A Slow PACE in Gulfport
When Gulfport city council debated whether or not to allow PACE (Property Assessed Clean Energy) to come to town, they heard from people who said Gulfport needed the program and people who said having such a program in Gulfport would hurt homebuyers.
Council didn’t consider one possibility: no one would take advantage of the program.
According to Amy Elliott, the director of sales for the PACE program administrator, Eco City Partners, since the city approved her company as an administrator, two property owners applied for funding. Eco City could not approve either application, she said, adding that she could not disclose the names of the applicants. Applicants must meet certain criteria, including current payment of property taxes for the past three years and equity in their property.
“We’re not trying to put people more in debt,” she said Tuesday afternoon. “We finance based on available equity.”
PACE, available to commercial property owners in Gulfport, allows property owners to borrow money for environmentally intelligent improvements, such as solar water heating, insulated windows, or lower use appliances. The improvements must pay for themselves in cost savings over the term of the loan and the loan, unlike others, stays with the property if the owner sells or abandons the property and mortgage. The loan also takes precedence over mortgages, something that raised eyebrows not only with former Vice Mayor Dave Hastings but Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac threatened to redline, or refuse to loan money, properties in towns that allowed the PACE program. Elliott said that an ECONWest study showed that PACE participants had a lower rate of mortgage default than other borrowers. In addition, Eco City maintains a loan loss reserve, a pool of money to cover losses should a borrower walk away from a property and the loan.
To allay these concerns, Eco City uses an “open market” model for PACE. This means that Eco City will work with any bank and will require the mortgage holder’s consent before writing a PACE loan. The other two models, warehouse and bond models, have different requirements. The warehouse model draws funding from a pool of money that comes from various sources, while the bond models fund the loans with municipal or private bonds.
Despite careful measures, Eco City, now in its fourth year, has yet to write a PACE loan. Elliott told the Gabber she believed a lack of exposure has hurt the program locally. She estimates, based on county records, that just over 50 Gulfport businesses would meet Eco City’s criteria for PACE.
Elliott remains optimistic and says that with more exposure, businesses will take advantage of the program. She stressed that building a program would take time; Eco City remains undeterred. She also said that although only property owners could take advantage of the loan, long-term tenants could ask landlords to make improvements using PACE funding.
Eco City serves as the program administrator and bills itself as an energy consultant, directing property owners to the appropriate vendor. Eco City uses local vendors as well as others.
The Department of Business and Professional Regulation regulates the contractors Eco City uses. Vendors include Wind Water Energy, a St. Pete Beach-based business owned by Gene Overmeyer.
Eco City makes its money off the loans, charging 2 ½% of the loan up front and 2 ½% of the annual payments every year. A $10,000 loan would gross Eco City $250 at the loan’s inception; if the property owner paid $1,000 every year, Eco City would make $25 a year on the loan.
Eco City’s annual report lists Mitymo Designs, a St. Petersburg company (owned by Lance and Maureen Eppley), West Palm Beach-based Kapok Group (owned by Michael Wallander), and Elliott’s company, Celadon Solutions LLC, as principals in Eco City, although state records show Celadon as inactive.
To learn more about PACE, visit EcoCityPartners.com. Contact Cathy Salustri at CathySalustri@theGabber.com