solar policy

New Law Makes Sun Shine Bright For California PACE Solar Financing If And When It is Revived

in Off-grid Solar

Sacramento Solar News – A new law sponsored by state Rep. Jared Huffman, a San Francisco Bay Area Democrat, was signed by Gov. Arnold Schwarzenegger. Under PACE programs, cities, counties or other public agencies typically issue bonds to set up a funding pool to pay for the tax-assessed solar projects. PACE solar financing was halted this spring by Fannie Mae and Freddie Mac two giant wall street financial institutions that had to be propped up by US taxpayers.

The new legislation authorizes the state treasurer, the California Public Employees Retirement System, and the State Compensation Insurance Fund to invest in Property Assessed Clean Energy bonds for homeowners to finance solar panel installation.

State representative Jared Huffman and those that helped him are our American solar heroes for this week. This is one of many examples of government helping clear the way for new local jobs and a brighter economy for California. Now all we have to do is get the wall street banks out of our way. Read More –

New Ca law would boost PACE solar financing program now in limbo. Sunpluggers California Gov. Arnold Schwarzenegger has signed legislation that could help reduce the interest rates on tax-assessed financing for energy improvements such as solar photovoltaic systems.

The new law, AB 1873, allows three state investment pools to invest in bonds that support the programs often called Property Assessed Clean Energy, or PACE if and when this solar financing mechanism is revived.

Most such programs across the country have been put on hold because of opposition from the Federal Housing Finance Agency, the Comptroller of the Currency, and the mortgage entities Fannie Mae and Freddie Mac.

Under PACE programs, property owners who install solar PV systems, for example, can pay little or no upfront cost, and volunteer to pay a special property tax assessment for a period of time, often up to 20 years. If the solar owner moves, the solar array stays on the property and the tax payments are taken over by the new owner. This is a real easy safe way for solar financing.

The intent is that the energy savings realized from the solar installation would cover the cost of payments under the special tax assessment.

PACE programs were surging in popularity earlier this year when the government-sponsored mortgage enterprises Fannie Mae and Freddie Mac issued warning letters to lending authorities that effectively put a halt to them.

Fannie Mae and Freddie Mac, which together control much of the U.S. home lending market, objected to the senior lien status given PACE solar financing under many programs in the event of a foreclosure or payment default by a property owner. The agencies said they consider the financing mechanism to constitute loans, and the head of the Federal Housing Finance Agency has called the financing approach risky. Supporters have countered with statistics showing that users of PACE financing so far have had lower default rates on tax payments than other property owners.
Efforts to resolve the issues have not succeeded.

The California measure, sponsored by state Rep. Jared Huffman, a San Francisco Bay Area Democrat, authorizes the state treasurer, the California Public Employees Retirement System, and the State Compensation Insurance Fund to invest in Property Assessed Clean Energy bonds.

Under PACE programs, cities, counties or other public agencies typically issue bonds to set up a funding pool to pay for the tax-assessed projects. At the time PACE solar financing was thrown into limbo, nearly half the states had some form of the program in place.

Allowing three major California funds to invest in PACE bonds could potentially reduce the interest rates typically charged with PACE financing, making solar more affordable for property owners who lack the cash needed to buy a solar system outright and who would prefer to own rather than lease a solar installation.

In addition to potentially making solar electric systems more affordable, the bill was seen as a jobs measure and economic multiplier by some supporters. Its listed backers included the California Building Industry Association, the California Business Properties Association, the California Chamber of Commerce, the California State Council of Laborers, and the State Building and Construction Trades Council.

The Senate analysis said proponents asserted that making PACE solar financing programs “more attractive and encouraging local governments to use them will expand job growth at a time we most need it and also help the state meet its energy efficiency and renewable energy goals.”

An Assembly analysis said the bill’s cost to the state would be negligible. For technical reasons, the measure was linked to another bill involving the State Compensation Insurance Fund, one of the three major funds that would become eligible to invest in PACE solar bonds. Both bills were signed by the governor.

“According to the author’s office,” the Senate analysis said, “this bill intends to expand the AB 811 program [authorizing PACE solar financing] throughout the state by authorizing the State Treasurer, CalPERS and the SCIF to purchase local PACE bonds, thereby lowering the interest rates that local governments must charge homeowners, while simultaneously creating a new, secure income stream for the state of California.”

Solar Blog Footnote; PACE solar (photovoltaic) installation financing is good for California jobs and will help revive local economies. Photovoltaic panels make clean energy, require no upkeep and create local jobs. Solar installers everywhere should be telling everyone to support politicians who support PACE.