Considering the daily blow hards we see elbowing each other for their 15 min of fame on TV it’s hard to believe there is any agreement from Washington on anything let alone helping solar. It still doesn’t mark the Age of Aquarius, but two Republicans and a Democrat have joined forces to introduce legislation to revive a popular home solar financing program scuttled by Fannie Mae and Freddie Mac last year.
Called Property Assessed Clean Energy, or PACE, the home solar program pioneered by the city of Berkeley, California, allows municipalities to float bonds to finance the installation of home solar arrays and other energy efficiency projects. Homeowners avoid the five-figure upfront cost of going solar and pay back the money through an annual surcharge on their property tax bill, typically over 20 years. If an owner sells the home, the surcharge rolls over to the buyer.
PACE seemed to be a winner for everyone and a way to accelerate the home solar market while generating clean electricity and green jobs. In short order, 28 states and the District of Columbia passed legislation authorizing PACE programs.
Then last year, Fannie Mae and Freddie Mac, which now guarantee about 90% of residential mortgages, increasingly began to express doubts about the program, warning lenders that they might not accept loans that carry PACE liens. The reason: such property-tax liens take precedence over the mortgage in the event an owner defaults.
PACE supporters point out that such municipal financing schemes have been used for a century and that studies show the risk of default by solar-loving homeowners to be miniscule. In California at least, research has shown that a home solar array for water can actually raise property values.
Fannie and Freddie and their government overseer, the Federal Housing Finance Agency, wouldn’t budge and most cities and states shelved their home solar programs rather than put homeowners at risk of being stuck with mortgages they couldn’t refinance if they carried PACE liens.
Now, two House Republicans, Nan Hayworth of New York and Dan Lungren of California, have joined Rep. Mike Thompson, a California Democrat, in introducing the PACE Protection Act of 2011 to mount an end-run around Fannie and Freddie.
“If they’re not willing to fix it on their own, we’ll fix it legislatively,” Thompson, whose California Sonoma County district was home to one of the nation’s largest PACE home solar programs, said at a press conference Wednesday. “This is too important to our energy future, too important to job creation across the country and it’s the right thing to do.”
The bill includes a number of provisions to address Fannie and Freddie’s concerns, including requiring homeowners to hold at least 15% equity in their properties while limiting the size of projects to 10% of a home’s value. Local governments would also have to determine an applicant’s ability to pay the PACE surcharge and an energy audit would be mandated.
“We can make PACE advantageous for everyone concerned and allow for energy savings, improvements for the environment and the creation of jobs all at no net cost to our taxpayers,” said Hayworth.
Whether such protections will satisfy the Federal Housing Finance Agency remains unclear. “FHFA continues to have concerns with the first lien created by certain PACE home solar programs and the absence of effective consumer protections,” Corinne Russell, a spokeswoman for the Federal Housing Finance Agency, said in an email Wednesday. “We will work with members of Congress on the particulars of any legislation.”
According to a study released Wednesday by a pro-PACE group, if 1% of U.S. homeowners participated in the program and each installed a $20,000 custom home solar project, more than 226,000 jobs would be created along with more than $40 billion in economic activity and more than $4 billion in tax revenue.
“If you’re looking for a bipartisan, bicoastal, transcontinental effort to deal with the challenges of energy, the challenges of the economy and the need to create jobs, this is a win-win-win,” said Lungren, a conservative Republican. “Frankly it’s hard to figure out why someone would be opposed to this home solar financing program.”
Source: Forbs By; Todd Woody