Advocates Expect Renewables’ Remuneration Comeback

By Published On: January 21, 2011

Hundreds of millions of dollars in muni financing to promote energy efficiency and solar retrofits on homes and small business largely may be thawing since the federal housing authority effectively froze the regional lending efforts (Current, July 9, 2010). Advocates of what are known as Property Assessed Clean Energy programs are hopeful that percolating state and federal measures will get the alternative energy financial blood flowing again. “It helps homeowners pay their utility bills, saves money, and creates jobs in communities,” Ted Flanagan, president of consulting firm Ecomotion, said of California’s and other state PACE programs. Moves to revive regional efficiency and renewable lending programs include enacted state legislation by Assemblymember Jared Huffman (D-Marin). His AB 1873 cleared the way for the California Public Employees’ Retirement System to invest part of its $200 billion portfolio in regional clean energy programs. CalPERS didn’t take a position on the legislation but invests in clean energy “because we believe the investments promise long-term, risk-adjusted growth” according to Wayne Davis, CalPERS spokesperson. It has invested $1.5 billion in clean tech. About “20 percent of that is in solar energy, much of it in California” he added. Another attempt to revive muni financing efforts is a federal pilot program under development by the Departments of Energy and Housing and Urban Development. Under this $25 million, two-year federal pilot project, up to 24,000 residences in select areas are to be awarded up to $25,000 each to increase energy savings or install solar panels to reduce residential fossil fuel use and carbon emissions. Just where the program, announced last November by Vice President Joe Biden, will be launched and when has not yet been decided, according to a HUD spokesperson. Another factor in muni financing advocates’ favor is that the President Barack Obama is expected to appoint a new head to the Federal Housing and Finance Authority. That agency oversees federal mortgage entities Freddie Mac and Fanny Mae. Those two semi-private/semi-governmental agencies are the entities that pulled the legal underpinnings from muni finance programs last year. That was because upfront financing was given to qualifying homeowners and small businesses and paid back by property assessments. The muni-backed financing also was at the head of the line in the event of foreclosure. The queue raised the hackles of the federal mortgage agencies flooded with billions of dollars of toxic mortgages. Also in play is legislation by Rep. Mike Thompson (D-CA), which aims to ensure that Fannie Mae and Freddie Mac promote the use of PACE. The bill, HR 5766, awaits a hearing in the House. Elsewhere, several lawsuits brought by Sonoma, Palm Desert, and others in California against FHFA—consolidated in the federal district court in Oakland—move slowly along. One of the claims is that federal housing agency regulation directly conflicts with the energy conservation policies of the Department of Energy and the White House. Lawsuits brought by munis in other states also could be consolidated in the federal court in Oakland, but a decision is pending, according to Phyllis Gallagher, Sonoma deputy county counsel. In the meantime, Sonoma County is the only region in the state still offering upfront financing for alternative energy retrofits in exchange for long-term property assessments. Sonoma County continues to issue loans to qualifying homeowners in exchange for long-term property assessments, which stay with the home. Sonoma, as of last week, had awarded $42.3 million to cover upfront costs of residential solar rooftops, air conditioning, and energy efficient windows, according to Jim Leddy, county spokesperson. It avoided the federal action principally because the loans are funded by the county treasury, not by private lenders. Another financing survivor is Palm Desert. Its lending program has been limping along since the Federal Housing Finance Authority last July rejected PACE financing on homes with federal agency mortgages. The city’s $6 million program has been “heavily stalled,” said Benjamin Druyon Palm Desert energy project technician. PACE programs helped fill a renewable financial void.

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