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House Energy committee hears experts on S.138 to modernize commercial CPACE financing
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Summary
Witnesses told the House Energy and Digital Infrastructure Committee that S.138 would modernize Vermonts commercial CPACE program, recommending an amendment to change references from assessed to appraised value, stressing lender consent, municipal implementation mechanics, and potential to lower borrowing costs for energy and resiliency projects.
The House Energy and Digital Infrastructure Committee heard testimony on S.138, a bill that would modernize Vermonts commercial Property Assessed Clean Energy (CPACE) program, during a multi-witness session. Representative Kathleen James presided and said the committee had reviewed statutory language and wanted expert perspective on how commercial CPACE programs operate and what benefits they can deliver.
Amanda Semai, managing director of PACE programs at Castle Green Finance, told the committee that the bill, as amended, would update Vermonts statute to match other states that have adopted commercial CPACE. "The updating of the Vermont statute would bring it in line with the 38 other states that have passed commercial PACE statutes and modernize it," Semai said, and she urged one specific change: replacing a reference to 90% of assessed value with 90% of an appraised value "as complete and stabilized" so that new construction is not unduly constrained.
Semai and other witnesses described how CPACE financing works in practice: private capital is advanced to a property owner but the municipality records a special assessment lien in the land records that funds repayment through the property-tax process. Semai emphasized that participation is voluntary and that lender consent is commonly required: "The consent of the lender is something that we always require," she said, explaining lenders need to understand how CPACE fits with mortgage financing.
Committee members pressed witnesses on operational details. Semai said municipalities commonly apply partial tax payments first to municipal real-estate taxes and then to PACE amounts, and that outstanding PACE amounts follow the jurisdictions ordinary delinquency procedures. On whether CPACE measures must be required to be immediately cash-flow positive, Semai said many states avoid that limit because resiliency investments and some efficiency measures can increase property value or reduce long-term costs even if they do not produce immediate dollar savings.
Michael Yockey, senior vice president and senior counsel for policy at PetroSpace Finance and a board member of the CPACE Alliance, described the programs market growth and reiterated the amendment request. "It is a unique, financing and a powerful financing tool for climate change, for resiliency," Yockey said, and he noted that municipal participation does not create a fiscal obligation for the municipality under the bill as written. He also explained that municipal taxes retain superior priority in tax sales, and that a CPACE lien remains attached to the property if the lien is properly recorded.
Kurt Pallum, managing director at Counterpoint Sustainable Real Estate, described underwriting practices used in the market: appraisals tied to a stabilized property, energy audits, environmental reviews and multistage investment committee approval. Pallum said his firm finances a range of projects from small co-op heat-pump and solar retrofits to large studio and redevelopment projects, and that capital commonly comes from institutional investors such as insurance companies or life-insurance-backed funds.
Witnesses gave market figures and examples but varied in how they characterized national activity: Semai said commercial CPACE has driven roughly $10 billion in financing nationally through 2025 with more than $3 billion in the last year; Yockey and Pallum described rapid growth as well, with Pallum saying his firm has underwritten roughly $1 billion across its book. Committee members asked about default experience and interaction with state green banks; witnesses said defaults have been uncommon in their portfolios and that green banks often play an originator or small-deal role while private capital providers take on larger transactions.
The committee asked no formal vote during the session and took a brief recess. Members signaled they would continue reviewing the statutory language and the proposed amendment changing "assessed" to "appraised" value before advancing the bill.
