Property Assessed Clean Energy (PACE) financing is one of the awesomest clean energy programs out there. Basically, here’s the summary: 1) your solar power system (or energy efficiency upgrade) is financed through government-issued bonds*; 2) you pay the bonds back through higher property taxes for a decade or two to come; 3) you save more money on your electricity bill from day 1 than you pay in higher property taxes. Furthermore, if you decide to sell your house, the beneficial system just carries over to the new owner.
PACE financing started in Berkeley in 2008. In 2009, Vice President Joe Biden planned to roll it out across the United States. Then, in 2010, the Federal Housing Finance Agency cut the program off at the knees all across the nation with the claim that the loans posed an unacceptable risk to mortgage lenders, even though the program allowed homeowners to cut their electricity bills and electricity is one of the last things people decide to stop paying when in financial difficulties. The argument was based on the fact that the PACE loans attached to the properties as liens, which would make paying them back a priority over paying back mortgage lenders.
Despite no change in perspective on behalf of the Federal Housing Finance Agency, PACE programs have started to resurface across the US, including in the giant and sunny states of Florida and California. In the case of California, a $10 million fund has been set aside just in case a bank forecloses on a home with PACE-funded solar or energy efficiency improvements in order to take care of any losses that federal agencies would face in that case.
GreenFinanceSF, San Francisco’s PACE program, is now supposed to relaunch in early 2014. San Francisco Supervisor Mark Farrell has introduced a resolution to re-open the program and get back on the PACE wagon.
Notably, over 100 California cities have implemented PACE through the HERO Program, part of Renovate America, which was set up in response to the death knell to conventional PACE programs that was delivered by the Federal Housing Finance Agency. In April, as we reported at the time, the number was 41. In Western Riverside County, California, where HERO (which stands for Home Energy Renovation Opportunity) was launched in 2011, over $100 million worth of projects have been approved, involving over 530 contractors and created an estimated 2,500+ jobs. Talk about an economic success story!
"Time is on our side," Farrell told SFGate regarding his drive to restart GreenFinanceSF. "It would be a game-changer if the FHFA did an about-face, but there's already a real movement out there to push forward on this."
"I know San Francisco homeowners are eager to contribute to the city's greenhouse gas reduction goals, and this is a great way to do that and save money and create jobs for our local economy," said San Francisco Mayor Ed Lee.
And SFGate also notes that the federal government may actually change its stance on PACE sometime soon. "The Housing Finance Agency may soon get a new director, North Carolina Rep. Mel Watt. His appointment had been filibustered by Senate Republicans, but Democrats changed the filibuster rules last week, easing Watt's path to confirmation."
"We think he'll provide a fresh look at this when a fresh look is warranted," said Cisco DeVries, who drafted Berkeley's program.
*There is some variation in whom the financing partner is; sometimes it isn't the local government. In the case of GreenFinanceSF, it's going to be through private financing.