New Hope for PACE Program
A recent federal district court ruling in California has revived the Property Assessed Clean Energy (PACE) program, a policy that allows municipalities to issue bonds to property owners as a way to finance the upfront costs of energy-efficient improvements such as solar panels. The program has been lifeless since July 2010, when the Federal Housing Finance Agency (FHFA) ordered Fannie Mae and Freddie Mac not to underwrite mortgages with PACE loans, as PACE liens are senior to home mortgages.
The court cited the FHFA’s failure to solicit public comment and ordered the FHFA to conduct hearings and open a “full-blown” rule-making process on the PACE program.
While PACE legislation has been adopted in 28 states, only three series of bonds have been issued to date. Advocates are hopeful that this new ruling will bring homeowners one step closer to finding a financing solution for clean energy projects. In California, there is extra reason for hope as legislators have taken an additional step to facilitate the issuance of PACE bonds. Enacted in October 2011, SB 555 expands the definition of PACE bonds to include bonds secured by a tax levied by community facilities districts, thus making clean energy projects acceptable improvements under the Mello-Roos Act.
For more information on the PACE program’s developments, see “Powerful Solar Financing Program for Homeowners Gets Reprieve,” in Forbes.
