August 12, 2010
Agency needs to pick up PACE
The owner of a 1920s bungalow in Golden Hill, my constituent Jason Ford has wanted to install solar panels to lower his energy bills and raise the value of his house. But the up-front cost has always been too much. "I don't have thousands just sitting around," he said. "And what if I moved? I'd never recoup that money."
Enter the Property Assessed Clean Energy (PACE) program (highlighted recently in the San Diego Union Tribune), which finances energy efficiency projects through property taxes. This helps people like Jason, who would not otherwise be able to afford these forward-thinking retrofits (let's call them 'future-fits'). Jason enrolled in PACE because, "the city of San Diego was behind it, the State was behind it, and it would benefit me. This is what government should be."
But Jason's plans along with those of other San Diego business and homeowners participating in PACE have been halted. The Federal Housing Finance Agency (FHFA) and the mortgage backing giants it oversees, Fannie Mae and Freddie Mac, are threatening to keep the program from ever getting off the ground in our region and have frozen PACE programs nationwide.
The FHFA claims that PACE constitutes a first lien on the home putting lenders at risk having to wait for their payment. But the true risk is that San Diegans like Jason and business and homeowners across the country stand to miss out on a program that will save them money and create jobs in our communities.
While FHFA and Fanny and Freddie's caution is understandable, their justification on blocking this program is misplaced. They say the loans required through PACE would be too risky. Simply put, PACE assessments aren't loans. They are property assessments that get paid off over time, just like assessments that have helped infrastructure improvements in our communities for years - like sidewalks, sewage systems, and schools. PACE applies the same time-tested process, but it does so in an innovative, 'future-fitting' way.
The shortsightedness of FHFA and Fannie and Freddie is sorely disappointing. Existing PACE programs have proved to be an effective way to get Americans back to work, and if the program is stopped the FHFA will have shot one of its own government's job-creation efforts in the foot. Meanwhile, when other countries like China are spurring innovation and growth in clean energy, how can we expect to compete globally if a low-risk program like PACE is discouraged or ended?
I'm hoping for a positive answer to a letter I sent to FHFA Acting Director Edward DeMarco urging consideration of the importance of PACE to communities like San Diego, and my colleagues and I have been working hard with the Obama Administration to find a solution to this roadblock. One jumping off point is the "PACE Assessment Protection Act," which I cosponsored. The bill would make lenders adopt standards that support PACE programs rather than conflict with them. It would require PACE assessments to be viewed as other property tax assessments and thereby would not conflict with FHFA standards.
San Diego is poised to become a leader in solar energy. Two of the world's solar energy leaders have announced plans to bring new solar technology and green jobs to San Diego. The Sanyo Electric group has begun a three year, $3 million partnership with the University of California, San Diego on next-generation solar energy systems, and Kyocera, a solar cell efficiency company, has started up a solar module manufacturing plant in the city.
The potential for success of the PACE program in San Diego can only improve our region's chances of becoming that leader. Rest assured, I will continue to support PACE so San Diegans like Jason can take advantage of programs that make sense, both for them and for our economy's future.