For the past three legislative sessions, powerful special interests have pushed bills that would dismantle the Property Assessed Clean Energy (PACE) concept and make this avenue of financing energy efficiency solar projects untenable. These forces do not attack PACE because it is ineffective; quite the opposite: PACE has invested millions of dollars into improvement projects around the state and helped contribute to the employment of electricians, HVAC specialists, and solar installers. No, these forces want PACE off the table because of its success.
Allow me to explain PACE a little bit so you can understand the absurdity of its opposition. Let’s say you want to make energy improvements to your home or business. Perhaps a traditional lending institution — like a bank — does not see value in providing such a loan. If you can’t get money from your bank, there’s always the possibility of getting a credit card from Home Depot or Lowe’s. Perfectly fine, if you’re willing to pay 26 percent APR interest.
An option in between is PACE. An energy and economic benefit analysis is conducted to ensure there will be a net economic benefit to the loan. The improvements are made, and the PACE regional district — similar to other political subdivisions — provides the money. The lender pays the money back every year as a part of the property tax bill issued by the local collector.
Missouri is one of the few states that allows commercial and residential customers to take advantage of PACE. This law was passed in 2010 with broad, bipartisan support. Since then, thousands of Missourians have enjoyed the benefits of PACE financing, and the program has contributed millions of dollars of private investment to our state. This value is not merely realized by improved property values but by lowering monthly utility bills. More importantly, the energy efficiency measures PACE finances help reduce not only a customer’s carbon footprint but also help relieve stress on the grid. This also provides indirect benefits to your fellow ratepayers.
PACE has become so popular that, at least in terms of commercial lending, it has become a competition to the banking industry. Banks are the primary force behind the legislation to end PACE in Missouri. These bills would add excessive regulation to PACE. Right now, local PACE subdivisions are charged with ensuring compliance with the law. Some of these new laws would require state oversight as well. Costly measures would make PACE too expensive to administer. It is fascinating to hear purported small-government conservatives championing new layers of regulation designed to destroy an industry.
There is also legislation that would disqualify certain properties from PACE eligibility. This legislation seeks to add requirements to these types of loans that no other financial instruments are required to follow. All of this in the name of choosing traditional banks over PACE providers. The role of the legislature is not to pick winners and losers in the free market. But that is precisely what bankers want lawmakers to do.
But now we can count dark money interests who allege to represent consumer interests as opponents. These liberals say they are concerned about PACE despite the fact that there are no complaints on file with the Missouri Attorney General’s Office regarding PACE. Nor have there been any homes or businesses lost at the courthouse steps as the result of a PACE loan.
In the end, these “advocates” and darkly-funded journalists ignore the fact this proposed legislation offers no additional consumer protections. But legal protection is beside the point. They do not believe people who might not qualify for traditional lending should have any options for borrowing money. Middle class or lower-middle-class customers just don’t know any better. It is a paternalistic, offensive attitude.
If these concerns were serious, the Missouri Legislature should consider additional measures like the state of Florida is considering. This would codify protections already followed by the PACE industry and make such provisions enforceable.
PACE has provided value to our state over the past decade. But it is important to know why PACE is under attack and by whom.
James Owen is the executive director of Renew Missouri.