Posts Tagged ‘Louisiana Green Building Law Blog’

What is PACE Financing and Is It Doomed?

Started in the green revolution’s holy land, Berkley, California, PACE financing is shorthand for Property-Assessed Clean Energy Financing (Wikipedia entry).

The concept is simple:  cities loan money to property owners to install clean energy equipment.   The loans are then repaid to the city through annual property tax assessments.

As originally conceived, it’s a win/win/win situation really.   Property owners get funds to improve their property, paying back the loan with money saved in the the property’s reduced operating expenses.   Cities and communities benefit by upgrading its overall energy efficiency.   Businesses and efficient energy investors benefit because the market grows for its products.

All was going very well for PACE Financing.  PACE legislation was passing across the country, and President Obama’s administration wholeheartedly supported PACE programs.

This progress came to an abrupt halt in June 2010, when the Federal Housing Financing Authority (FHFA) dropped this news:   Properties with PACE loans cannot be purchased by mortgage giants Fannie Mae and Freddie Mac.

Why not?

Well, PACE loans create a lien against properties similar to a tax lien, meaning that the lien has priority over all other debts (including mortgages).   The value of these loans can be between $10,000 and $100,000, and sometimes more.   The problem for these mortgage holders is obvious, as they are losing priority on their collateral.

The news from the FHFA caused more than $150m in funding to get yanked by the US Department of Energy, and has some predicting the demise of PACE Financing as we know it.  And they may be right.

Can PACE Be Saved?

The question now is whether these PACE Programs can be saved.   While I believe they can be, I don’t think the programs will be unaffected by the FHFA determination.   Here is a few things that are happening to help PACE stage a comeback, and a glimpse at how this might affect the PACE Programs:

1)   California is Fighting It:   First, Sonoma County and the California Attorney General have both separately filed suit against the FHFA claiming that the determination is wrong, or that FHFA lacks jurisdiction to make the determination on behalf of states and counties.

2)  Legislation is Being Proposed:   The US Congress (as well as local reps and senators) are introducing bills aiming to protect PACE financing programs.   One such bill is the PACE Assessment Protection Act of 2010.

3)  Re-Thinking PACE: States may be ready to re-think the way they structure these PACE programs, and provide some protections for mortgage companies.   While not passed in response to the FHFA announcement, Louisiana’s new PACE egislation may have predicted these problems, as it greatly accommodated mortgage holders.   The PACE legislation from the 2010 session, for example, requires enough equity in the house to support the loan, and requires permission from the mortgage holder for commercial loans greater than $100k (talked about in this post)

4)  Commercial Focus:   The FHFA restriction really affects the residential markets only.  As such, many states and municipalities may be re-focusing their PACE programs on the commercial market.  One example of this is New Orleans, who anticipated launching a PACE district with the help of funding from the US Department of Energy’s America’s Solar Cities program.   The city says they plan on moving forward with the district, except it will only be for commercial PACE loans.

Hey, What Does This Have To Do With Construction?

The PACE Financing Programs has a lot to do with construction and construction law.   You may or may not know, but our firm publishes two blogs that focuses on green building laws:   The Louisiana Green Building Law Blog and the Northwest Green Building Law Blog.   I am also a LEEP AP, and focus part of my practice on green building issues.

I recently wrote a blog post called:  Think Green Building is Irrelevant?  Think Again. The post discussed a report published by NPR saying that green building accounts for 33% of new construction in the United States.  That’s a remarkable number.   And if these PACE Programs get off the ground, the existing construction green building numbers will be driven up significantly.

Stay tuned.

Posted in:     Construction News, Green Building  /  Tags: , , , ,   /   1 Comment

Think Green Building Is Irrelevant? Think Again

Green, green, green, green, green, green. The word gets used so much (see: Greenwashing). Geesh, even companies are changing their logos to green to cash in on the popularity.

Still, despite the PR, many in the construction sector wonder: Does anyone actually build green?

A report from NPR suggests that they certainly do, reporting that green building accounts for 1/3 of new construction in the United States! The article suggests, and I agree, that:

The numbers suggest a revolution is taking place within an industry that is historically slow to change. There are many factors — and many players — in this move toward green building

This article was originally posted on Wolfe Law Group’s topic-specific Louisiana Green Building Law Blog and Northwest Green Building Law Blog.

Posted in:     Green Building  /  Tags: , ,   /   3 Comments

Solar Power is Big, and So are Louisiana Tax Credits for Solar Power

The International Energy Agency (IEA) has recently indicated that it expects solar power to generate between 20-25% of electricity production for the entire world by 2050. What does this mean? This is a potentially HUGE market.

Folks in Louisiana like to mock their state as being backwards and corrupt. Without commenting on that, I can tell you that Louisiana is very forward-thinking when it comes to solar power and solar panel installations. In fact, the state is leading the nation in tax credit offerings and other legal benefits to installing solar power generation equipment at your home or business.

This is not a secret to readers of the Louisiana Green Building Law Blog, as it’s been posted about frequently in the past.

It’s also no secret to companies in Louisiana already taking advantage of the tax credit structure, like South Coast Solar, who posted this recent post: Louisiana Has Top Tax Credit for Solar Panels.

Solar energy is a great opportunity for businesses and consumers. Learn more about the tax credits offered by the above-provided links.

This article was originally posted on Wolfe Law Group’s topic-specific Louisiana Green Building Law Blog.

Posted in:     Green Building  /  Tags: , , ,   /   1 Comment

New Orleans is A Solar America City: Take Advantage Of It

The U.S. Department of Energy has a “Solar America Cities” program, whereby it works in partnership with U.S. cities to accelerate the adoption of solar energy technologies for a cleaner, more secure energy future.  There are 25 major U.S. cities on the list, and New Orleans is one of them.

If you’re in or around the city, it’s hard not to notice that we’ve got a vibrant market for solar energy technologies.    Here are just a few companies offering solar products and installations (and doing well at it):

Why so much hype about solar energy products?   Well, for two reasons really.

First, solar energy is cheaper than the energy you get from Entergy because you’re getting it from the sun.   Second, government tax rebates and credits make it super affordable and practical to invest in solar technology for your home or business.

The State Tax Credit

What’s great about the state tax credit is that Louisiana will actually write you a check if the credit results in an overpayment of your state income taxes.

Right now, the credit applies to residential and apartment projects, and provides a credit of 50% the cost of the system & its installation.  The available credit is maxed out at $12,500.00, but you can install multiple systems on the same building and claim an additional credit.

How To Apply for State Tax Credit

Applying is a synch.  You’ll need to fill out Louisiana Department of Revenue form R-1082, and file it.

You also need to provide the Department of Revenue with the following “proof of purchase:”

  1. type of system applying for the tax credit;
  2. output capacity of the system:
    1. Solar Electric System: total nameplate listed kW of all installed panels;
    2. Solar Thermal Systems: listed SRCC annual BTU or equivalent kWh output;
    3. Wind Electric Systems: total rated kW of all alternators and generators;
    4. Wind Mechanical Systems: shaft horsepower as rated by manufacturer, licensed contractor or licensed professional engineer.
  3. physical address where the system is installed in the state
  4. total cost of the system as applied towards the tax credit separated by:
    1. equipment costs;
    2. installation costs;
    3. taxes;
  5. make, model and serial number of generators, alternators, turbines, photovoltaic panels, inverters, and solar thermal collectors applied for in the tax credit.
  6. name and Louisiana contractor’s license number of installer.
  7. copy of the modeled array output report using the PV Watts Solar System Performance Calculator developed by the National Renewable Energy Laboratory and available at the website www.nrel.gov/rredc/pvwatts. The analysis must be performed using the default PV Watts de-rate factor.
  8. copy of a solar site shading analysis conducted on the installation system using a recognized industry site assessment tool such as a Solar Pathfinder or Solmetric demonstrating the suitability f the site for installation of a solar energy system.

It Matters Who Installs Your System

Not just anybody can install your renewable energy system.   The Notice of Intent Letter from the Louisiana Department of Revenue regarding these credits provides the following requirement about contractor qualifications:

All installations must be performed by a contractor duly licensed by and in good standing with the Louisiana Contractors Licensing Board with a classification of Solar Energy Equipment and a certificate of training in the design and installation of solar energy systems from an industry recognized training entity, or a Louisiana technical college, or the owner of the residence

You Can Get Federal Credits Too

In addition to the 50% Louisiana Tax Credit, you can also apply for the 30% federal tax credit for the same system.   The details for this is for another time and place, but for now, take a look at the Legal Guide I published on Avvo.com in March 2010 here:  How to Claim A Federal Tax Credit for Solar or Renewable Energy.

This article was originally posted on Wolfe Law Group’s topic-specific Louisiana Green Building Law Blog.

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Model "Green Code" Coming This March

A draft of the International Green Construction Code (IGCC) is scheduled for release in March 2010.  Developed in partnership with the American Institute of Architects and ASTM International, and supported by the United States Green Building Council, the code is expected to perform as a “model code” for jurisdictions across the country looking to draft and enforce green construction codes in their areas.

There’s a key difference between the proposed “code” and rating systems such as the LEED Rating system.    Unlike rating systems like LEED, the IGCC is a regulatory framework.

A great article explaining the IGCC and its potential uses and challenges was written by Harvey Berman, a LEED AP lawyer in Ann Arbor, Michigan.   Read it here:   “ICC makes rapid progress on International Green Construction Code.”

It will be interesting to see which jurisdictions adopt the IGCC, and which go further to make it mandatory.

As many in the green building sector know, California has already adopted a “California Green Building Standards.”  While code compliance is currently voluntary, it becomes mandatory this year.   Other cities and states have introduced and passed legislation that will require commercial projects to meet certain sustainable performance benchmarks, although not always in the form of a code.

In Washington state, and the City of Seattle, new laws require commercial property owners to report its energy performance, and disclose it to future tenants and purchasers.   Seattle, Washington, Portland and the entire Pacific Northwest is likely to be among the early adaptors of the IGCC.

Louisiana certainly hasn’t remained dormant in the green building sector, and perhaps the state and its parishes will look closely at the IGCC when its released.

This article was originally posted on Wolfe Law Group’s topic-specific Louisiana Green Building Law Blog.

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