Monday, February 22, 2010

Florida: The Opportunity for a New Paradigm in Energy Finance Districts

By Paul D'Arelli

It has been very exciting to see the concept of an energy finance district (EFD) start to get traction here in Florida. These EFD financing arrangements are referred to in different circles by a variety of names, including, “Property Assessed Clean Energy” (PACE) programs; “Voluntary Environmental Improvement Bonds” (VEIBS), and “Energy Loan Tax Assessment Programs” (ELTAPs). Under these EFD financing arrangements, the local government raises capital from public and/or private financing sources that is loaned to property owners who voluntarily enter into loan/contractual assessment agreements to finance a renewable energy system (e.g., solar) and/or energy efficiency improvements to the property (e.g., insulation, HVAC, windows, etc.). The loan is repaid by the property owner over a long term (e.g., 10-20 years) as an item on the property owner's ad valorem tax bill.

After working hands-on on these financing initiatives in California, I had the pleasure of presenting the concept around Florida in several venues, including the Florida Green Cities Conference in Orlando and then at the Florida Association of Counties meeting recently in St. Pete. As I understand it, there were 2 bills that were put into formal bill drafting by Legislators for potential consideration in the 2010 Session, including the one we presented with our white paper to the Florida Association of Counties. If Florida adopts implementing legislation for EFDs in one form or another, then I believe local governments will need to focus their efforts on quality control as they set up their local finance programs. Prescribing appropriate eligible improvements for finance, effective deployment processes (education and training of property owners, auditors, contractors and vendors), collection and disbursement mechanisms, and other program criteria will be key. The end game for a local government should be to develop a program that best ensures that property owners are likely to realize energy savings sufficient to off set the cost of the assessments in order to set the predicate for long term success of the local program. Let's not just imitate what is being done in other states in this area, but let's develop a paradigm here in Florida for best practices that result in measurable and verifiable success.

1 comment:

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