The California Energy Commission pulled its funding for PACE on Wednesday, a result of a ruling against the popular lending program by the Federal Housing Finance Agency (FHFA). Earlier this month, the FHFA issued guidelines for Fannie Mae and Freddie Mac, the nation’s two largest mortgage lenders, stating that PACE programs could not take precedence over primary mortgages. That dispute has effectively killed PACE financing for the time being.
Property Assessed Clean Energy programs tie loans for renewable energy and home energy efficiency upgrades to property, and are then paid off through a voluntary increase in property taxes. 21 states have already signed legislation enabling PACE programs. The PACE model was invented in Berkeley, California to worldwide approval and now, in its home state, we see PACE’s life strings begin to unravel.
On Wednesday the CEC pulled $30 million in federal stimulus money it was using to fund PACE programs in five California counties, reports the New York Times. Those programs would have created 4,400 jobs and offset 187,000 tons of carbon dioxide emissions through 2012. In 2009, PACE in California was even expanded to cover water efficiency improvements.
California’s Attorney General (and gubernatorial candidate) Jerry Brown filed a lawsuit against the FHFA two weeks ago in an attempt to save PACE, and a group of representatives in Congress have introduced legislation that would at least temporarily override the FHFA.
Yet while PACE broils in controversy, valuable energy retrofit funding goes unused, and federal stimulus dollars come with an expiration date.
The state of California is by no means happy to cut funding. “FHFA’s and [Office of the Comptroller of the Currency's] recent direction flies in the face of over a century of lawful priority lien tax assessments issued by local governments to finance public benefits,” the CEC paper explaining its decision says.
At its next meeting on August 6th, the CEC will evaluate other ways to fund home retrofits in California.
Governor Schwarzenegger’s California Recovery Task Force has written the CEC asking for full reallocation of the PACE funding by September 30, 2010.