Property Assessed Clean Energy
There has been a revival of pushing forward with PACE. Of all the government programs that have come out of this industry I have always been a fan of P.A.C.E.
PACE brings the idea of a private/government hybrid loan that is then transferred to the property tax, thus the name Property Assessed Clean Energy. The local government will guarantee the loan and the loan will be transferred with the property. It like a special assessment attached to the property tax and moves from owner to owner. The loan can be paid but not forgiven.
As the average homeowners here in the United States stays in a property for seven years. Many who have been in a financial position to invest in clean energy do not as there long term goals are not set and are uncertain of where they will live in the future. This gives them the ability to invest without having to worry whether they will get their investment dollars back should they decide to sell.
With the PACE program typically spread over 20 years most homeowners will see a dramatic reduction if not complete elimination for their current energy bill. The local area benefits by having clean energy for a number of years to come produced locally. With labor being provided by Americans it also give a boost to the local economy.
The loan does not add to the deficit and is attached to the property just as the upgrades are
Our local government the city of San Diego was one of the first to jump on board. Sounds almost to good to be true.
Turns out it was. The great minds at Freddie Mac and Fannie Mae killed it. While it was ok for them to dive us into this great housing crisis it is definitely not ok for them to write a loan for a house and not be in first position. The concern was that it flew in the face of underwriting (all the sudden they seem to care about such things) was unconventional and they were having none of it. While they can do little about current tax positions and assessments levied city wide they were none too thrilled with this new concept.
PACE was shot down dead in August of 2010. Mae and Mac announced they would buy no loans with PACE. As almost many loans in America are bought through them and others follow their lead, the PACE program was effectively dead. Anyone with a PACE assessment was levied a due on sales clause from that day on.
August 2011 HR 2599
PACE Assessment Protection Act of 2011
A bipartisan bill signed by 14 Republicans and 11 Democrats before the recess. It is thought more sponsors will come on board when congress reconvenes . It will be interesting to see how this will play out. While the legislature might like PACE can they force the hand of FHFA? Only time will tell.
http://online.wsj.com/article/SB10001424052748704534904575132123115802584.html
http://green.blogs.nytimes.com/2010/08/31/homeowners-must-pay-off-energy-improvement-loans/
http://www.fhfa.gov/webfiles/15884/PACESTMT7610.pdf
http://pacenow.org/blog/
Glen Gallo
858 922 7507
CSLB 956053