Energy efficiency bill a bipartisan achievement

In today’s polarized and paralyzed system of government, it’s all too uncommon to hear about the passage of non-ideological legislation that addresses a pressing economic need. However, this week’s gubernatorial signing of the EPAD Act — sponsored by rising star State Rep. James Kay, D-Versailles, and thoughtfully facilitated by the Senate’s Republican leadership — represents one of those rare bipartisan achievements in Frankfort.

EPAD stands for Energy Project Assessment Districts, which offer a new, innovative and proven way for commercial and industrial property owners to pay for energy efficiency upgrades — and there’s no cost to Kentucky taxpayers. Building owners acquire private financing for a project’s costs, and then repay these loans via an assessment on their property tax bill over a term of up to 20 years. Participation is totally voluntary; no assessment is made unless the property owner voluntarily initiates the process.

While the debate over state and federal energy policy has tended to be loud and toxic of late, efficiency’s the one energy issue on which even the Friends of Coal and tree-huggers can agree.

Buildings use about 33 percent of the energy consumed in Kentucky, and prices are expected to increase. Promoting energy efficiency and building rehabilitations therefore are a policy win-win-win: saving energy costs for businesses, protecting the global environment, and creating jobs in the high-tech rehab industry — jobs that pay well and can’t be outsourced to India or China. Meanwhile, energy efficiency projects pay for themselves in the short run through utility savings; while in the long run, all of the benefits go straight to the building owner’s bottom line.

The challenge is identifying the financing to make this process possible: For too many small- and medium-sized business, finding the startup funds can be prohibitively expensive.

That’s where EPAD comes in.

It allows business owners to borrow money from a ready and willing private investor market, and then pay back their loans through affordable monthly chunks out of their energy savings. And because EPAD allows building owners to voluntarily make these payments through their property tax bills, they don’t need to worry about the possibility of selling the property before the loan is repaid — the assessment would be passed on to the new building owner. This property tax vehicle, moreover, comforts banks and private investors against the possibility of default, empowering them to engage in low-risk, low-cost, long-term lending.

EPAD can be found in 31 other states (usually under the name PACE), and more than $1 billion in projects have been either completed or are in the current pipeline. Now, starting this year in Kentucky, owners of some of the country’s leakiest building stock will be able to start the process of saving money, creating jobs and protecting the environment.

It’s easy today to be cynical about our democracy, but in passage of Rep. Kay’s EPAD Act this year, we witnessed state government at its best.

Very liberal and very conservative legislators — and many of those in the middle — shed their labels to write, amend and enact a complicated bill that should have a positive, long-term impact on our economy. Despite all of the snow, it was a beautiful moment in Frankfort.

Jonathan Miller, the former Kentucky State Treasurer, serves as general counsel to the Kentucky EPAD Council as an attorney at Frost Brown Todd.