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Pa. bill would let businesses pay for energy retrofits through property taxes

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Pa. bill would let businesses pay for energy retrofits through property taxes

Owners of commercial and industrial properties in Pennsylvania could have another option for paying for energy efficiency projects under a bill before the state legislature.

State Sen. John Blake is one of the lead sponsors of Senate Bill 234, which would establish a property assessed clean energy, or PACE, program for small businesses and commercial and industrial property owners. S.B. 234 would allow a county, municipality or district to set up a PACE program, which involves issuing bonds to cover the upfront costs of renovations and upgrades. The bonds would be repaid through property tax assessments, according to the bill.

Some examples of qualified projects are equipment to improve energy use or swapping out a traditional heating and cooling system for one that uses alternative energy resources such as solar, wind, combined heat and power systems, or landfill gas, according to the bill.

Blake reintroduced the bill after a previous version failed to pass in the 2015-2016 session, according to a Dec. 13, 2016, memo. In January, S.B. 234 was referred to the Community, Economic and Recreational Development Committee, but progress stalled this past summer after the legislature focused on how to close a roughly $2 billion budget deficit. Blake said in an Oct. 10 email that the bill now has momentum to move forward, given Gov. Tom Wolf took a number of recent actions including borrowing funds from the state's Liquor Control Board, which collects taxes on liquor sales, to help cover the budget deficit.

"It is my hope that the General Assembly overall and the [Pennsylvania] state Senate in particular will refocus on legislative priorities when we return to session on Oct. 16 — something that has been next to impossible due to the three [plus] month budget/revenue stalemate. Further, the Senate Majority Chairman of the [community development] committee has indicated an interest in moving the bill," Blake said. The bill is still being amended, but Blake said, "We believe we will have a good product moving forward once the bill is amended in committee, hopefully within the next few weeks."

Sen. Mario Scavello, who chairs the community development committee, is one of 28 senators co-sponsoring the bill, according to the General Assembly's website. Scavello could not be reached immediately for comment.

Julian Boggs, policy director at Philadelphia-based advocacy group Keystone Energy Efficiency Alliance, said Oct. 10 that one of the attractions of PACE financing is that the repayment obligation stays with the property owner such that if a small business were to sell its property, the PACE loan would transfer to the new owner.

The bill's language states, "The lien runs with the land and that portion of the assessment under the assessment contract that has not yet become due is not eliminated by foreclosure of a property tax lien. The assessment cannot be accelerated or extinguished until fully repaid."

Blake's office confirmed that S.B. 234 is being amended to include recommendations from lenders. One primary change is that existing lienholders must give consent that a PACE loan takes priority in terms of repayment over other existing loans, Blake's staff said.

A companion bill in the House, H.B. 1722, sponsored by Rep. Kate Harper, was referred on Sept. 14 to the House Local Government Committee but has yet to receive a committee vote.

If enacted, the bill would let Pennsylvania join 33 other states and the District of Columbia that have enacted residential or commercial PACE programs, according to PACENation, an association of 400 members that back PACE financing. Other similar programs already in operation include the Pennsylvania Sustainable Energy Finance Program, which offers low-interest capital for hospitals, universities and other public entities interested in energy improvement projects. The state also has KeystoneHELP, a home energy loan program, according to the American Council for an Energy-Efficiency Economy's website.