Legislation sponsored by Assembly Democrats Raj Mukherji, Eliana Pintor Marin and Tim Eustace to help home and business owners finance flood and hurricane resistance projects, water conservation projects and storm shelter construction was approved by an Assembly panel on Monday.
Specifically, the bill (A-2579) would expand the existing “clean energy special assessment” program in order to provide municipalities with a mechanism to finance the aforementioned projects.
“The existing program has been helping home and business owners pay for the upfront costs of energy saving initiatives, which the owner then pays back through their property tax bill at a set rate over roughly 20 years,” said Mukherji (D-Hudson). “Given the record amount of damage New Jersey suffered in the wake of Hurricane Sandy, it makes sense to expand this program to help finance other smart initiatives that will save property owners money in the long run.”
Currently, the Property Assessed Clean Energy (PACE) program allows municipalities, upon approval by the state Division of Local Government Services, to undertake the financing of the purchase and installation of renewable energy systems and energy efficiency improvements made by property owners.
In areas with PACE legislation in place, municipal governments offer a specific bond to investors and then turn around and loan the money to residential and commercial property owners to put towards an energy retrofit, such as rooftop solar panels or other energy improvements
“This type of affordable loan, spread out over a fair amount of time, provides property owners with the means to finance crucial investment projects,” said Pintor Marin (Essex). “Without this type of program they might not otherwise be able to afford this investment, putting them at risk for far more costs down the road from potential storm damage.”
Under the existing program, the loans are repaid over the assigned term, typically 15 or 20 years, via an annual assessment on the owner’s property tax bill. One of the most notable characteristics of PACE programs is that the loan is attached to the property rather than an individual.
Under the bill advanced today, the program would be expanded to cover the financing of flood and hurricane resistance projects, water conservation projects and storm shelter construction and would be known as the “clean energy and storm resistance special assessment.”
“There are a lot of property owners out there who suffered some degree of damage from Sandy but just can’t afford to make the improvements they need to help prevent the same damage during future storms,” said Eustace (D-Bergen/Passaic). “This is a smart and affordable way to help these property owners finance projects that will protect their home or business in the long-run.”
Under current law, to finance eligible projects, the governing body of the municipality may issue bonds itself or apply to a county improvement authority that issues bonds pursuant to paragraph.
While the use of private financing is not explicitly prohibited under current law, the bill clarifies that a municipality may also use private funds to finance eligible projects.
The bill also allows qualified private or non-profit entities to establish programs to finance the purchase and installation of eligible projects. Upon application to and approval by the Director of the Division of Local Government Services in the Department of Community Affairs, private or non-profit entities will be able to contract with municipalities that have also gained the director’s approval to administer lending agreements for those municipalities.
The entity could then serve to administer the program for the municipality using funding from the municipality, a county improvement authority, or private entities, or by using its own funding. As in programs administered by the municipality itself, the entity will be repaid through a clean energy and storm resistance special assessment.
The measure was approved by the Assembly Environment and Solid Waste Committee.