LA Business Journal: Keep PACE with Hispanic Business Growth
July 6, 2018
As the old saying goes, the only way to eat an elephant is one bite at a time. We know California’s climate goals are of mammoth proportion.
We also know the success of those goals will lie in many small, but significant steps that give every Californian – including its small and Hispanic-owned businesses – a chance to live green, increase revenue and ultimately contribute to the target set by law.
The reality is that if emission reductions are to hit 40 percent by 2030 and twice that by 2050 – goals that would include making the state’s 14 million buildings twice as energy efficient – all California residents and businesses must be able to participate in an accessible, cost-effective manner.
One of the smaller but impactful steps to achieving this goal involves an innovative financing program known as PACE (Property Assessed Clean Energy) which is enabling millions of Californians to become more energy efficient and resilient through property improvements. From air conditioners and windows to seismic readiness, PACE is helping thousands of residents realize improved property values, save on energy costs and, for businesses, boost their bottom line.
Affordable ways to reduce energy costs are critical to small businesses. In fact, U.S. small businesses currently spend more than $60 billion a year on energy, with 25 percent of them singling out energy expenses among the biggest business costs incurred.
For many of California’s Hispanic-owned businesses, being able to participate in energy efficient upgrades and seismic safety requirements depends on the low-interest rate financing made available with the PACE program. And, instead of having to bankroll the entire costs upfront, PACE allows property owners to pay off building upgrades through their tax bill over a 20- to 30-year term. The money saved over that time can be invested back into where it matters most: their business, employees and the communities they serve.
Hispanic business participation in making these improvements is essential, especially given their economic impact. A recent UC Riverside Minority Business Ownership study found that Hispanic-owned businesses comprise 37 percent of all businesses in inland Southern California — Riverside and San Bernardino counties — 23 percent in California and 12 percent across the U.S.
The analysis also shows no signs of slowing, with the growth rate of Hispanic businesses at two to three times the national average. The needs of this population to have access to affordable programs for energy efficiency and resiliency as offered by PACE makes a difference in their overall and continued contribution as the fastest growing source of new businesses in California.
In fact, in Riverside and Los Angeles counties alone, PACE financing provided $27.1 million for energy efficiency projects, abated 333,000 metric tons of CO2 emissions and created over 4,200 jobs. Ultimately, we need to ensure our economic growth is inclusive and access to affordable financing tools is part of the solution. California should be doubling down on programs like PACE which are demonstrating that good environmental policy can be effective economic policies, too.
Often-overlooked by state regulators and policy makers are micro businesses that are home-based, many of which are Hispanic-owned. In fact, The Stanford Latino Entrepreneurship Initiative found that nearly half of all Latino business owners in the U.S. are millennials aged 18 to 35. The benefits to this community cannot be overstated as PACE is the only avenue to affording energy efficient upgrades for entrepreneurs with in-home businesses, often working on shoestring budgets.
Without a doubt, it will take many small bites to achieve the state’s ambitious climate goals. Providing easy and affordable access to programs like PACE gives everyone a seat at the table and a chance to participate in this worthy mission.
Julian Canete is president and chief executive of California Hispanic Chambers of Commerce.