PACE notes 1.4.11MEMO
TO: Energy and Sustainability Commission
FROM: Chris Mason, Energy and Sustainability Officer
On behalf of Wayne Feiden and Adin Maynard
RE: Property Assessed Clean Energy (PACE) focus
DATE: December 4, 2011
Purpose of meeting: With the FHFA decision on PACE financing effectively holding up all PACE liens for properties with mortgages sold on the secondary market, for which building sector(s)
should Northampton develop initial PACE program(s)?
Following discussion, the workgroup recommends investigating developing a PACE program for the following three sectors:
Small Commercial
Multi-family Residential
Residential properties with mortgages held by local financial institutions
Small Commercial
Possible Barriers identified:
While we have heard anecdotally that many small commercial businesses are interested in “greening” their business, the primary small commercial property landlords in Northampton may
not be interested in participating in a PACE program
Potential Drivers/Benefits:
Pike Research report provided by Steve Burrington states that “Commercial mortgage lenders have generally been supportive of PACE.”
We have heard that utility efficiency programs for small commercial have been less than successful and have left businesses frustrated with the experience
Some small commercial landlords also run a residential rental business and those buildings may fit into this program
Next Steps
Talk with a sample of small commercial property landlords in Northampton to gage their interest in participating in a PACE program.
Landlords suggested: Eric Suher, Rich Madowitz (Hampshire Property Management Group), Richard & Robert Abuza (Abuza Brothers Management Inc), Smith College (rents a large number of residential
houses), Dan Yacuzzo, (Chair, Northampton BID)
Survey small commercial businesses on their interest in a PACE program (suggestion to work with the Chamber of Commerce’s Green Business Initiative Group on a survey)
Multi-Family Residential
Possible Barriers identified:
Would owners with large numbers of multi-family units be interested in participating in a PACE program?
Split incentives for many landlords
Potential Drivers/Benefits:
Pike Research report provided by Steve Burrington states that “Commercial mortgage lenders have generally been supportive of PACE.”
Leases could be structured so as to pass the PACE tax assessment onto renters, addressing the split incentive problem.
Next Steps
Talk with a sample of owners with large numbers of multi-family units in Northampton to gage their interest in participating in a PACE program.
Businesses suggested: Amherst Property Rental, Hampshire Property Group, some Condo groups (River Run Condo, what was the Hampton Gardens)
Residential properties with mortgages held by local financial institutions
Possible Barriers identified:
Local lenders may have same concern as FHFA
No guarantee that the next owner of the property will obtain a locally-held mortgage. Thus, the PACE financing would have to be paid off early.
What type of guarantee is there that the locally-held mortgage wont be sold on the secondary market.
A PACE program for only a selection of SF homes could be confusing to potential home buyers.
Potential Drivers/Benefits:
Would give the City an early start on a PACE program for SF homes
Next Steps
Talk with financial institutions that hold mortgages locally
Institutions suggested: Northampton Cooperative Bank, Florence Savings Bank
Who Does the Follow-up?
Possible entities
Interns from Smith College if the work is straightforward (e.g., parsing survey responses)
Chris
NESC members
Serrafix
Chamber of Commerce Green Initiative Group member(s)? (To develop a Survey Monkey questionnaire)
City of Northampton, Massachusetts
Central Services
Memorial Hall, 240 Main Street
Northampton, MA 01060
David Pomerantz (413) 587-1238 Fax: (413) 587-1248
Director of Central Services