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CH& Concludes That PACE Can Be Adopted in Washington Without Violating the State Constitution

January 08, 2019 posted by Eric Christensen

PROPERTY-ASSESSED CLEAN ENERGY (PACE):
CH& CONCLUDES THAT HIGHLY SUCCESSFUL CONSERVATION FINANCING MECHANISM CAN BE ADOPTED IN WASHINGTON WITHOUT VIOLATING THE STATE CONSTITUTION

Cairncross & Hempelmann (CH&) has determined that Property-Assessed Clean Energy (“PACE”) legislation can be adopted in Washington without violating the Washington Constitution’s prohibitions against gifts of public funds and lending of public shift-zero-final-zero-net-carbon-building-alliance-11.pngcredit.  The conclusion paves the way for PACE legislation to be adopted in Washington.  This will allow Washington commercial property owners to take advantage of a mechanism for financing energy conservation, renewable energy, and resiliency investments that has proved highly successful in many other states.

When a property owner installs cost-effective energy conservation measures or installs a renewable energy system, that owner will pay lower utility bills, which means that the owner has more capacity to repay loans.  PACE allows this greater credit capacity to be harnessed to fund long-term energy conservation measures and renewable energy systems.  Similarly, when a property owner invests in seismic upgrades, reduced insurance bills create new borrowing capacity that can be harnessed to repay the costs of those seismic upgrades.

Working on behalf of the Shift Zero Coalition, a group of architecture, engineering, and energy conservation service providers and others interested in promoting green buildings, CH& analyzed whether legislation following the Texas PACE model could be adopted in Washington without running afoul of our state Constitution.  The Texas PACE model relies on private financing to fund PACE loans, with state and local government agencies acting primarily to ensure repayment of the loans through local property tax assessment mechanisms.   In a memorandum prepared for the Coalition, CH& concludes that no public funds are either loaned or given away under the Texas model, and that PACE legislation following this model can be adopted in Washington without risk of violating the Washington Constitution.  To read the full CH& analysis, click here.