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Commissioners schedule public hearing on PACE program after extended discussion of lender risk and property impact
Summary
The Board discussed a proposed PACE (Property Assessed Clean Energy) program, questioned default risk and lien priority, and agreed to hold a public hearing next week before final action. A PACE representative described a low national default rate and Michigan experience (87 projects; one full default in St. Clair County).
Barry County commissioners on March 18 heard an extended briefing and public discussion about establishing a local PACE (Property Assessed Clean Energy) program and agreed to hold a public hearing next week before considering final approval.
Eric (county staff) presented the draft resolution to establish a PACE program and said no immediate vote was required; a public hearing has been scheduled and the program could be considered for final approval afterward. A representative for the PACE administrator described national and Michigan experience, saying about 36–37 states have programs and that Michigan has completed 87 projects with one full default in St. Clair County involving a developer the speaker called a “bad actor.” The speaker said other late payments have been resolved and several projects prepaid their loans after penalty periods.
Commissioners asked how a PACE special assessment interacts with existing mortgages. The PACE representative said a PACE assessment is placed on the tax roll and in a default the tax portion that comes ahead of a mortgage is limited to current and past-due payments — typically a small portion (the speaker estimated less than 4 percent of the total PACE loan in practice). He said senior lenders routinely accept that structure after underwriting because the assessment does not accelerate the full loan balance.
Several commissioners raised policy questions, including whether PACE financing could increase rents or affect affordability, how a sale of property would handle an outstanding PACE assessment, and whether the county would in any circumstance have financial exposure. The PACE representative reiterated that the county does not make the loan or put county money at risk; private lenders carry repayment risk and the assessment mechanism provides a tax-based collection route.
Commissioner Smelker said he had done outreach to local businesses and intends to support forwarding the program to public hearing. Commissioner Hatfield and others said they were comfortable with moving to a public hearing and that every application would be considered individually if the program is adopted. The board did not vote to adopt the program on March 18; it scheduled a public hearing next week and deferred final action.
