solar laws

PACE Solar Financing Is Heading For A San Francisco or D.C. Federal Courtroom

in Off-Grid Kits

PACE solar installation financing came to a smoking tire screeching halt earlier this year when wall street banks Fanny and Freddie felt their “executive compensation” was being local loan blocked. More than 100 cities and a dozen counties, representing an estimated 12 percent of California’s population, had been throttling up to participate in a PACE solar and home energy program called California FIRST.

Well since then, just about every responsible local government from Napa to New York has stepped up to turn it around. (With Jerry Brown leading the charge) PACE (Property Assessed Clean Energy) and the citizens of Ca and other states may finally have their day in solar court… err, Federal court.

To think local governments have to go to a courtroom to get the Wall Street Banks, which are financed by the federal government, out of the way of job stimulation is sad. This is not a government give-away program. It is a profitable way for homeowners to control their escalating energy costs while creating local jobs for local economies. I suppose at the end of the day that is what really threatens the Wall Street bankers.

Solar Financing Program is headed for court reports Lance Howland of Public CEO. A dispute between federal mortgage authorities and representatives of California’s solar and energy efficient financing programs has lawyers preparing for a showdown in federal court.

The conflict at hand involves a July declaration by the Federal Housing Finance Agency regarding state and local-level solar finance programs. PACE provides funding for energy saving capital improvement programs. Funds made available from these low cost renewable energy finance programs, residential solar installs and energy home improvements, are repaid by assessed charges on the homeowner’s property tax bill.

More than 100 cities and a dozen counties, representing an estimated 12 percent of the state’s population, had been poised to participate in an ambitious PACE solar and home energy program called CaliforniaFIRST.

The future of these programs was thrown into doubt by the FHFA after it issued a cautionary note in July. On July 6, the federal agency issued a statement warning municipalities about PACE solar financing. FHFA, which oversees the largest mortgage buyers nicknamed Fannie Mae and Freddie Mac, was concerned about future repayment of the PACE funds in the event of default.

The California Energy Commission then cancelled its plan to provide funding to PACE solar programs by using $30 million in Federal Stimulus funds. This decision forced programs like California FIRST and Palm Desert’s Energy Independence to be suspended. The State of California and individual municipalities then sued the FHFA for interfering with plans to fund solar and energy saving home improvements.

“It’s ironic that the city has to sue the federal government to remove an impediment to energy efficiency and conservation when residential and commercial solar installations are a central part of the Department of Energy’s policy,” said Palm Desert Mayor Cindy Finerty.

Reason Fanny & Freddie Oppose PACE Financing Reason Fanny & Freddie Oppose Pace

The city of Palm Desert became the newest plaintiff in the lawsuit filed suit against the Federal Housing Finance Agency. It is a complicated case that involves multiple municipalities, environmental groups, and states ranging from California to New York and Florida. The political waters of replacing large utility companies with solar home energy production run deep.

“The early indications are that the court would like to see this matter resolved promptly,” said Janill Richards, supervising deputy attorney general for California. The federal housing authorities filed a motion to consolidate the multiple solar financing lawsuits into one case. A case management conference is scheduled for Nov. 2 in U.S. District Court in San Francisco before Judge Claudia Wilken.

One issue is the location for a potential trial. “The federal defendants said the first choice would be California and the second choice would be Washington, D.C.,” said Richards.

Another issue before the court is whether PACE solar funding is repaid as a loan or as a tax assessment. PACE liens often have a 20-year amortization and are included on a homeowner’s property tax bill. The attorney general’s complaint says that under California law, liens resulting from PACE assessments take priority over mortgages.

“Certainly if the Federal Housing Finance Agency were to propose some reasonable resolution that would allow PACE solar financing to proceed, we would give it serious consideration,” said Richards.

Placer County may also join in the solar and renewable energy suit, said Richards. In March, the county launched a PACE program called mPower Placer, but suspended it four months later as a result of the FHFA directive. There’s a note on its website saying Power Placer can no longer accept residential solar financing or other applications.

In a letter to the FHFA protesting the federal directive, Placer County Treasurer-Tax Collector Jenine Windeshausen detailed the care that went into designing mPower Placer. The program included fiscal safeguards designed to reduce the risk of default by ensuring participants were in good financial standing.

Placer started its solar financing program after the Sonoma County’s pioneering PACE program in early 2009. It has resulted in impressive energy improvements and job creation.

In July, Sonoma County responded to the FHFA directive by thumbing its nose at the feds the Board of Supervisors voted to continue accepting applications. Two weeks later, the county sued the FHFA for threatening to cripple an innovative and secure way for property owners to make home solar installations and other home improvements that would reduce greenhouse gases and conserve water.

Sonoma County Energy Independence Program is still receiving applications, but at a slower rate than before. During the summer, most weeks saw between 10 and 20 applications filed with Sonoma’s PACE solar program.

In roughly 18 months of the program, Sonoma County has funded more than $45 million in solar installations and home energy improvements.

None of those solar or home energy improvements products have resulted in a foreclosure. That puts to the test the FHFA concern, said Jim Leddy, community and governmental affairs manager for Sonoma County.

While PACE proponents scrutinize developments in federal court, Congress may have a fix as well. Bills to restore PACE solar loans and home energy financing and overcome the FHFA objections have been introduced in the House and the Senate with bipartisan sponsorship from members of the California delegation. Solar installers and photovoltaic manufactures across the country would be ecstatic if that happens.