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Loudoun on pace to adopt clean energy program for businesses

Loudoun County will continue to move forward with a Property Assessed Clean Energy Program that will help to aid in loans from private lenders to commercial property owners who want to invest in green-friendly projects.

Also known as PACE, supervisors voted unanimously on Jan. 18 to direct county staff to continue working on a plan to facilitate the program, which offers several benefits to owners that are not available in conventional commercial mortgage loans.

Once the logistics are ironed out, Loudoun County will be the second municipality in the state to adopt the PACE program if supervisors vote for it. Arlington County is the only municipality using the program, which it adopted in November.

With PACE, the borrower does not face a personal guarantee, generally a requirement for traditional commercial mortgage loans. In addition, the owner is not personally responsible for the loan should they decide to sell the property; the PACE loan will be transferred to the new property owner upon sale. The program also offers longer loan terms than the traditional commercial real estate loan, which typically is up to 25 years.

Borrowers participating in PACE won’t be required to pay 20 percent of up-front capital and 100 percent of hard and soft costs may be financed.

The program also offers loans to business property owners who are looking for energy and water efficient improvements. Additional related expenses, such as energy audits, renewable energy feasibility studies, engineering studies, roof upgrades and environmental clean-up are also available.

“ … There’s no financial liability, no cost, no local tax funds that are involved in the program as we recommend it,” said County Administrator John Sandy.

Supervisor Ron Meyer (R-Broad Run) described the program as a “free market solution.”

“This is a local solution that really doesn’t really involve the government all that much except for facilitating a property rights transaction. It’s a free market solution promoted at a local level,” Meyer said.

Loudoun County is only proposing the PACE program for commercial buildings, however Meyer said, if adopted, he would like to see it eventually include multifamily buildings.

Still, some supervisors were a bit skeptical of the program, since the county would be used as a mechanism for how the special assessment lien is levied and then recorded against the property. The county would also be the mechanism for how the lien is carried from commercial owner to owner.

“In reading this item, I can’t see why we want to get involved. What are they doing that can’t be done without us?” asked Supervisor Geary Higgins (R-Catoctin). “ … Virginia has 95 counties, 38 cities and towns and one of them is still working on a memorandum to do this and we’re going to jump in. I don’t understand the urgency and I don’t understand why we need to be involved.”

The only cost to the county, according to Sandy, would be funding for an administrator to oversee the PACE program.

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