California Backs PACE Financing
PACE Financing Advocates Applaud California Governor Brown’s Leadership
Governor proposes reserve fund to address FHFA’s regulatory concerns; would help California homeowners finance clean energy upgrades
September 25, 2013 — San Francisco, CA — In an effort to revitalize Property Assessed Clean Energy (PACE) financing programs, California Governor Jerry Brown recently announced the creation of a reserve fund for PACE programs. The effort is designed to address the Federal Housing and Finance Agency’s (FHFA) concerns about PACE.
“We applaud Governor Brown’s efforts to resolve regulatory concerns and bring clean energy solutions to California homeowners,” said Adam Browning, Executive Director of Vote Solar, a non-profit advocacy organization.
Cisco DeVries, CEO of Renewable Funding, a company that administers PACE programs, said, “We are hopeful that this constructive engagement is a game changer and will help bring PACE to scale.” Cisco is the original developer of the PACE mechanism.
“Thirty-one states and counting have passed authorizing legislation for PACE programs, and commercial PACE is taking off around the country. There’s tremendous interest in PACE throughout the U.S., and we’re asked regularly about solutions for homes, so we’re immensely encouraged by this development,” said David Gabrielson, Executive Director of PACENow, a non-profit advocacy organization working on PACE programs around the country.
PACE programs allow homeowners and businesses to pay for clean energy improvements (such as installing solar energy systems, or energy-efficiency upgrades) through a property tax assessment, which is then repaid over a number of years. However, in 2010, the Federal Housing Finance Agency (which oversees Fannie Mae and Freddie Mac), claimed that PACE assessments violated securities agreements and jeopardized their interests. This action severely restricted PACE programs nationwide.
To ameliorate the situation and address these concerns, Governor Brown proposes to develop a reserve fund through the California Alternative Energy and Advanced Transportation Financing Authority, an existing state institution. Any PACE program that wishes to use the reserve fund would enter into an agreement to make FHFA whole in the event of a foreclosure. Participating programs would have to meet certain criteria.