By Jeffrey Steele
Commercial Property Executive | Feb. 22, 2019
STATES OF CONSIDERATION
New PACE legislation is before the South Dakota, Oklahoma and Washington State legislatures, said Michael Yaki, vice president and senior counsel for Sausalito, Calif.-based CleanFund Commercial PACE Capital, Inc. The South Dakota bill did not pass out of committee in early February, which means it will have to be re-introduced in 2020, he added.
Some have wondered if last year’s state-level election results will make approval by certain state legislatures and governors more likely. They suggest that in states where newly-elected Democratic governors have replaced Republican governors, green-related issues may meet with greater favor. Yaki believes it’s difficult to generalize, as PACE is a financing tool popular across party lines, he said.
For example, Pennsylvania, which passed PACE last year, has a Democratic governor but a strongly Republican legislature. On the other hand, New Jersey has a Democratic governor and strongly Democratic legislature.
But there, year-old PACE legislation has not reached the governor’s desk, primarily due to review by the executive branch. This “despite New Jersey being surrounded by states that have passed and implemented C-PACE programs,” Yaki added.
In the Garden State, development director Victoria Zelin and executive director Jonathan Cloud of Basking Ridge and Princeton, N.J.-based New Jersey PACE, a 501c3 non-profit that has championed PACE since 2012, report they have developed a PACE alternative “almost as good as PACE with a major financial institution,” Zelin said.
“We’re now looking at implementing demonstration projects for New Jersey PACE. So anywhere PACE does not exist, we’ll be able to use this alternative financing over the useful life of the improvement up to 25 years. Or it could be transitioned into a PACE loan at the discretion of the lender.”
Yaki observed “the basic economic message of PACE” is its greater strength in more conservative legislatures. PACE saves businesses money and boosts their bottom lines. It also delivers a demonstrable economic development impact by financing the rehabilitation of existing structures, creating jobs, improving lenders’ collateral and increasing the tax base.
“This is what helped it pass in Virginia, Florida, Nebraska, Missouri, Kentucky and Texas,” he added.
“The PACE climate-change message has obvious appeal in liberal states such as California, New York and Minnesota.
“But its ability to reach across the aisle is why it is thriving in swing states like Ohio, Colorado, Wisconsin, Michigan and soon, Pennsylvania.”