We have just launched our new website, NJPACE.org, which replaces NewJerseyPACE.org (archived here). We’ve removed most of the material dating back a dozen years to focus on the new Garden State C-PACE Program being rolled out by NJEDA. Commercial Property Assessed Clean Energy—which actually covers not only the usual office, retail, and industrial, but also multifamily, agricultural, and nonprofit/institutional properties like churches, schools, hospitals, and so on—has the potential of bringing billions of dollars of investments in energy efficiency, renewables, and resiliency in the Garden State.
It’s worth revisiting some of this history if only to understand what shaped our thinking about the program over the many years we advocated for it. I first heard about PACE (Property Assessed Clean Energy) in 2011 from a group in California asking if we would support them in their effort to get Residential PACE accepted by the Federal Housing Financing Agency, which was working to stop it from being used with federally mortgaged housing. At the time, I was working with Fairleigh Dickinson University on small-scale hydro with a member of the New Jersey Legislature, then-Deputy Speaker of the Assembly, Upendra Chivukula. Chivukula, who has a Master’s Degree in Electrical Engineering, is now a Commissioner on NJ’s Board of Public Utilities.
Unbeknownst to me, Chivukula and State Senator Bob Smith had already authored a bill introducing PACE in New Jersey in 2011. Unfortunately, then-Governor Chris Christie emasculated it through a conditional veto, leaving only a weakly worded permission to municipalities, allowing them to create PACE programs as long as they had the approval of the Director of Local Government Services. But under the Christie Administration, the Director had no intention of doing this, as we found out after approaching him with the support of Simon Property Group and Livingston Township in the hope of securing low-cost financing to upgrade one of their malls.
While my colleague Gus Escher and I considered whether we could make the law work for clean energy, Superstorm Sandy intervened. Like others in our inland neighborhood, we lost power for a couple of weeks and had some minor wind damage, but many folks at the shore were wiped out. So, when we met with Senator Smith to discuss the feasibility of amending the law, his first question was whether we could expand the eligible projects to include resiliency. The answer, after some inquiry, was yes, so along with Senator Smith, we set about offering input on revising the law. Little did we know that the proposed revisions would be vetoed twice by Governor Christie and that what would finally get signed into law by Governor Phil Murphy in 2021 would be a much different law.
At times, it seemed we were on an entirely quixotic adventure. We weren’t tilting at windmills, but we might as well have been. Certainly, we were idealistic. Mostly, we toiled in near-total obscurity, with hardly anyone even understanding what we were up to. Yet the promise of unlocking a new source of capital invested in climate-smart technologies was too alluring to pass up. Buildings account for about forty percent of carbon emissions, almost as much as transportation, but much harder to reduce. Commercial PACE is a clever solution that leverages the local property tax mechanism to unlock almost unlimited capital—using low-cost, long-term, stable sources like insurance companies and pension funds to invest in upgrading our built environment.
Each year, we thought we saw the end in sight. In 2015, we hosted a conference at Princeton University with more than 250 attendees and a couple of dozen industry sponsors. But it wasn’t enough. Even the obvious economic benefits weren’t enough to overcome the knee-jerk anti-green attitudes of Chris Christie, who was then running for President. There was one dramatic moment in the Legislature, when we got some specific provision changed at the last moment with Senator Smith. But all to no avail.
Of course, as time goes on, the world changes around us. Phil Murphy became NJ’s 56th Governor. But PACE wasn’t happening anywhere to the extent it is today, so it was not a matter of priority for the Governor or even for the Legislature, which had already tried to approve it at least four times. The change in party also signaled a profound shift in attitude. Where Governor Christie’s vetoes had made it clear that he did not want the state government to manage the program, Governor Murphy’s team was all for bringing it in under the New Jersey Economic Development Authority.
We no longer had a role in administering the program (thank goodness—it’s a thankless and mostly unprofitable task). A centralized state bank was now going to make this program work by providing uniform documents and procedures to all of NJ’s 564 municipalities. The industry and the legislature agreed to make one exception: The top one-third of NJ municipalities could set up their own program, provided that it was essentially identical to NJEDA’s.
The Legislature gave NJEDA up to a year to roll out the Program, but in practice, there is no way to keep state agencies to a schedule, and the guidelines had to undergo multiple revisions, so the whole process has taken almost four years instead of one. Nonetheless, if they have gotten it right in terms of how the program is structured, NJ should show very strong demand, and the state’s program could well “knock it out of the park.”
We’re very interested in working with others to achieve this outcome. Nationwide, C-PACE investment has now surpassed the $10 billion mark. At the same time, as a 501(c)(3) nonprofit, our goal is to make this work at the community level, to empower towns to use it to upgrade their built environment, and to reduce their carbon emissions. If you can help us achieve that, please text Jonathan Cloud at 908-581-8418 and suggest times for a call.
