CARSON CITY — Local governments could create special improvement districts to allow commercial properties to finance, through a private lender, energy efficiency upgrades and renewable energy sources under a bill heard Wednesday by an Assembly committee.
Assembly Bill 5 is sponsored by the Governor’s Office of Energy and is part of Gov. Brian Sandoval’s package of legislative priorities. It would allow loans to finance energy efficiency projects to be paid off through tax assessments, which would be passed on to new owners if a property is sold.
Angela Dykema, director of the governor’s energy office, said the bill authorizes commercial PACE programs, an acronym that stands for Property Assessed Clean Energy.
“The building owner repays a loan for clean energy in the same way property taxes are collected,” Dykema told members of the Assembly Committee on Government Affairs.
The loans would come from private lenders. Local governments would not be responsible for providing capital, they would only serve as a “conduit” between the property owner and the lender, Dykema said.
“The lender is guaranteed payback … because it survives ownership,” said Suzanne Linfante, energy program manager in the state office.
The legislation would require written consent from the mortgage holder, as well as an opportunity for the primary lender to offer the energy loan. The bill also requires an energy audit to ensure projects would add value to properties and save on energy costs.
The bills says a project must have a savings to investment ratio greater than one-to-one, meaning expected energy savings should exceed investment costs.
Liens would be filed on the property until the loans are repaid. PACE lenders also would be given super-priority status in the event of a default and foreclosure.
The bill was supported by the Associated Builders and Contractors, the city of Las Vegas, solar lobbyists and others who said it will foster jobs and Nevada’s clean energy goals.
About 30 states have PACE programs, with most limited to commercial properties. While the initial version of AB5 also included residential properties, an amendment was offered restricting it to commercial properties only. Credit union and bank lobbyists testified neutral on the bill after the amendment was added.
But Sam McMullen, representing the Nevada Bankers Association, urged caution and said discussion is needed on interest rates; selection and eligibility of contractors; and statewide standards.
“This is a whole new animal for special improvement districts,” he said.
No action was taken by the committee.
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