Even though there are questions about the long-term viability of Property Assessed Clean Energy (PACE) residential programs at the federal level due to federal regulators’ concerns about the first lien status of PACE assessments over a homeowner’s mortgage, a unique program has been initiated by City of Cleveland and 14 member communities, which is referred to as Cleveland–First Suburbs.
Recent changes to Ohio’s special improvement district laws now allow for financing of energy efficiency improvements, geothermal, wind, biomass or gasification projects in addition to solar photovoltaic and solar thermal project through the creation of energy special improvement districts, or Energy SIDs. Energy SIDs have unique characteristics from other older special improvement districts: the properties included within an Energy SID do not have to be contiguous and an Energy SID requires the consent of 100 percent of the property owners who will be assessed for the costs of the energy project, which means that participation in an Energy SID is entirely voluntary.
Cleveland–First Suburbs has taken advantage of changes in the law to form essentially a regional Energy SID that is initially composed only of municipalities. The regional Energy SID will allow for qualifying energy projects to be financed according to a uniform plan approved by the participating municipalities. Required filings to form the Energy SID will occur shortly at the Ohio Secretary of State’s Office. Initial real property included in the Energy SID will be property owned by the municipal governments themselves. A demonstration solar project will be installed on government-owned buildings (e.g. city halls).
Cleveland–First Suburbs is now in the process of establishing the board of directors of the Energy SID which will likely be composed of development directors of each of the member communities. Once the board is in place, regulations adopted by the board will allow private and other public real property owners to add territory to the Energy SID and finance energy projects using the Cleveland-First Suburbs PACE program. The Energy SID regulations will provide that title to the energy projects may be transferred from the participating municipalities to the real property owner prior to the energy project being placed in service in order for the property owner to claim any tax benefits associated with ownership of the energy projects. Additional property owners in the Energy SID will not have voting member status.
This Cleveland-First Suburbs program appears is an innovative model of regional, intergovernmental cooperation and is designed to provide cost savings to commercial and industrial property owners. Several other metropolitan communities are investigating the Cleveland-First Suburbs model.