New Life for PACE: Legislation Presented for Solar Financing Program
If you've been following or involved in the PACE discussions, you are aware that the merits of the program have been subject of debate for over a year now. In short, PACE stands for Property Assessed Clean Energy and is a way for homeowners to install solar panels with no down payment and gradually pay back the cost to the local government through a tax supplement.
Best of all, this program does not use taxpayer money, leveraging private investment through bonds, while providing work for a wide range of local small businesses and building an infrastructure of renewable energy. Unfortunately, as of last summer, mortgage lenders, Fannie Mae and Freddie Mac (as well as the overseers in the Federal Housing Finance Agency) have balked at the prospect of increased risk from a first lien on the property and refused to underwrite any homes participating in the program.
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Last week PACE may have been given new life as a bipartisan trio in the House of Representatives proposed the PACE Assessment Protection Act of 2011. As a revamped and edited version of its former self, the bill continues to gain traction and already has the backing of at least fifteen co-sponsors. In an article by Rosalind Jackson published by GreenTechMedia, she outlines the successes of the bill:
It undoes the damage. The Bill rescinds the 2010 guidance from the FHFA, OCC, Fannie and Freddie that derailed PACE in the first place. It further prohibits these groups from discriminating against homeowners and communities participating in PACE programs.
- It resolves the legal question. Much of the FHFA's legal arguments against PACE have been founded in the erroneous assertion the programs administer loans rather than assessments. This isn't semantics -- a loan is the purview of the FHFA, but an assessment is a century-old constitutional right of local government. This bill correctly defines PACE as an "assessment" rather than a "loan" once and for all.
- It virtually eliminates risk to Fannie and Freddie. Nobody wants to see these entities, already over $150 billion in debt with taxpayer dollars on the line, go further into the red. The bill establishes national PACE program standards to further reduce the chance that a participant would default, including criteria such as participant underwriting, consumer protections, qualifying improvements and qualifying contractors.
Representative Dan Thompson (D-CA), one of the Bill's original sponsors, said in a press conference that "This is too important to our energy future, too important to job creation across the country and it's the right thing to do."
From all indications so far, it seems that Congress is serious about rebooting the PACE program in a form that protects mortgage lenders while still promoting and increasing the accessibility of solar energy. We'll stay tuned to see in what form the bill leaves the Hill.