+ RMA Rural Municipalities
of Alberta

Resolution 17-17F

Amendment to the Municipal Government Act to Allow the PACEAlberta Program

November 15, 2017
Expiry Date:
December 1, 2020
Active Status:
MD of Opportunity
4 - Northern
Planning and Development
Vote Results:

WHEREAS Alberta has demonstrated leadership as identified in the Alberta Climate Leadership Plan which is intended to address climate change and reduce greenhouse gas emissions; and

WHEREAS the Alberta Climate Leadership Plan is expected to raise $9.6 billion, all of which will be reinvested in the green economy and rebated to Albertans; and

WHEREAS Property Assessed Clean Energy (PACE) financing programs exist in the United States through which building owners and building developers can access 100% financing (for both hard and soft costs), which is repaid through their property tax bill and provides a public good by increasing the energy performance of their building(s), thereby decreasing their use of resources and reducing greenhouse gases (GHGs) generated by their buildings; and

WHEREAS PACE programs in the United States have created 42,200 jobs across 22 states since 2009; and

WHEREAS the groundwork for the PACEAlberta program has already begun; and

WHEREAS a change in provincial legislation would allow municipalities to participate in and/or develop PACE programs to enable citizens to access financing to increase energy efficiency and/or reduce resource use and GHG production on private property; and

WHEREAS municipalities in Canada are using alternative funding mechanisms to create opportunities for citizens to undertake energy retrofits; and

WHEREAS if all municipalities are granted authority for PACE programs, individual municipalities could either set up their own program or “opt-in” to a provincial PACE program operated by a third party organization which may significantly accelerate the economic stimulus and GHG reduction agenda; and

WHEREAS PACE programs can be financed in whole or in part by municipalities if enabled by provincial legislation through what is known as ‘refundable debt;’ and

WHEREAS many municipalities in Alberta have adopted sustainable community plans or strategies to address climate change impacts at the local level;

Operative Clause:

THEREFORE, BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties urge the Government of Alberta to amend the Municipal Government Act to allow municipalities to levy a special tax to fund environmental/energy efficiency/GHG reduction programs for property owners, or to add a stand alone provision that empowers municipalities to create and fund a PACE program;

FURTHER BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties urge the Government of Alberta to amend the Municipal Government Act to remove the restrictions on municipal loans which restrict PACE financing programs from being offered by municipalities to their constituents.

Member Background:

The MD of Opportunity No. 17 has been investigating different ways to aid and encourage residents to install alternative energy systems. Solar energy is a renewable resource available to the general public, unfortunately the purchase and installation of solar panels is still quite expensive. Alberta’s Climate Leadership Plan, through the carbon levy, provides a financial incentive for families, businesses, and communities to lower their emissions. Even though the Government of Alberta has a few grants available for people to upgrade their homes, the home/business owner would still need to front a large portion of the costs.

With a PACE program, the cost of purchasing and installing the solar panels would be borne by the building owner. A PACE program will also permit building owners to upgrade the energy and GHG performance of their buildings, thus further creating municipal value and jobs. The PACE financing is then added as a tax lien on the property, and the homeowner pays it back via a line on their tax bill. This lien stays with the property, so if the landowner sells their property, the responsibility of paying back the financing falls to the new landowner. The source of the funds used by the PACE program can come from private capital, public capital or both.

While the municipality does have to collect the taxes to give to the PACE administrator, they are able to collect a fee for their own administrative costs. The PACE program has a mandate to hire local contractors and construction workers. This will bring new skills to the communities throughout Alberta and will diversify our economy. The PACE program also can ensure that all landowners are able to afford solar panels and building upgrades by structuring the terms such that the PACE financing repayments come to less than their annual energy bills savings. Further positive returns on investment for the municipality are as follows:

  • If municipal funds are used for the PACE financing, they are not included in the municipal debt because it is 100% secured and recoverable and does not have an impact on the municipal debt ceiling
  • It improves the value of properties
  • It promotes economic and industry diversification
  • It improves property appraisal which positively changes property values
  • It is an investment which has an unquestionably positive return on investment for the municipality
  • It is tax neutral, it creates no additional cost to the taxpayer.

By examining the efficacy of American PACE programs, the successful programs have minimal legislative constraints which permits implementation and delivery to be adapted as circumstances evolve. It has also shown that successful PACE programs are financed by either or both private and public capital.

The groundwork for the PACEAlberta program has already begun. PACEAlberta has started researching the best practices for a PACE program, educating Municipalities on the benefit of a PACE program, and looking for Canadian investors. However, program cannot be implemented until amendments to the Municipal Government Act (MGA) have been made.

The Environmental Law Centre (Alberta) has put together several potential amendments to the MGA which would allow for a PACE program to be implemented. There are three sets of amendments that would need to be made; they are as follows:

Amendment 1

Option 1: amending Part 10, Division 7 MGA to allow local improvement taxes to be levied for “environmental/energy efficiency/GHG programs or other public good programs as determined by Ministerial regulation.”, and by amending ss. 395 and 397 to remove the requirement to identify the area of the municipality that will benefit from the local improvement.

Option 2: amending s. 382 MGA to allow special taxes for “environmental/energy efficiency/GHG programs or other public good programs as determined by Ministerial regulation.” and by amending s. 384 to remove the requirement that a special tax bylaw describe the area of the municipality that will benefit from the service or purpose of the tax and in which the special tax will be imposed.

Option 3: amending the MGA by adding a stand-alone PACE provision which would address the issues preventing PACE financing to be registered as a tax lien on the recipient’s property

Amendment 2:

Option 1: amending s. 264 so that a municipal loan can be made to an individual property owner or PACE administrator to support PACE programs.

Option 2: addressing this barrier through program design to avoid the municipality providing loans altogether.

Amendment 3:

Option 1: amending s. 268 of the MGA to indicate that a loan under s. 264 for the purposes of supporting a PACE program is deemed to form no part of the municipality’s debt for the purposes of calculating the municipal debt limit.

Option 2: amending the Debt Limit Regulations to indicate that loans for the purposes of supporting a PACE program are deemed to form no part of the municipality’s debt for the purposes of calculating the municipal debt limit.

The PACEAlberta program has already received support from Red Deer, Edmonton, Brazeau County, Drayton Valley and Devon. The provincial government is currently working on a city charter for Edmonton and Calgary where they are looking at allowing these two cities the chance to deliver a PACE program to their residents and business owners. This shows that the province is open to the idea of an Alberta PACE program. While the concept of piloting a PACE program for only the Charter cities has merit, permitting any municipality to participate in a PACE program, will significantly accelerate the economic job stimulus and GHG reduction agendas for all municipalities and the entire Province.

RMA Background:

The AAMDC has no active resolutions directly related to this issue.

Provincial Ministries:
Municipal Affairs,
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