.

The Maryland Clean Energy Center’s report can be viewed here.

Click here for the full Baltimore Sun article.