PACE Update: Latest Bad Faith Move from Fannie & Freddie Highlights the Need for Congressional Action
Summer may be slow for most, but the attack from Fannie Mae, Freddie Mac and the FHFA on PACE green retrofit programs has not eased up one bit. Just last week these municipal programs for solar and efficiency upgrades on private property were dealt yet another blow when Fannie and Freddie issued guidance letters that threaten existing PACE participants.
This latest bad faith move makes it clearer than ever that Congressional action is needed to protect PACE.
Specifically, the letters now require PACE early adopters in places like Sonoma, California and Babylon, New York to pay off their PACE liens before allowing them to refinance or sell their homes. Fannie and Freddie are leaving upstanding homeowners with two unsavory options: fork over the full cost of their PACE energy upgrades or put any refinancing plans on hold for the 20 year period of their PACE terms. At best, the new policy unfairly punishes dutiful mortgage payers – and at worst it forces them to make financial decisions that actually put their mortgage status at greater risk.
The latest guidance letters directly reverse Fannie and Freddie's earlier assurances that they would not jeopardize existing participants. They are just the latest in a series of dubious moves from the lending giants.
Through several months of discussion, PACE advocates and government officials have worked to find points of compromise with Fannie, Freddie and the FHFA. All parties agree that PACE programs should be designed to mitigate risk to lenders. But over the course of those deliberations, it's also become painfully clear that positive resolution is not likely without an act of Congress. Both the House and Senate are currently considering bills that would cut through the quagmire to effectively restore PACE programs nationwide.
In attacking municipal PACE programs, the FHFA and its wards are also taking square aim at a century-old local government authority. PACE makes innovative use of a well-proven, low-risk finance mechanism called a "special assessment district." For over 100 years, municipalities and states have used special assessments to fund improvements that benefit the public good. Today there are 37,000 such special districts in the U.S. helping build everything from sewage systems to streetlights across public and private property alike. Cities and counties in 23 states are now enabled to use that same authority to combat the dual challenges of economic and climate crisis by financing green retrofits. By derailing PACE, the quasi-federal lending entities are standing in the way of local governments' ability to do their jobs and support their communities. We need Congress to defend against this undue power grab.
Ultimately, we have yet to see a comparable model that offers the same scope and scale of green job benefits and greenhouse gas reduction as PACE. This is an economic recovery issue. This is an environmental issue. This is a states' rights issue. And this is a bipartisan issue. When our lawmakers return to DC this fall, we hope to see Congress to make PACE-protective legislation a priority and help get this country back on track.
Here is a good resource for more information about efforts to protect PACE.
Rosalind Jackson is director of communications & development at Vote Solar. Rosalind manages media, member and donor relations for Vote Solar. Previously Rosalind spent five years directing and implementing PR campaigns for all manner of clean energy and sustainable business innovators. She has a degree in Environmental Science and Mass Communications from UC Berkeley.
Vote Solar is a non-profit organization working to combat climate change and foster economic opportunity by bringing solar energy into the U.S. mainstream.
The information and views expressed in this article are those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on its Web site and other publications.
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