- 07/20/11 12:05 PM ET
Benjamin Franklin established the nation’s first special assessment district when he created the Union Fire Company of Philadelphia, a volunteer fire department. Today there are more than 37,000 special districts in the United States. Local governments use them to pay for everything from sewer systems to sidewalks to mosquito abatement — all in response to important community concerns.
In the last two years, 27 states and the District of Columbia have passed laws allowing their local governments to use existing assessment authority (also called special improvement districts) to help homeowners and businesses finance energy efficiency and renewable energy improvements. These laws, commonly called Property Assessed Clean Energy (PACE) laws, were hailed by Scientific American as one of the top 20 ways to change the world.
The idea of PACE is simple. It uses a traditional municipal finance tool to help property owners pay for the upfront cost associated with energy-saving improvements. Property owners then pay for the improvements on their property taxes over the course of up to 20 years. PACE has rapidly gained popularity because it solves a big problem — by eliminating the high upfront cost, it removes the biggest barrier to unlocking significant new investment in clean energy.
Because the assessment is voluntary, only property owners who can afford it sign up. And, like other tax assessments, it stays with the property upon sale. So if you use PACE to install an energy-efficient furnace or put solar panels on your roof, but sell your home, the new owner will assume the property tax assessments — and get the benefit of the lower utility bills. It’s not just a win-win situation, but win-win-win: Homeowners get the benefit of lower utility bills; workers in the stagnating construction industry get jobs; and the nation gets the benefit of increased energy efficiency and reduced energy costs.
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