Thompson promotes PACE protection
A legislative solution to an administrative roadblock that threatens one of the most successful energy efficiency programs in Sonoma County history would remove current restraints on the PACE program imposed by housing giants Fannie Mae and Freddie Mac.
PACE, which stands for Property Assessed Clean Energy, is a federal act that gave birth to the Sonoma County Energy independence Program (SCEIP).
Through PACE, and subsequently SCEIP, the county crated a $100-million loan fund to finance permanent property improvements - such as energy-efficient heating and cooling systems, cool roofs and improved insulation - that are then repaid through property tax increments at fixed interest rates over periods of five to 20 years.
Sonoma County has already funded more than $47 million worth of projects for 1,683 applicants and hundreds more area waiting in line. But last year, the Federal Housing Finance Agency - along with Fannie Mae and Freddie Mac - issued "advice letters" that halted the PACE program because the federally-chartered mortgage lenders feared that PACE loans, because they have lien priority, would be first in line in the case of foreclosures and would therefore put Freddie Mac and Fannie Mae at risk. States argued that the loans are only assessments, mortgage instruments and foreclosures on PACE homes are far less frequent than on homes outside the program because PACE borrowers are more invested in their homes' futures.
But federal housing authorities were unswayed. Now, Rep. Mike Thompson, D-St. Helena, has joined with Rep. Dan Lundgren, R-Gold River, and Rep. Nan Hayworth, R-N.Y., to introduce the PACE Protection Act of 2011, which would guarantee that PACE assessments will only be allowed for credit-worthy applicants, and that improvements must be revenue positive.
Benefits of the PACE program, according to Thompson, are substantial.
"PACE programs are an important part of the push to create a green economy and reduce our reliance on foreign oil," Thompson said in a July 15 email. "They create jobs, and are an exciting way for homeowners to reduce their energy bills while also reducing greenhouse gas emissions. This is especially important in California, which has already taken significant steps to ensure that PACE programs are available to 70 percent of Californians ... And our district has been a national leader in getting these programs up and running - lending institutions should not interfere with these great green energy programs."
Notwithstanding threats by the federal lenders that they will not approve mortgages saddled with PACE loans, the Sonoma County Board of Supervisors voted to ignore the federal threat and proceed with SCEIP. So far the county program has received applications for 1,334 energy efficiency projects, 54 water conservation projects and 881 power generation projects out of a total of 2,270 applications. Ten new applications were approved in the past week.
Lundgren, a conservative Congressman from the Central Valley, described the PACE protection legislation as "bi-coastal and bipartisan. It doesn't put government on the hook ... It's not Democratic, it's not Republican, it's not conservative or liberal. It's just plain common sense."
First District Supervisor Valerie Brown, who has been one of the county's leading proponents of PACE, said 27 other states have passed PACE programs. "We had a 7 percent increase in construction jobs," she said. "Non-PACE states had a 2 percent reduction."
Thompson said predicting a passage timetable for the bill would be difficult but that he hopes to see passage by the end of the year.