Glastonbury Town Council discusses efficiency upgrade loan plan for businesses
By Steve Smith - Staff Writer
Glastonbury - posted Thu., Apr. 11, 2013
The Glastonbury Town Council heard an overview of the CT-Property Assessment Clean Energy Program (C-PACE) at its meeting on April 9. Town Manager Richard Johnson said the program essentially allows business owners to make investments in energy efficiency improvements to their buildings, with the program's assistance. The payback system would essentially be through a 15- to 20-year tax lien. “We think it's something that makes sense,” Johnson said.
Genevieve Sherman, manager of Commercial and Industrial C-PACE, has been working with the town and said the program allows the businesses to get the capital they need up front to make the improvements. The Clean Energy Finance and Investment Authority (CEFIA) underwrites the commercial loans from private banks for approved clean energy upgrades.
The role of the town, Sherman said, is the “conduit for payment.”
“The reason that we use a tax lien structure is to take energy lending from essentially an unsecured product to a secured product, which is how we get competitive interest rates and low cost capital for our businesses," she said.
Sherman said that the program essentially makes the property itself the collateral for the loan, since it's not possible to repossess energy-efficient improvements. “Banks know that they are going to be made whole,” she said.
The town would be recording the application for the improvement, assessing the lien, and then making the collection.
Sherman said CEFIA is looking at the contract that the business's contractor would put together, and the rates are based on the property (and the status of other taxes), and the value of the project. She added that in the near future, tax collectors in towns that subscribe to the program will be given software upgrades to make the town's share of the program's work easier. Towns are also being reimbursed $500 during this first year of the program, to account for the tax collector's additional work time.
Johnson said the town would likely issue a separate bill to the program's users and didn't see it being very labor-intensive for the town.
Councilwoman Diane DeLuzio asked about the town's businesses who default. “When it works smoothly, I think the $500 is sufficient,” she said. “I think when it doesn't – when the property owner isn't paying on time – that's when I see it being something where maybe the town doesn't want to get involved.”
Councilman Tom Gullotta said he saw the repayment-via-lien as a muddy area. “Do we really want the town in a contract where someone is going to be using our tax bills to try to collect payment?” he asked.
Council Chair Chip Beckett said that sort of system isn't uncharted territory. “If someone hooks up sewers to their house, there's a separate tax lien for the connection charge,” he said. “We do it regularly.”
“Sewers are different,” Gullotta said. “I would project that in less than 10 years, we're going to be running from this. It's not going to have my support.”
Some members seemed on board with the idea. “It does seem to be a program that's a win-win in many respects,” Councilman Tim Coon said.
“I see it as a value-added for our businesses,” said Councilwoman Lorrain Marchetti.
The council took no action, tabling the motion until its meeting on April 30.