A jobs bill (H.F. 2695) recently enacted by the Minnesota legislature and signed by the governor offers cities and other local governments a unique opportunity to help citizens make their homes and businesses more energy efficient, and at the same time, encourage small scale renewable energy. Under the bill, local governments can establish programs to finance certain energy improvements to qualifying residents to pay for energy improvements to their property. A city or other local government unit may now issue revenue bonds to pay for loans to owners of residential, commercial, or industrial buildings that can benefit from installing energy improvements. The energy improvement can consist of renovating or retrofitting a building to improve energy efficiency, installing electric circuitry, or installing a renewable energy system. To qualify, an energy audit or renewable energy system feasibility study must be conducted and must demonstrate that the property could benefit from installing energy improvements. The loans are secured with liens against the property and collect repayments as a special assessment against the property.

This type of program, sometimes referred to as a “PACE” (Property Assessed Clean Energy) program, is gaining in national popularity. Improving energy efficiency and the use of renewable energy are seen as central to battling climate change. A PACE program allows cities to take a concrete step toward battling climate change concern as well as strengthening the local economy through retrofitting and installations. A PACE program offers advantages to homeowners as well, including a loan that transfers when the property is sold, which allows investment in improvements that pay back over a longer time frame. The interest payment is also tax deductible, although the principal payment is not.