Most property owners wanting to improve the comfort of their homes and businesses, reduce water and energy costs, and reduce their impact on the environment have to consider the large up-front costs and limited payment terms before investing in these energy saving projects.
Property Assessed Clean Energy (PACE) programs across the country addressed the financial obstacles associated with energy efficient installations by eliminating up-front costs and allowing gradual repayment through the owner’s property taxes. However, in July 2010 a directive issued by the Federal Housing Finance Agency (FHFA) effectively suspended most residential PACE programs.
Multiple law suits have been filed, some of which have been dismissed. The California lawsuits have been combined and, after a favorable ruling by U.S. District Judge, Claudia Wilken, the combined suit is awaiting appeal by FHFA.
In the meantime, a bipartisan group of Members of Congress have initiated a legislative approach to solving the PACE issue. Representatives Dan Lungren (R-CA), Mike Thompson (D-CA), and Nan Hayworth (R-NY) introduced House Resolution 2599 on July 20, 2011. HR2599, also known as The PACE Assessment Protection Act of 2011, has garnered the bipartisan support of 48 House members, 20 Republicans and 28 Democrats.
The PACE Assessment Protection Act of 2011 aims to prevent Fannie Mae, Freddie Mac, and other Federal residential and commercial mortgage lending regulators from adopting policies that disregard established State and local property assessed clean energy laws and would guarantee that state and local governments maintain the right to levy taxes for public purposes.
HR2599 establishes strict guidelines intended to protect lenders. In return, federal regulators would be required to rescind prior guidance against local jurisdictions implementing or participating in a voluntary PACE program. Guidelines to establish an applicant’s credit-worthiness are outlined, as is the requirement for an energy audit. The energy and/or water savings realized would be required to exceed the amount of the PACE assessment.
Twenty-seven states have adopted PACE legislation. However, there are only a handful of programs currently offering financing. MPOWER is one of only five programs offering PACE financing for non-residential property owners in California.