Under the proposal put forward by assemblywoman Stephanie Nowers the borough would create a PACE, or Property Assessed Clean Energy Program
The Matanuska Susitna Borough Assembly (Alaska) took another step Tuesday evening to establish a financing mechanism for energy improvements and renewable energy for commercial and industrial properties.
Under the proposal put forward by assemblywoman Stephanie Nowers the borough would create a PACE, or Property Assessed Clean Energy Program.
Property owners would be able to finance energy efficiency or other improvements through a bank or other financial institution and make payments through an assessment on local property taxes similar to the way utility improvements are often funded.
The Mat-Su Borough would act as a go-between by collecting the money through the tax assessment. However, the borough would not otherwise be involved in the transaction, or liable.
The arrangement is provided for in state law but until now only the Municipality of Anchorage has established a program. Mat-Su would be the second municipality to develop a program. Several other municipalities are considering it.
Using the procedure property owners would typically get a better interest rate in financing than through a typical bank loan because there is less risk for the lender.
If a default occurs a tax lien is placed against the property. Tax liens are first in line to be repaid and ahead of conventional loans.
For the bank the administrative ease of working through a municipal tax assessment, with the local government acting as collector rather than the bank administering the loan, is another advantage.
A big advantage for the property owner is that it allows an improvement to be done without a big up-front cost, and with the financing repaid over a set term such as 10 to 20 years.
The assembly adopted a resolution Tuesday that amounts to its second approval under a three-step process required by the state. Nowers said there is one more approval to be made before the borough can set up and operate the program.
There has been discussion of establishing similar programs for private residential property owners but it must be established in state law, as has been done with PACE for commercial and industrial owners.
