An innovative new lending program might soon make it easier for Turlock residents and businesses to install energy efficiency upgrades.
The Property Assessed Clean Energy Program, made possible through recent action in the California legislature, allows property owners to obtain low-interest loans for “green” upgrades, which are then paid off through increased property taxes on the parcel.
The program came to the City of Turlock's attention through Mayor John Lazar, who learned of PACE at a League of California Cities meeting in Fall 2012. The biggest advantage to most Turlockers, Lazar said, could be an easy financing mechanism to upgrade energy hog air conditioning units.
“For the average middle-class person, this is an opportunity to upgrade their system and invest in their home,” Lazar said.
PACE loans are tied to properties, not property owners, making them easier to attain regardless of credit. However, property owners may not take out a PACE loan larger than the equity they own in their homes
In addition to air conditioning, PACE loans can be used to install solar, dual pane windows, cool roofs, or other efficiency measures.
Those measures can quickly pay for themselves in reduced energy bills, according to Turlock Irrigation District statistics. Commercial buildings recover their expenditures in three to four years, on average, while residential units start seeing savings in year seven to eight. In one notable example, a $13 million energy efficiency upgrade on the Empire State Building led to $4.4 million in utility savings each year, paying back the investment in fewer than three years.
Energy efficiency upgrades can also increase home values directly, further reducing time to breakeven.
And contractors, too, could see a financial boon from work created by the PACE program.
“You're going to see contractors who are currently having a difficult time to get along that will now have a chance to work (installing energy efficiency upgrades),” said Ron Reid, Interim Assistant to the City Manager.
Already, many towns across California are taking advantage of the PACE program. In Richmond alone, more than 300 homes were upgraded in the past year, with cities like San Diego and Fresno also participating. Modesto will soon launch a version of the PACE program as well.
It remains to be seen how, or if, the Turlock City Council will opt to offer PACE financing in Turlock. The city would likely contract with a third-party lender, operating the program at no financial risk to Turlock.
Council will decide whether or not to implement the PACE program at an unspecified future meeting.