Item M02M
C ounty of f Monroe
ELj » °o
�
BOARD OF COUNTY COMMISSIONERS
/� r i � ��
Mayor George Neugent, District 2
The Florida. Ke Se
y
I
Mayor Pro Tern David Rice, District 4
Danny L. Kolhage, District I
Heather Carruthers, District 3
Sylvia J. Murphy, District 5
County Commission Meeting
October 18, 2017
Agenda Item Number: M2
Agenda Item Summary #3119
BULK ITEM: No DEPARTMENT: Sustainability
TIME APPROXIMATE: STAFF CONTACT: Rhonda Haag (305) 453 -8774
1:30 P.M.
AGENDA ITEM WORDING: Discussion and direction on potential for a PACE Program
(Property Assessed Clean Energy).
ITEM BACKGROUND:
Property Assessed Clean Energy Programs
Property assessed clean energy ( "PACE ") programs allow a property owner to voluntarily
finance energy efficiency or wind resistance improvements through a non -ad valorem assessment
repaid through the annual tax bill. Pursuant to Section 163.08, F.S. (enacted in 2010),
"qualifying" improvements can include energy efficiency, renewable energy and wind resistance
improvements. In states other than Florida, PACE can be used for improvements to mitigate for
seismic damage, flooding and tornado resilience. The PACE financing structure addresses a
barrier to financing these types of projects by providing funds to the property owner upfront who
may not have cash on hand to finance them.
Local governments support PACE because it can overcome the hurdles in making properties
more energy efficient and wind resistant thus saving them money on the energy bills and wind
insurance. The local contracting community supports PACE programs because it provides
another financing tool they can use when providing cost options to customers. PACE projects
can increase property values, creating another tax revenue enhancement tool for local
governments. PACE also provides a strategy to reduce community -wide greenhouse gas
( "GHG') emissions.
History of PACE Programs
PACE programs evolved first in California in 2008 with great momentum, but that slowed in
2010 due to concerns raised by the Federal Housing and Finance Agency ( "FHFA "), Fannie Mae
( "Fannie ") and Freddie Mac ( "Freddie ") regarding the seniority of the PACE lien over
mortgages. Today, PACE - enabling legislation is active in 33 states plus D.C., and PACE
programs are now active (launched and operating) in 19 states plus D.C. Residential PACE is
currently offered in California, Florida, and Missouri.
Several Federal legislative attempts in 2011 and 2012 to resolve concerns of Fannie Mae and
Freddie Mac failed to pass. Federal litigation against the FHFA, Fannie and Freddie occurred
from 2010 to 2013, along with a court- mandated federal rulemaking process that was later
suspended. Failed appeals to several PACE - related bond validation proceedings in Florida also
slowed progress. PACE programs throughout the country may differ by method of financing,
eligible improvements, whether the program includes residential and whether the program
includes specific criteria to minimize the risk. Despite these challenges, PACE implementation
is taking off in Florida.
The U.S. Environmental Protection Agency and Department of Energy have supported PACE
programs for their environmental, consumer and energy efficiency benefits. The FHFA, which
oversees Fannie Mae and Freddie Mac, has not supported the program. The result is that in some
instances the property owner must pay off the outstanding PACE assessments before in
conjunction with the resale or refinance and in other instances the lien simply transfers to the
new property owner. Disclosures regarding these issues are made to property owners during the
application process to inform them.
Most recently, in July 2016, the U.S. Department of Housing and Urban Development issued a
Mortgage Letter updating its FHA Single Family Housing Policy Handbook' stating that
properties which will remain encumbered with a PACE obligation may be eligible for FHA
insured mortgage financing signaling that they will underwrite mortgages with PACE
assessments under certain conditions- or allow outstanding PACE liens to transfer. Those
conditions include that the PACE obligation is treated as a routine government assessment and
the PACE obligations are disclosed and readily apparent to mortgagees, appraisers, borrowers
and other parties.
Benefits of PACE
To date nationally, almost $4 Billion worth of PACE improvements have been completed,
almost 160,000 total projects completed and over 37,000 jobs created.
In Florida, approximately 14,000 projects have been completed at a total value of $250,000,000
and PACE programs currently serve about half the population. Even more importantly there are
energy and insurance savings information about the projects. Based on a sample of 910 projects
provided by one of the PACE providers:
• Total Project Value was $14,809,387
• Jobs created = 102
• Kilowatts of solar installed = 73
• Annual tons of greenhouse gases reduced = 418 MTCO2 which is equivalent to 88 cars
off the road
• Annual energy savings = 584,892 kwh
• Annual renew energy produced = 89,525 kwh
1 https : //porta1.hud.gov /hudportaI/ documents /huddoc ?id= 16- 1lm1.pdf
2 http: / /pacenation.us /pace- market -data/
• Projected utility savings = $ 522,767
PACE in Florida
Currently in Florida there are four (4) PACE programs as follows:
Program Name Levv /Collection Entitv Third Partv Administrator
HERO
Florida Resiliency and Energy
District
Florida Development Finance
Corporation/Renovate America
Renew PACE
Florida Green Finance Authority
Renew Financial
Ygrene Works
Green Corridor
Ygrene
Florida PACE Funding Agency
Florida PACE Funding Agency
CounterPointe Energy Solutions
(FL) LLC
The four (4) PACE programs operate the same way in that to levy and collect the PACE
assessments a separate legal entity is created through interlocal agreement pursuant to Section
163.01, F.S. New local governments then "join" that entity to allow the program to operate in
their jurisdiction. These separate legal entities have procured "third party administrators" to run
the day to day operations of the program, process applications, and interface with contractors and
generally apply the policies to PACE applicants. So the County would join the PACE programs
by passing a Resolution and executing the interlocal agreements with the separate legal entities.
These separate legal entities then execute agreements (government to government) with the
various County Tax Collectors to levy and collect the assessments, and in some instances,
agreements with the Property Appraisers if required in that jurisdiction. They prepare the
assessment roll according to the Tax Collector's specifications within the deadlines to levy and
collect the assessment. It appears on the individual's tax bill as a non -ad valorem assessment
levied by that particular entity. Information numbers are also provided for those entities on the
tax bill for property owners to call if they have questions about their assessment. The property
owner pays the PACE assessment when they pay their tax bill. The levy and collection entity is
then repaid by the Tax Collector.
PACE is currently authorized across 28 counties in Florida. This figure includes counties where
the unincorporated county might participate in the program only (not the municipalities) and
counties where only a municipality participates in the program, but it is still being offered on
some level within that jurisdiction. This equates to approximately 60% of the State's population.
Many counties have created processes whereby the municipalities can "opt in" to or "opt out"
from the County PACE program or some have extended application of their program through
Charter language or Constitutional authority.
The typical Florida community now allows all four (4) of the existing PACE programs to operate
within their jurisdiction to promote competition ultimately benefitting the participants in the
programs. Also some programs may not have the same offerings as the others, such as
commercial projects.
Many local governments are also passing policy Resolutions or Ordinances to provide common
criteria by which PACE programs operate in a jurisdiction. These Ordinances or Resolutions
have common topics such as consumer protections, disclosures to participants about the program
financing, reporting requirements back to the local governments to track benefits, privacy
policies, marketing policies and contractor requirements.
PREVIOUS RELEVANT BOCC ACTION:
None
CONTRACT /AGREEMENT CHANGES:
N/A
STAFF RECOMMENDATION: Approval to move forward
DOCUMENTATION:
FINANCIAL IMPACT:
Effective Date: N/A Expiration Date: N/A
Total Dollar Value of Contract: None
Total Cost to County: TBD Current Year Portion: N/A
Budgeted: N/A
Source of Funds: N/A
CPI: N/A
Indirect Costs: N/A
Estimated Ongoing Costs Not Included in above dollar amounts: Staff administration costs
Revenue Producing: No
If yes, amount: N/A
Grant: No
County Match: N/A
Insurance Required: N/A
Completed
Additional Details:
Kathy Peters
N/A
REVIEWED BY:
Rhonda Haag
Completed
09/05/2017 10:17 AM
Pedro Mercado
Completed
09/05/2017 10:55 AM
Budget and Finance
Completed
09/05/2017 12:44 PM
Maria Slavik
Completed
09/05/2017 1:10 PM
Kathy Peters
Completed
09/05/2017 2:23 PM
Board of County Commissioners
Completed
09/20/2017 9:00 AM