The Tea Party Embraces Local Energy Efficiency Financing

(Legal Planet) While Congress flailed during the debt ceiling deliberations, Republicans Nan Hayworth (NY) and Dan Lungren (CA) co-sponsored the PACE Assessment Protection Act of 2011, along with 12 other Republicans and 11 Democrats. The proposed law tells FHFA to rescind its policy of withholding mortgage insurance for residential properties with PACE assessments, provided that the PACE arrangements meet certain standards. These standards include the use of a locally approved contractor, a home energy audit or feasibility study by a certified auditor prior to the PACE deal, and eligibility limited to property owners who have not been delinquent for at least the past three years on property taxes, among other safeguards.

Why would a Tea Party-supported member of Congress like Hayworth sponsor this bill? Much of it has to do with preserving local control and staving off federal intervention into local matters, typically a Republican ideal. But the benefits go beyond philosophy or political structure: energy efficiency retrofits save building owners money, create much-needed construction jobs, and clean our air. And they don’t require federal spending, since these measures pay for themselves over time. Certainly after the light bulb fiasco that Dan wrote about, it’s nice to see that some energy efficiency measures pass muster in a Republican-controlled House.


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Its time to stop the over-reach by Fannie and Freddie

By Reps. Daniel Lungren (R-Calif.), Mike Thompson (D-Calif.) and Nan Hayworth (R-N.Y.) - 07/20/11 12:05 PM ET 
 
Benjamin Franklin established the nation’s first special assessment district when he created the Union Fire Company of Philadelphia, a volunteer fire department. Today there are more than 37,000 special districts in the United States. Local governments use them to pay for everything from sewer systems to sidewalks to mosquito abatement — all in response to important community concerns.

In the last two years, 27 states and the District of Columbia have passed laws allowing their local governments to use existing assessment authority (also called special improvement districts) to help homeowners and businesses finance energy efficiency and renewable energy improvements. These laws, commonly called Property Assessed Clean Energy (PACE) laws, were hailed by Scientific American as one of the top 20 ways to change the world.

The idea of PACE is simple. It uses a traditional municipal finance tool to help property owners pay for the upfront cost associated with energy-saving improvements. Property owners then pay for the improvements on their property taxes over the course of up to 20 years. PACE has rapidly gained popularity because it solves a big problem — by eliminating the high upfront cost, it removes the biggest barrier to unlocking significant new investment in clean energy.

Because the assessment is voluntary, only property owners who can afford it sign up. And, like other tax assessments, it stays with the property upon sale. So if you use PACE to install an energy-efficient furnace or put solar panels on your roof, but sell your home, the new owner will assume the property tax assessments — and get the benefit of the lower utility bills. It’s not just a win-win situation, but win-win-win: Homeowners get the benefit of lower utility bills; workers in the stagnating construction industry get jobs; and the nation gets the benefit of increased energy efficiency and reduced energy costs.

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Jefferson City Creates Energy Board

KBIA --Posted Monday, January 10th, 2011 at 1:02pm

Less than a week after announcing the creation of a Clean Energy Development Board, Jefferson City officials say they’ve already received requests from citizens wanting to begin energy efficiency projects.


Jefferson City officials have created the first Clean Energy Development Board in the state. The board will help citizens and businesses fund renewable energy projects through the Property Assessed Clean Energy Act, or PACE. City officials hope PACE will encourage people to increase the efficiency of their homes.

 Although the Clean Energy Development Board is still in its infancy, city officials say they’ve already received more requests than they can process from citizens hoping to increase energy efficiency in their homes. Now, their offices aren’t overloaded with inquiries. It’s just that the Clean Energy Development Board is not completely set up at this time. But once the Board is fully in place, Jefferson City, city attorney Nathan Nickolaus says officials hope the city can lead others in the state to develop similar programs.

� “For it to work, it can’t just be in Jefferson City because eventually everybody who needed those kinds of things in Jefferson City would have them. You really kind of need new people coming into the system all the time. It’s designed to spread out from Jefferson City into all the surrounding counties.” 

 Now, energy efficient projects can be expensive. But helping people pay these costs is pretty much what officials say the board will do. People can purchase energy efficient appliances and add that payment to their property tax rather than paying for it all up front. Property owners then have up to 20 years to repay the taxes. Nickolaus says the board will eventually be self funding. He likens the way it works to a home mortgage.

� “The board will borrow money to pay the contractors who do the work, and then they will be repaid through the property taxes coming in. When they get a large enough pool of these contracts, they will refund those with a bond issue.”�

 And if you move after installing new appliances, whoever buys your home takes over the payments. Nickolaus says not only will this increase the value of people’s homes, but it will also increase the use of energy improvements.

 Every project that’s approved must show a cost-benefit analysis. More energy must be saved than the project costs. Nickolaus says 24 other states currently use the PACE program.

Jefferson City Council Authorizing PACE Clean Energy Development Board

Jefferson City, Missouri Press Release Announcing Creation of CEDB

Clean Energy Board-2

U.S. problems won't charge energy retrofit plans

As Vancouver works out a plan to begin financing home energy retrofit loans through its property taxes next year, the U.S. program on which it was modelled has come to a screeching halt after federal housing regulators raised concerns about the financial risk.

Municipalities in the U.S. that were giving retrofit loans to homeowners on the proviso they repay them as special assessments on their property-tax bills were shut down in July by the Federal Housing Financing Agency after it grew concerned the plan would put mortgage holders at greater risk of defaults.
Hundreds of towns and cities in 22 states had just started to loan out retrofit money under locally administered "Property Assessed Clean Energy" programs that required homeowners to repay the funds over 20 years on their tax bills. Those bills take precedence over conventional mortgages.

The federal agency, which administers the government insurance programs that underwrite most bank mortgages, said it was concerned large PACE loans could affect the ability of homeowners to pay their mortgages.

But one of the architects of Vancouver's similar "on-tax-bill financing program" said he's not worried about the American experience and promised the city will resolve those issues before it proceeds.

Deputy city manager Sadhu Johnston said Vancouver is aware of the PACE problems. But he said the city doesn't think they are an insurmountable obstacle for its plan, even though many details still need to be worked out, including whether taxpayers would be at risk in the event of a default.
"The bottom line is that we are looking to learn from the experiences there. A lot of what happened there is fallout from the meltdown in the mortgage industry. Everyone there is really skittish," said Johnston. "Our goal is to learn from what they've done and take those lessons and tweak the program."

Enviros Claim Feds Pulled Clean-Energy Plug

     Two federal agencies are trying to sink Property Assessed Clean Energy programs, which finance energy-efficiency changes for homes and businesses, the Natural Resources Defense Council claims in Federal Court. The NRDC says it has spent 2 years supporting development of PACE programs, but the Federal Housing Finance Authority and Office of the Comptroller of the Currency issued misguided directives this summer that could stop the programs in their tracks.

     "Defendants' actions, which have the effect of terminating existing PACE programs and curtailing the development of new PACE initiatives, will significantly set back efforts to address air pollution and global warming pollution from the electric generation sector," according to the complaint.

     Energy efficiency is important to combating global warming, making the electric grid more reliable, and reducing consumers' energy bills, but Americans need financing so they can afford to pay for better energy or to retrofit their homes and businesses, the NRDC says.

     "If PACE programs were to achieve a 3 percent penetration rate nationwide over the next decade, 3.3 million homes would be retrofitted, resulting in approximately 320 million metric tons of avoided carbon dioxide emissions," according to the complaint. "Assuming an average job cost of $15,000, these retrofits would also result in just under $50 billion of construction activity."

     The NRDC claims that PACE projects such as installing new windows or improving insulation can increase property value in the long term and bring many short-term benefits, such as decreasing a building's energy bills, increasing a property owner's cash flow and reducing the risk of default and foreclosure.

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PACE Presentation to U.S. Senate Committee

7.22.10 PACE Banking Committee PPT

NRDC Sues Federal Housing Regulators for Blocking Affordable Clean Energy Projects for Homeowners

NEW YORK, N.Y. (October 6, 2010) – Federal housing regulators must stop obstructing programs that make energy efficiency upgrades and renewable energy projects affordable for American homeowners, according to a lawsuit filed today by the Natural Resources Defense Council.

“Federal housing regulators are standing in the way of programs that make clean energy projects affordable for homeowners and lower electricity bills,” said Katherine Kennedy, Energy Counsel at NRDC. “It defies common sense that the federal government is blocking programs that could create jobs, jumpstart our economy, put money in homeowners’ pockets, and fight climate change at the same time. Instead of shutting them down, the federal government should help these programs grow.”

NRDC filed the lawsuit in federal district court in the Southern District of New York against the Federal Housing Finance Agency, which regulates government sponsored mortgage buyers Fannie Mae and Freddie Mac, and the Office of the Comptroller of the Currency, which regulates national banks. The agencies have halted clean energy financing programs—called Property Assessed Clean Energy (PACE) programs— that are already off the ground in California, Colorado and New York, and have been adopted in 20 other states and the District of Columbia.
NRDC Complaint

Property Assessed Clean Energy (PACE) program on the ropes

National Association of Counties: County News

By Julie Ufner
ASSOCIATE LEGISLATIVE DIRECTOR

As the clock ticks to the end of the 111th Congress, many local governments are anxious about the fate of the Property Assessed Clean Energy (PACE) program.

In July, NACo members passed a resolution at NACo’s Annual Meeting to support PACE programs. Since then, NACo has been lobbying with the National League of Cities and the U.S. Conference of Mayors in support of PACE programs.

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