Santa Rosa Press Democrat – PD Editorial: Staying on PACE: Program still makes sense

The last time we checked, generating jobs remained high on the nation's priority list. So is weaning ourselves from traditional greenhouse-gas-producing energy systems.

The latest dire report by the Intergovernmental Panel on Climate Change shows, if anything, greater urgency is needed.

Therefore one would think that a job-generating program — one that began locally no less — that increases use of alternative energy and helps residents pay for energy-saving improvements to their homes would be praised and elevated. Instead, it's been penalized and marginalized for nearly five years.

But there's hope for the much-maligned Property Assisted Clean Energy program, which started in Sonoma County in 2009.

Nationally, the program has funded more than $50 million worth of residential energy-saving improvements — including solar panels, tankless water heaters, etc. — installations that owners repay, plus interest, over 20 years through their property tax bills and mortgages.

But the program hit a roadblock in 2010 when Fannie Mae and Freddie Mac said they would no longer buy loans on homes that are participating in PACE programs. Given that collectively Fannie and Freddie handle about 60 percent of the nation's mortgages, it was a major blow, one rooted more in irrational fear than reason.

It was not a surprise that, at that point, many communities suspended their loan programs, and funding applications for residential projects dropped by half. The problem is a Federal Housing Finance Agency finding that because PACE loans are based on liens that take priority over a mortgage if the borrower defaults, the loans pose a risk to Fannie Mae and Freddie Mac.

But two recent developments are restoring hope. First, Gov. Jerry Brown and state Treasurer Bill Lockyer have created a $10 million fund aimed at offsetting the loan program's potential impact on mortgages. California's new fund is designed to insure mortgage lenders against any losses they might face due to the energy loan program.

Second, Rep. Mike Thompson, D-St. Helena, is once again introducing a bill directing the Federal Housing Finance Agency to rescind the policy that led to Fannie and Freddie turning away from PACE-linked mortgages.

As noted in the Sunday story by Staff Writer Guy Kovner, the bill has failed twice before. But there's hope this time given that Republicans have signed on and that former Democratic Rep. Mel Watt has taken over as head of the finance agency.

Thompson is right when he describes PACE as "one of the most innovative and successful solutions to our nation's energy crisis." It's also one of the most promising ways that individual homeowners can make a difference — in cutting their energy bills and making a dent in that growing crisis known as climate change.

PACE deserves a fresh and free start.