Ways & Means reviews CPACE language in S327; advocates say program leverages private financing for clean-energy upgrades

The Ways & Means Committee on April 23 took up S327’s newly added CPACE provisions, hearing from Office of Legislative Council staff and private-sector witnesses who described CPACE as a tool that lets municipalities enable private financing for commercial clean-energy and resilience projects.

Ellen Titrosi of the Office of Legislative Council told the committee S327 adds commercial PACE (CPACE) as a new subchapter to 24 V.S.A. chapter 87 and would allow a municipality to vote to become a CPACE district. She said the statute would activate a special assessment mechanism so private lenders can offer loans secured by a lien on the property, and the loan obligation stays with the property after sale. "Commercial property assessed clean energy," Titrosi said, explaining the statute’s stated purposes.

At the heart of the committee’s questions were lien priority and municipal exposure. Titrosi and other counsel said the CPACE lien is a governmental assessment that takes priority in the capital stack and that the bill includes a provision requiring consent by other secured lenders when CPACE financing would be placed on a property. "This allows private financers to have lower rates and longer payback periods," Titrosi said.

Michael Yaki of PACE Finance, who testified as a CPACE practitioner and bill drafter, said CPACE combines municipal assessment authority with private capital so the financing can be offered at longer terms and lower rates than many commercial options. He described the financing as "a form of public–private partnership" that is seen favorably in capital markets because the assessment stays with the property and only past-due amounts are accelerated in a foreclosure. "It stays on the property until it's paid off," Yaki said, and that feature, together with multi-layer underwriting and lender consent requirements, reduces perceived risk for capital providers.

Members pressed for details on whether CPACE assessments would be subordinate to municipal or education property taxes and whether municipalities would face contingent liability if a property owner defaulted. Committee counsel and staff said they will draft clarifying language; Rick Sable (Office of Legislative Counsel) confirmed the operative drafting will make clear which municipal tax liens are senior. Josh Hanford of the Vermont League of Cities and Towns testified that municipal attorneys have reviewed the language and that municipalities would adopt CPACE only by choice; the League supports making the authority available but expects limited uptake without program administrators in smaller towns.

Why it matters: supporters said CPACE can spur investment in renewable energy, efficiency, water conservation and resilience projects by improving cash-flow outcomes for commercial property owners. Opponents or cautious members raised accounting and lien-priority questions the committee asked staff to resolve before voting.

Next steps: the committee did not vote and scheduled final consideration for the next morning. Staff said they will prepare clarifying amendments on lien priority and the treatment of education-related property tax components before the vote.