President’s Clean Energy Initiative Could Jumpstart Residential PACE Programs Nationwide
This week, President Obama announced the Clean Energy Savings for All Americans Initiative to advance solar energy deployment across the country, particularly for low- and middle-income households. A center piece of the initiative is to give every American household the opportunity to improve energy efficiency and increase renewable energy use through PACE programs. PACE, or Property Assessed Clean Energy, is a way to help property owners pay for energy efficiency and renewable energy improvements over time through a property tax assessment, thereby removing the barrier of high upfront costs to homeowners and businesses. NLC has been a long-time champion of PACE.
The new Initiative is a collaboration among several government agencies including the U.S. Department of Housing and Urban Development (HUD), U.S. Department of Veterans Affairs (VA), and U.S. Department of Energy (DOE).
As part of the announcement, the Federal Housing Administration (FHA) issued a set of guidelines outlining how homeowners can purchase and refinance properties with FHA-insured mortgages. Due to ongoing concerns from the Federal Housing Finance Agency (FHFA), the guidance stipulates that PACE assessments will have secondary lien status, rather than first lien position ahead of a mortgage. Additionally, when the property is sold the PACE assessment will transfer from one property owner to the next, even in the case of a foreclosure.
Similarly, in order to provide opportunities for veterans to lower their bills, the VA is welcoming the use of PACE financing for VA-ensured mortgages.
Finally, DOE released a set of best practice guidelines for both new and existing residential PACE programs across the country, including guidelines for consumer and lender protections. DOE also plans to offer technical assistance and webinars for states and local governments to help design and implement PACE programs.
Together these provisions are designed to decrease the costs and increase the accessibility of PACE financing in communities. PACE holds the potential to unlock capital and jumpstart economic growth backed by the marketplace certainty of the Administration.
Currently, 32 states plus the District of Columbia have laws enabling local governments to develop PACE programs. While commercial PACE programs have flourished over the years in communities nationwide, residential PACE, notwithstanding programs in California and Florida, has stalled due to the opposition and concern from the FHFA that began in 2010. Today their position remains unchanged - homeowners with PACE loans will not be able to purchase or refinance their home with a Freddie Mac of Fannie Mae loan. While NLC continues to urge FHFA to allow local governments to develop PACE programs with senior lien status, this announcement and move by the Administration is a step in the right direction.
Additionally, as part of the President's Initiative, DOE announced the development of a Community Solar Challenge that will award communities up to $100,000 to develop innovative models to increase solar deployment and cut communities' energy bills, in particular in low-income communities.
In compliment to this effort, NLC is a partner in SolSmart, which will provide national recognition and no-cost technical support for local governments in promoting solar energy. The adoption and promotion of solar energy represents an increasingly viable and cost-effective means for helping cities nationwide address their climate goals. Local governments can play a key role in reducing the non-hardware "soft costs" of solar and do their part to foster the development of a mature local solar market.
Learn more: PACENation will host a webinar on "FHA's PACE Guidance Explained" to discuss the White House's new initiative to broaden the scope of residential PACE.
· Cisco Devries, CEO, Renew Financial
· David Gabrielson, Executive Director, PACENation
· Laurie Goodman, Co-Director of Housing Finance Policy Center, Urban Institute
· Ari Matusiak, Executive Vice President for Market Development, Renovate America
Tuesday, July 26th, 2:00PM EDT
Register here to receive dial-in information