Tennessee Energy Project
As homes and businesses in Tennessee improve their energy efficiency, we boost our economy, reduce operating expenses while reducing air pollution and the need to burn coal for energy generation. We promote opportunities to advance energy efficiency in Tennessee.
*** Hot Opportunity ***
There is currently an opportunity in the Tennessee General Assembly to pass legislation this year that would enable local governments to offer financing for homes and businesses to make energy efficiency improvements.
*** TAKE ACTION ***
Call and email your Tennessee House and Senate members TODAY and tell them you support the Property Assessed Clean Energy Act.
- HB0464 and SB0794 create jobs in manufacturing here in Tennessee and installation on properties in the program. Tennessee is losing out by not enacting this legislation by holding by this industry in Tennessee that is expanding and growing quickly elsewhere.
- Not having this legislation creates a barrier to property owners and businesses who want to improve, and utilize renewable energy projects but do not have the upfront capital. The PACE program allows these projects to become self-liquidating debt situations where the energy cost savings are immediately available to pay off the equipment.
- Property Assessed financing terms extend up to 20 years, which means repayments can be amortized throughout the cumulative useful life of most projects. This allows for annual energy savings to exceed the annual PACE payments, increasing cash flow to the property owner and raising net operating income. Positive cash flow enhances the property owner’s ability to pay an existing mortgage or other existing expenses.
- PACE is accepted as a valid and effective financing tool within the banking industry, which is reiterated on a regular basis as mortgage holders consistently give their consent to PACE projects. As of January, 2017, over 130 lending institutions have given consent to PACE projects, from regional financiers to the largest national banks.
- The value of the mortgage holder’s collateral increases after a PACE project is completed. PACE also results in positive cash flow for the property owner, which increases the Debt Service Coverage Ratio and enhances their ability to pay existing debt.
- This legislation protects mortgage holders by requiring affirmative acknowledgment or consent prior to the implementation of PACE financing. This legislation creates market opportunities for Banks to pursue, such as construction term financing, bulk project funding and secondary market participation.
Other talking points and information on the bill:
WHAT THIS LEGISLATION DOES: This is enabling legislation to allow local governments to set up a program to assist business & residential property owners to implement energy efficiency improvements. Private or public financing is aided by having the loan repayments added to the property tax bill as a lien. The benefit to the property and the lien and repayment of the financing are tied together so change of ownership is not a problem. Kentucky and Virginia are the most recent of the 33 states that now PACE enabling legislation.
WHAT IS Property Assessed Clean Energy?
- A financing mechanism that enables low-cost, long-term funding for energy efficiency, renewable energy and water conservation projects.
- It’s repaid as an assessment on the property’s regular tax bill, and is processed the same way as other local public benefit assessments (sidewalks, sewers) have been for decades.
- It can be used for commercial, nonprofit and residential properties.
HOW DOES IT WORK?
- Financing is established locally and tailored to meet local market needs.
- PACE financing is VOLUNTARY for all parties involved.
- PACE financing can cover 100% of a project’s hard and soft costs. Long financing terms up to 20 years.
- Energy projects are permanently affixed to a property.
WHY IS IT SO POPULAR?
- Property owners can fund projects with no out-of-pocket costs.
- Since PACE financing terms extend to 20 years, it’s possible to undertake deep, comprehensive retrofits that have meaningful energy savings and a significant impact on the bottom line.
- The annual energy savings for a PACE project usually exceeds the annual assessment payment, so property owners are cash flow positive immediately.
- That means there are increased dollars that can be spent on other capital projects, budgetary expenses, or business expansion.
- Local governments love PACE because it’s an Economic Development initiative that lowers the cost of doing business in their community.
- It encourages new business owners to invest in the area, and creates jobs using the local workforce.
- There are over 1.5 million single-family dwellings in Tennessee potentially eligible for PACE funding.
- Energy-efficient improvements lower utility bills and put more dollars in the pockets of families.
- There are numerous commercial and industrial sites where the installation of energy-efficient or renewable energy could significantly lower operational costs.
BENEFITS OF PACE:
|Economic Development: Lowers cost of doing business|
Building Stock: Maintained and upgraded
Bottom Line: Directly impacts local businesses
Workforce Development: Creates local jobs
Healthy Air: Environmental Impact
*** Another opportunity to improve your home/business energy efficiency in Tennessee: You may participate in TVA’s online program for you to improve the energy efficiency of your home. It’s called eScore, and you may click here to get started. Please tell us about your experience.