U.S. Reps. Mike Thompson (D-CA-5), Pete King (R-NY-2) and Sean Patrick Maloney (D-NY-18) introduced the bipartisan Property Assessed Clean Energy (PACE) Assessment Protection Act of 2014. The legislation, HR 4285, helps spur local job creation and increase energy efficiency by enabling State and local governments to develop and implement PACE programs through local government financing of residential and nonresidential energy efficiency improvements. PACE programs -- currently available in 31 states and the District of Columbia -- allow property owners to finance the purchase and installation of energy retrofits to their homes and businesses and then pay for them each year as part of their property tax.
"Not only is PACE one of the most innovative and successful solutions to our nation's energy crisis, it's a proven job creator that saves property owners money by lowering their energy costs and maintaining, and in some instances increasing, the value of their homes and properties," said Thompson. "With PACE, homeowners and businesses' utility costs are lowered, people are put to work, and our nation gets the benefit of reduced energy use, increased energy independence and a cleaner environment -- all at no cost to the taxpayers. Our bill will allow every community in America to take advantage of this great program."
"I am proud to support legislation that allows homeowners to continue to use the PACE program to finance clean energy upgrades, which creates jobs and lowers energy costs for consumers," said King.
"With my neighbors already facing astronomical energy costs, we need to get rid of needless bureaucracy and start helping our homeowners invest in the technology of the future," said Maloney. "Communities like Bedford, Somers and Pound Ridge are leading the nation to reduce energy consumption through PACE financing, and we need to cut through the red tape to ensure they can continue create jobs and increase energy efficiency by expanding this innovative program."
Specifically, the PACE Assessment Protection Act would direct the FHFA to rescind its 2010 policy guidance that directed Fannie Mae and Freddie Mac to discontinue guaranteeing mortgages with PACE assessments. FHFA issued this policy guidance because it was concerned that if properties with a PACE assessment went into foreclosure, the PACE assessment would be repaid before Fannie Mae and Freddie Mac, which insured the mortgage. This policy guidance treats PACE differently than any other assessment. Under many state and local laws, most assessments, like property taxes and home owner association liens, are repaid before the government-sponsored enterprises (GSEs) and other mortgage holders. To address FHFA's concerns, the bill establishes minimum underwriting standards to ensure that homeowners are able to afford the PACE assessments, thereby protecting Fannie Mae and Freddie Mac from financial risk.
Because a majority of new mortgages are underwritten by Fannie Mae and Freddie Mac, homeowners have essentially been unable to participate in PACE. If they did choose to participate in PACE then attempt to sell their house, a potential buyer would not be able to get a mortgage for the home because Fannie Mae and Freddie Mac could not insure the mortgage. This has caused PACE programs to be effectively halted throughout the country.
PACE is a voluntary program that allows state and local governments to work together to meet the economic and environmental needs of their communities at no cost to taxpayers. The program is not mandated by Washington, D.C. so communities, which know better than Washington what suits their local needs, can make PACE work for them.
In Sonoma County, California, which has one of the most successful PACE programs in our country, PACE has been responsible for more than $53 million in local investment and has helped create and support more than 700 jobs.
The legislation is supported by the U.S. Conference of Mayors, National League of Cities, California State Association of Counties (CSAC), and the Solar Energy Industries Association (SEIA).
HR 4285 has been referred to the House Committee on Financial services.