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Legislation, Legal Action Aim to Safeguard PACE

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Date: Aug 13, 2010

A row of single family homes

As property assessed clean energy (PACE) financing programs face an uncertain fate, the Alliance is supporting legislative action that would ensure a strong future for PACE.

As we reported in June and July, Fannie Mae and Freddie Mac rejected PACE financing, a program that helps property owners make efficiency improvements to reduce their energy use and save money. Fanie and Freddie claim that "senior lien" provisions in PACE violate their mortgage regulations. This position had a chilling effect on PACE programs nationwide, causing many municipalities to suspend current programs and indefinitely shelve planned programs — although a few programs, including Sonoma County’s in California, are determined to continue. Fannie and Freddie’s announcement was backed up by their regulator, the Federal Housing Finance Agency (FHFA), as well as the Office of the Comptroller of the Currency.

Negotiations have been ongoing between these entities, administration representatives, municipalities administering PACE-type programs, and organizations involved in PACE advocacy. Whereas most involved in PACE see a negotiated settlement with Fannie and Freddie as the ideal resolution to this issue, legal and legislative fixes seem to be the likely means for resolution.

Strengthening Congressional Support for PACE

The Alliance has been intimately involved with gathering support for legislation that would ensure the future of PACE financing programs. We also are working closely with interested organizations in D.C. and target states to secure Congressional support for such legislation. Bills that feature provisions to protect PACE financing include H.R. 5766, introduced by Rep. Mike Thompson (D-Calif.), and S. 3642, introduced by Sen. Barbara Boxer (D-Calif.).

On Aug. 4, the Alliance hosted a strategy meeting in a standing-room-only conference room, with dozens of participants calling in by phone. At the meeting, the Alliance and other pro-PACE organizations pledged to redouble their efforts at persuading lawmakers to support legislation that would ensure that municipalities around the country can choose to establish PACE-type programs.

August 31 Update: On August 31st Fannie Mae and Freddie Mac released announcements stating that they would not purchase mortgages for properties subject to PACE financing where that financing was acquired on or after July 6. Those who had PACE financing before July 6 will not be penalized - however if they wish to refinance, they will likely have to repay the PACE assessment in full first - or face some complicated refinancing requirements.

Those who would like to be involved in PACE advocacy or who have further questions can contact Tom Simchak at the Alliance.

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