The Arkansas legislative session is winding down and there is not a lot to crow about environmentally speaking. One bright spot however is the passage of Act 1074 which will provide a novel method to finance energy efficiency projects in Arkansas. The bills leading to enactment were sponsored by Senator Johnson (D) Little Rock and Representative Leding (D) Fayetteville.
Assuming Arkansas is like the rest of the United States, about half of all the energy and three quarters of the electrical energy used goes into buildings. Acts, ordinances, etc. which lead to energy efficiency in buildings can go a long way to save energy, lower costs, and lessen the use of fossil fuels which drive global warming. Act 1074, called the Property Assessed Clean Energy act or PACE is a bond financed program that allows a person or business to finance energy efficiency projects through inclusion of costs in a property tax assessment.
The act enables government such as cities, counties or combinations thereof to form Energy Improvement Districts which can sell bonds to finance projects. A property owner identifies a project that will save energy or water or create clean renewable energy. The improvement district then gives the property owner money to finance the project. The property owner repays the district through a property assessment tax over a defined period of time. Because the improvement is to the property, it stays with the property so if the original owner sells before the end of the assessment, the new owner continues to pay off the project.
A number of energy efficiency projects come to mind: Increased insulation, more efficient window windows with low-E glass, solar hot water systems, projects which reduce water consumption, more efficient heating and cooling systems such as ground source heat pumps.Projects which actually produce clean energy are also funded: Photo voltaic panels, micro hydro projects, wind turbines and biomass energy are all included.
Here is an example of how it could work. A homeowner with an older house decides to insulate the walls and attic, and replace the windows. The total cost of the project is 10,000 dollars. She goes the Energy Improvement district and receives 100 per cent financing. The cost is repaid over twenty years through a property tax assessment. Generally the savings in utility costs will cover or even exceed the annual fee. If she sells her home before twenty years the buyer assumes the assessment, just as they assume the energy savings from the energy improvement.
PACE benefits the local community by creating a cleaner, greener environment. Local businesses that supply the equipment will see increased sales. Installers will have more work and create jobs for skilled tradesmen and unskilled labor alike.
The best way to save money and the environment comes through energy efficiency. Reduced use of electricity means lower costs but also less burning of coal and natural gas. This is a win, win, win situation. This act will save the property owners money, create business opportunities and jobs for the community, clean the air, and cool the planet. As we approach Earth Day remember: Think globally, act locally.