Boone County Fiscal Court Enacts Epad, Allowing Special Financing for Energy Efficient Improvements
The Boone County Fiscal Court has approved legislation to create a countywide Energy Project Assessment District (EPAD) which allows property owners to use Property Assessed Clean Energy (PACE) financing to pay for energy-efficiency improvements on commercial, industrial, nonprofit, agricultural, and multi-family properties.
This legislation marks a continuing trend in Kentucky. Boone County has become the third Kentucky county, after Campbell County and Fayette County, to adopt a countywide EPAD in the past year.
“PACE financing covers 100 percent of all of the hard and soft costs for energy upgrades, such as solar panels, LED lighting, energy-efficient air conditioning and heating systems, and water conservation projects,” said Chris Jones, director of PACE financing for Energize Kentucky, a nonprofit organization that administers the program in Boone, Campbell, and Fayette counties.
“This is done through fixed-rate, long-term loans that require no down payment or personal or business guarantees. The loan is repaid annually through a voluntary special assessment placed on the property owner’s tax bill.”
In 2015, the Kentucky General Assembly passed legislation that allowed local governments to create these special assessment districts to allow property owners to use PACE financing for energy-efficiency improvements made to their properties.
“I am excited about this voluntary program that will allow our businesses to save on their energy costs while reducing impacts on our environment,” said Boone County Judge-Executive Gary Moore.
For property owners to use of this type of financing, the Fiscal Court will need to pass separate legislation to approve the use of this financing for each building or project that employs PACE financing.
“This really speeds up the process for property owners who are interested in pursuing this financing tool in Boone County,” Jones said. “A process that sometimes took many months to complete can now be completed in just a few weeks with this new legislation in place.”
How PACE Financing Works:
- A property owner decides to use PACE financing to purchase and install energy-efficiency equipment in commercial, industrial, non-profit, agricultural, or multi-family properties. These energy upgrades can be incorporated into new construction or the rehabilitation of existing buildings.
- If the local government where the property is located does not have an Energy Project Assessment District (EPAD), the local legislative body (city or county) must adopt an ordinance creating a special assessment district in all or part of its jurisdiction.
- A PACE program administrator like Energize Kentucky can help a property owner find qualified energy-efficiency contractors for the project. Property owner and contractor then agree on a project scope.
- Property owner submits an initial eligibility form, then an application with an energy project summary to PACE program administrator.
- If qualified, program administrator facilitates financing for the project with PACE lenders. This financing does not require a down payment or personal guarantee and covers 100 percent of all of hard and soft costs of energy upgrades through long-term, fixed-rate financing, generally with payment terms between 15 and 25 years.
- Local government approves PACE financing legislation for this particular project.
- Local government adds EPAD assessment to the property tax record.
- PACE lender distributes funds to contractor, who makes the energy upgrades to the project on the property.
- Local government places special tax assessment on the property tax bill each year, which is paid by property owner until the loan is finally paid off.
Local governments also like the PACE program because it promotes economic development in their communities, including the rehabilitation of older buildings with outdated energy systems and making energy-efficiency improvements more affordable for new developments, Jones said.
Jones said that Energize Kentucky is currently speaking with officials in other Kentucky counties who have expressed interest in passing countywide legislation similar to the ordinance approved by Boone County Fiscal Court on April 9.