By TIM FAULKNER/ecoRI News staff
PROVIDENCE — Rhode Island’s new green bank wouldn’t have branches, ATMs or tellers, but it would provide loans and lending services for a range of environmental products and projects, including brownfield cleanups, cesspool replacement and lead abatement.
If budget Article 24 is approved as part of the House budget, the Rhode Island Clean Water Finance Agency will change its name to the Rhode Island Infrastructure Bank. This new entity would continue its current function of issuing bonds for drinking water, stormwater and wastewater projects, but it also would take on two new roles.
The first would be to provide low-interest loans to municipalities for energy-efficiency programs and renewable-energy projects. The new entity would also oversee and promote a lending program for residents and businesses to fund energy efficiency and renewable-energy projects. Clean-up projects would also qualify, including the state’s 1,800 or so brownfield sites.
The Property Accessed Clean Energy (PACE) program would be financed through private banks. It’s unique compared to traditional loans because the debt is a 20-year lien on the property, with the balance showing up on the property tax bill.
PACE proponents say the lien feature allows property owners to buy into a green project without worrying that they may not own the building long enough to pay the loan in full. Instead, the debt stays with the structure and new owners would continue to receive the benefit of solar panels or a new septic system while also paying for the remaining cost.
The fund for municipal loans would be seeded with $2 million in unspent economic stimulus money, $3 million of proceeds from the Regional Greenhouse Gas Initiative and $10.9 in qualified energy conservation bonds.
Article 24 also seeks a 12-year continuation of a charge on gas and electric bills that helps fund some of these projects. The demand-side management charge currently pays into the state Renewable Energy Fund. Under the Rhode Island Infrastructure Bank, 20 percent of those proceeds would go to the new green fund for municipal energy efficiency and renewable-energy projects.
The PACE program was passed in 2013, but has yet to take hold as various financial details are addressed. As it stands, each city and town must approve the program in order for residents and businesses to participate. So far, only East Providence has signed on.
The architect of the green bank, General Treasurer Seth Magaziner, has been promoting a new version of the lending entity to the House and Senate in recent days.
The green bank concept isn’t new and Rhode Island’s is modeled after a similar program in Connecticut, which had the first in the country. The Rhode Island green bank, Magaziner said, would create hundreds of new jobs and millions of dollars in energy savings.
“Our families and businesses are burdened by some of the highest energy costs in the country,” Magaziner said during an April 28 hearing before the Senate Finance Committee.
He noted that Connecticut funds about $20 million annually in PACE projects. He said he expects Rhode Island to fund between $4 million and $8 million a year. Several banks, including Webster Bank of Waterbury, Conn., have expressed interest in participating in the Rhode Island PACE program. Magaziner estimated that the interest rate would between 6 percent and 7 percent.
Connecticut, however, only offers PACE to commercial entities. Magaziner said the Rhode Island program is one of the most robust in the country for offering business and residential loans.
If approved, the Rhode Island Infrastructure Bank could be operating by the end of this or early 2016, according to Magaziner.