Posted on October 5th, 2022.

Yellowstone County commissioners want more time before they pull the trigger on forming a special district that would guarantee low-interest loans to businesses wanting to make their facilities more energy efficient.

County businesses and nonprofits, along with agencies like the Billings Chamber of Commerce, the Downtown Billings Alliance and Big Sky Economic Development, have been lobbying the county all summer to form the district.

The program, known formally as Commercial Property Assessed Capital Enhancements or C-PACE, was approved last year by the state legislature and is run by the state's facility finance authority. Counties that want to make use of C-PACE are required by state law to form a special district that would structure the program.

"This is an economic development tool," said Seth Lutter, associate director of the Montana Facility Finance Authority.

The program works by connecting businesses wanting to upgrade the energy efficiency of their facilities to private lenders who have the cash to make the projects happen.

To bring down the price of the loans for the businesses and to reduce the risk for the lenders, a C-PACE district ties those loans to a county's tax rolls. That means a business's loan payments are collected twice a year along with the usual property tax and other improvement fees.

Montana Facility Finance Authority then distributes the payments back to the lenders.

By using a government entity as the receiving agent for the loan payments, lenders reduce their risk and can then offer loans with a lower interest rate. The lower interest rates make the loans more appealing for businesses, which creates the incentive for them to upgrade their facilities.

The benefits are twofold, Lutter said.

First, the cheap loans spur economic activity. Businesses and nonprofits taking out the loans spend the money with local contractors and suppliers, and end up improving their properties, which increases their taxable value.

Second, he said, by focusing the projects on upgrades for better energy efficiency, those businesses cut their facility operation costs and the county ends up with cleaner operating buildings and facilities.

The Yellowstone Art Museum was one of the groups advocating for the adoption of a county C-PACE district. The museum has a number of maintenance needs, including the replacement of its 80-year-old boiler.

"I'm certainly optimistic that C-PACE could benefit us as we consider these infrastructure expenses," Jessica Ruhle, YAM's new executive director, said by email. "Beyond the YAM's specific needs, C-PACE seems like an economic stimulus program as much as an energy saving program. With the opportunity to use local lenders and local contractors, this strikes me as a potential win for everyone involved."

County treasurer Sherry Long told commissioners she really likes the aim of the program but believes it has no place operating through an arm of the county. These types of loans, she said, should not be on the tax bill.

Commissioner John Ostlund expressed similar reservations, saying he was uncomfortable with the county getting into the loan collection business. He suggested commissioners wait to make a final approval on the program and in the meantime hammer out its finer points at a discussion meeting.

Commissioner Denis Pitman pushed back, saying C-PACE works as a local economic development tool precisely by tying loans to a local government entity.

Commissioner Don Jones, who likes the program, agreed that waiting and working out some of the details and getting a better understanding of the collection mechanism in a discussion meeting made sense. Still, he wanted the business community to know he favors creating the district.

"At the end of the day, I'm in support," he said.

Text and image source: clicke here.