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PACE Talk: Virginia is ready to tap into the power of PACE

Virginia Governor McAuliffe signing the PACE bill. Image credit:Ken Rosenfeld of  Virginia Energy Efficiency Council. 

May 15, 2015

Kristina Klimovich of PACENow talks to Bill Greenleaf, Virginia Community Capital and Abby Johnson, Abacus Property Solutions LLC.

Kristina Klimovich: Thank you both for taking part in this PACE Talk focusing on the recent successful legislative effort in VA. Abby and Bill, can you provide some background on how we got here?

Bill Greenleaf: It started out as a simple effort to build a business coalition to hire a lobbyist to make the business case to legislators to correct Virginia’s flawed PACE legislation.  But the process itself was not simple, it was rather difficult and uncertain as it required convincing companies to fund a lobbyist, overcoming opposition from bankers and persuading legislators to support PACE.  We would not have succeeded without engaging an exceptionally talented lobbyist, Preston Bryant of McGuire Woods Consulting LLC.

Abby Johnson: I’ve been involved in the PACE market for a number of years and I live in Virginia, so I always wanted to see an active PACE program in the state. I took part in the effort to amend the Virginia existing PACE law in 2014. The effort failed, so since then I was eager to find a way to make PACE happen in VA. In 2014, Cynthia Adams with the Local Energy Alliance Program (LEAP) bridged me to Bill Greenleaf, who was already deeply involved in amending PACE legislation. Bill and I have been working closely together ever since.

KKBill, what was wrong with PACE legislation in VA?

BG: The existing VA PACE law, which was passed in 2009, law did not allow for the PACE loan to have senior lien status equal to a tax lien.  One of the unintended consequences of Virginia’s flawed 2009 PACE law was that it permitted a municipal utility to offer on-bill financing.  I was involved in efforts to pass this legislation in 2011 and again in 2014, but both of those efforts failed.   After learning that PACE was passed in three conservative states, Texas, Arkansas and Utah, I decided to try again in 2015.  We succeeded in correcting the PACE law but only because we had a business coalition and a lobbyist who developed a strategic approach to legislative success.

KK: Bill, we were introduced nearly a year ago, when you began building a coalition in support of the bill. What was this process like? Can you share some insights and lessons learned? 

BG: Building the business coalition was extremely challenging and time-consuming. First, not many companies were familiar with PACE or truly understood how it would benefit them.  It often took 4 to 8 weeks to secure a phone call with the appropriate person at a company or trade association to pitch them on joining the PACE coalition.  I had the most success with national energy service companies that had experienced positive benefits from PACE programs in other states and I had the least success with Virginia based organizations. While 30 companies joined the PACE coalition only a handful of companies actually funded the lobbying effort.  Many companies viewed PACE an abstract concept and could not visualize how it would benefit them economically.

KK:Abby, in your opinion, what made this process a success?

AJ: Lobbying was essential. In Virginia, we have a heavily Republican legislature, therefore it was important that PACE was viewed as a private sector initiative. We hired Preston Bryant Jr. of McGuire Woods Consulting LLC, who was a legislator for several years and he was able to identify the sponsors and shepherded the bill through the committees. As a result, the bill passed very easily and with limited opposition. Also, the support of Larry Cummings of Trane and the Virginia Energy Efficiency Council was critical.

KK: What major opposition did you encounter and how did you work around it? 

BG: The only known opposition in the beginning was the Virginia Bankers Association. We were able to overcome their opposition by working with them to write legislation. The VBA took a neutral position on the legislation which was the best we were going to get.   The VBA was open to working with us this time because PACE legislation passed in 30 states and passed in Texas with the support of the Texas Bankers Association. We also were able to secure a PACE support letter from one of their member banks which was very beneficial.  We are very grateful to the staff of the Virginia Bankers Association for their willingness to sit down with us and negotiate legislation that works for both parties.

AJ: In fact, in order to get the sponsors for the bill we had to make sure that the VBA was neutral. We worked closely with the Southern Environmental Law Center, who pro bono helped us draft the legislation, which we shared with the VBA throughout the process.

KK: Abby and Bill, looking forward, what are some of the next steps to make PACE available to commercial property owners in VA? Who will take lead on putting a program in place and which jurisdictions are first to join?

BG: This summer we will be conducting PACE implementation planning for the most cost-effective way to launch PACE in Virginia. We are not expecting many localities to voluntarily start their own PACE programs and we are not expecting the Commonwealth of Virginia to fund a statewide PACE program similar to Connecticut.   We know a few localities are interested in developing PACE programs but I am not free to name those yet.

AJ: The bill explicitly calls for the stakeholder coalition to devise an implementation plan by the end of 2015. So we will be working on bringing the coalition together consisting of: VBA, VA Municipal League, VA Association of league of  of Counties, VA Association of Realtors, VA chambers of commerce, private sector project developers, ESCOs, engineers, law firms, and lenders.

KK: Abby, the process you are describing sounds similar to Texas’ PACE in a Box. Will there be VA in a box?

AJ: The PACE in a Box process in Texas was very useful. In Virginia, since we have to have the underwriting guidelines defined by the end of the year, we will strive to make it an accelerated PACE in a Box process! As Bill noted, there are no resources or bandwidth for a state agency-led effort. However, since VA is so tied to Maryland and D.C. there are some discussions about putting in place cohesive marketing for the private sector in all three jurisdictions.

Ultimately, the stakeholder coalition will help determine which PACE model is best for Virginia. We are calling out to anyone in VA who wants to join us and participate!

KK: Thank you both! Please reach out to Bill or Abby if you would like to join the stakeholder coalition!

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Kristina KlimovichPACE Talk: Virginia is ready to tap into the power of PACE
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