Schwarzenegger approves funding for energy efficiency improvements
The effort to revive a home energy efficiency financing program that stalled this summer has a new recruit: Gov. Arnold Schwarzenegger.
This week he signed a law that will help route more funding to the Property Assessed Clean Energy program in California, which allows homeowners and businesses to use low-interest government financing to install solar panels, energy-efficient windows and insulation.
Participants of the popular program, known as PACE, use proceeds raised by local governments in bond sales to make energy-efficient improvements, usually with little upfront cost. The funds are paid back through long-term property tax assessments. The liens are attached to the home and roll over to the new owner if the original resident moves.
AB 1873 authorizes state agencies including the California Public Employees' Retirement System, the Pooled Money Investment Board and the State Compensation Insurance Fund to invest in PACE bonds. As a result, interest rates on PACE financing would probably drop.
The bill was co-sponsored by the Environmental Defense Fund and Sonoma County and authored by Assemblyman Jared Huffman (D-San Rafael). The law, part of a package of job-creation bills, goes into effect Jan. 1.
But it may remain mostly symbolic while PACE remains in purgatory, where it was sent after the Federal Housing Finance Agency said in July that the program was too risky. The regulator, which is also conservator to mortgage giants Fannie Mae and Freddie Mac, balked because PACE liens were given senior status to mortgages and other loans.
In the event of a foreclosure, PACE funds would be paid back first. Participants were also not required to submit to credit checks.
By then, the program had been adopted by roughly half of all states. Scattered communities have defied warnings that PACE participants would be shunned or squeezed by mortgage lenders. A national effort is underway to push through legislation to force the Federal Housing Finance Agency to give its blessing to the program.
In the meantime, the agency has been inundated with lawsuits. This month, the city of Palm Desert filed a federal suit to protect its PACE program.
-- Tiffany Hsu