There has been a flurry of PACE financing developments in the last few weeks. To quickly recap all the PACE program activity since our last post:
- On July 14th, California attorney general Jerry Brown filed a lawsuit against Fannie May and Freddie Mac for attempting to block PACE programs. In this lawsuit, Brown alleges that the FHFA violated the California law that authorizes municipalities to approve special assessments that benefit the public good. Additionally, Brown’s lawsuit alleges that the FHFA violated federal environmental law by not conducting a review of the potential environmental impact of restricting PACE programs. For more information, visit the article in the New York Times.
- On July 15th, 30 members of the US House of Representatives joined together to submit legislation (the “PACE Assessment Protection Act of 2010“) to Congress. The bill’s author, Mike Thompson of California, is optimistic that the proposed legislation will persuade Fannie May and Freddie Mac to compromise on their PACE stance without the need for lawmaking.
- Last week, Congressman Steve Israel (D-NY) proposed 30 month PACE pilot project that would allow up to 300,000 homes to test the FHFA’s concerns over increasing mortgage risk. The FHFA is now a week late (and counting) in announcing whether they will accept this proposal. More information on the PACE proposal here.
- On July 26th, Sonoma County in northern California filed a lawsuit in federal court that challenges Fannie, Freddie, and the FHFA’s claim to be the final arbiter of what constitutes an appropriate use of local tax assessments.
While the ultimate fate of PACE programs is still up in the air, one thing is for certain: PACE program advocates are standing up to the FHFA and Fannie/Freddie. Stay tuned for more information as the situation develops.
In response to the FHFA’s recent actions on PACE programs, our friends over at the Vote Solar Initiative have chosen to fight back! Below is their call to action to help fight the Washington DC bureaucrats to keep PACE financing alive. Click here to join the PACE fight.
Friends-
For the past several years, we have been working to establish innovative local financing programs (known as PACE) for clean energy retrofits. Can you take action to help save this promising approach to jumpstarting the clean energy economy?
PACE is under attack. In May, mortgage-giants Fannie Mae and Freddie Mac issued ‘lender letters’ suggesting that PACE is incompatible with their mortgage instruments. And this month the Federal Housing Finance Agency, which regulates Fannie and Freddie, issued a statement blocking PACE programs nationwide–and in effect directly challenging states’ rights to levy tax assessments for a public purpose. These actions are wrong on the merits and confused in their rationale, but have nonetheless forced existing PACE programs to a grinding halt and frozen progress on new programs under development in cities across the country.
Well, the Dark Side has had their say. Now we fight back. On Thursday, Congressman Mike Thompson introduced the “PACE Assessment Protection Act” to ensure states’ ability to implement PACE programs. We need support for the bill in order to save PACE. Can you help get your Congressional representative on board?
We engaged on the issue because PACE offers a clean energy vision of scale and scope unmatched by current financing efforts–it’s a workable way to quickly remove significant amounts of carbon emissions from nation’s existing building stock. Not to mention lower utility bills, jumpstart the economy, and put Americans to work.
Many people have toiled hard over the past two years to get these programs going – call it the Star Wars phase of the battle (we’re the small band of rebels in this scenario…work with us here). The past few months have been more like the Empire Strikes Back (in the sense of getting our butts kicked by the evil empire). And now, now it’s time for the Return of the Jedi (without Ewoks. that may be where the analogy breaks down). We’ve come too far to lose.
Many thanks for helping.
To the X-Wings-
The Vote Solar Team
Here at PACE Financing.org, we believe that PACE programs are one of those rare ideas where everyone wins and nobody loses – homeowners increase the value of their homes and save money on utility bills, the environment is preserved for future generations, and local green-collar jobs are created en masse. Started in Berkeley, CA and adopted by savvy local organizers in communities across the country from Florida to Hawaii and New Mexico to New York, PACE programs were beginning to emerge as one of the “green” economic drivers poised to lift local communities out of the recent recession.
However, in what appears to be a reaction to the fallout from the still-fresh housing bubble bust, on July 6th 2010 the FHFA (Federal Housing Finance Agency) issued a statement that has temporarily killed the growing PACE party. In direct opposition to the Obama Administration’s pro-PACE program $100M commitment, the FHFA’s anti-PACE announcement made clear that mortgages with PACE-financed loans would not be eligible to be purchased by federal mortgage giants Fanny May and Freddie Mac. This effectively has put a halt to new PACE program development throughout the country.
PACE supporters are working with the Obama Administration to see if a compromise is possible, but at least for the short-term it appears that PACE, the win-win-win concept, has been put on bureaucratic hold until the political process can sort itself out.
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Is the future of PACE financing in jeopardy? According to reports, PACE financing efforts in places like San Francisco have recently been suspended after federal mortgage holders Fannie May and Freddie Mac issued letters of guidance that indicated that they would not purchase mortgages that included a PACE lien. These letters, released earlier this year, focus on legal issues surrounding the primacy of the PACE lien on a residential mortgage.
Explanation: For over 100 years local governments have used their authority to assess and use tax revenues for improvements to the public good. Using the same authority, some local governments now offer PACE financing to individual homeowners for energy efficiency projects. This is where the debate arises. The way most PACE programs are set up, these voluntary individual property tax assessments are attached to the mortgage in such a way that they become the “primary” lien. This means that the local government is the first be paid if the homeowner defaults on his/her mortgage. If you think about it, this makes intuitive sense because making a house more energy efficient via PACE financing increases a homeowner’s cash flow, making them more likely to be able to afford their mortgage payments.
Continue reading PACE Faces Uncertain Future
 
Hi PACE supporters,
We are trying to get more people excited about PACE and we recently finished making a Wikipedia article at http://en.wikipedia.org/wiki/PACE_Financing. We also have a Facebook page for PACE Financing. Check it out! And feel free to become a fan of the Facebook page and please take a moment to edit or add content to the Wikipedia page.
Remember to keep posting updates, questions and comments here too! We love hearing from you.
To all readers: We are looking to feature a few stories on this website of real people having real experiences with a PACE program in their city. As there have been many outstanding PACE programs across the country, we know you’re out there somewhere. So if you have had a successful experience with a PACE program in your area, or know of someone who has, we want to hear about it! Contact us through the blog, or through any of the contact forms on this site, and we’ll make sure your story gets heard!
“Originality and initiative are what I ask for my country.” – Robert Frost
So who is the originator and innovative mind behind PACE financing? Cisco DeVries, the chief of staff to Berkeley’s mayor, realized that upfront costs of solar panels were a major reason that more people in the Bay Area were not taking advantage of energy efficient home improvements. As a way to help achieve the Bay Area’s climate goals, he came up with the PACE idea to cover the upfront costs of green-tech retrofits, through an increased property tax over a 20-year period. In order to make this happen, California had to pass a legislative code which allowed counties and municipalities to set up loans for renewable energy. This eventually opened the door for the BerkeleyFIRST climate program which was formed in 2008. PACE programs have been spreading throughout the country ever since then with great success.
Just to make it clear: we are not PACE. PACE isn’t an organization, a business, or any kind of institution; it’s a set of legislative guidelines to form energy efficient municipal programs. Local governments will adapt the principles of PACE according to the specific needs of their constituents. This is why you see programs with different labels that follow PACE legislative guidelines [such as BerkelyFIRST or The ClimateSmart Loan Program in Boulder]. Here at pacefinancing.org we are passionate supporters of PACE programs across the nation. Although we didn’t originate the PACE financing legislation, we want the average consumer like you to be able to take advantage of the benefits PACE programs offer.
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This being the first official blog post for PACE financing, we thought we’d introduce ourselves, the objective behind this forum and the PACEfinancing blog itself.
We are a group of students involved in social entrepreneurship from Brigham Young University, and interns for Virgance. We are currently working, under the direction of 1Bog, to develop the PACE Financing website and blog. Our main goal is to make the PACE Financing blog and website as useful for you as we can!
The purpose of PACEfinancing.org is to tell consumers what PACE is and how it can benefit them. This website should be a place where you can come to get updates on PACE financing, find contacts in your region and contribute your own experiences, advice and questions. If you are interested in making green improvements to your home, this is the place to find out how PACE programs can help you!
We are excited to help people with a green vision make use of the resources available to them and save money while also living a more sustainable lifestyle. Help us help you: Please leave comments, suggestions, questions, etc. We want this site to meet your needs in understanding and accessing PACE programs in your area!
Again, this is meant to be a collaborative forum, so add comments, ask questions and get involved. . . Let’s make this happen!
-The BYU Virgance Team
Welcome to our new resource for PACE Financing! We hope that this will become a useful repository over time. A group of Brigham Young University students are helping put the information together. Watch this space for updates.
In the meantime, we’re throwing what we’ve got on the home page.
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