PACE programs generally focus on cutting energy waste through insulation, leak-sealing, and more efficient furnaces, although some finance rooftop solar and wind as well. More than a third of the nation's carbon dioxide emissions come from buildings, so retrofits are an appealing step in fighting climate change, with the added benefits of creating local jobs and cutting utility bills for property owners.
The PACE Assessment Protection Act of 2010 would force the government-sponsored corporations to adopt standards that support PACE, based on Department of Energy guidelines. Yet the bill's author, Rep. Mike Thompson of northern California, hopes the legislation persuades Fannie and Freddie to accept a compromise before it's signed into law.
"I think we can do this without legislation, and I think we should do it without legislation," Thompson said in an interview. "PACE does everything from reducing greenhouse-gas emissions to creating jobs to reduce our reliance on traditionally generated energy. This is something that needs to continue. There are hundreds of jobs that have been created by this program."
The finance tool certainly has a lot of friends. It's been backed by $150 million in Department of Energy stimulus funding, the vice president's Middle Class Task Force, 23 state legislatures, governors such as Arnold Schwarzenegger, and mayors such as Michael Bloomberg. California Attorney General Jerry Brown sued Fannie and Freddie yesterday to defend the PACE programs, the largest of which are in California.
PACE programs let home and business owners pay for rooftop solar arrays, high-efficiency furnaces, insulation, and other improvements through a surcharge on their property tax bills, removing high up-front costs. Fannie and Freddie dislike that those tax assessments have senior lien standing to mortgages, even though analyses and pilot programs have found that energy efficiency and PACE programs can make borrowers more financially secure.
The bill would ban lenders from imposing penalties or stricter criteria on municipalities that use PACE; Fannie and Freddie recently told lenders to do just that. The bill would also prevent lenders from requiring homeowners to pay off assessments before refinancing their mortgages or selling their property.
Thompson said lawmakers and PACE advocates will meet next Tuesday with the Federal Housing Finance Agency, Fannie and Freddie's regulator. He's hopeful they can reach a resolution that lets cities and counties put programs back into action -- which would be much quicker than a lawsuit or passing a bill.
Thompson said there were no Republican cosponsors of his bill because he hadn't had time to seek them out. More than 15 Republican districts have municipalities using or considering stimulus-funded PACE programs, so it's possible the legislation will pick up Republican support. Rep. Steve Israel (D-N.Y.), a cosponsor of the bill, plans to introduce another measure that would promote PACE and complement Thompson's legislation, an aide said.
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