Federal lender guidelines slowing local efforts for home energy upgrades
By Bob Berwyn
SUMMIT COUNTY — Sen. Michael Bennet, a Colorado Democrat, is asking the Senate Finance Committee to clarify the terms of a loan program that helps homeowners finance energy efficiency improvements.
The Property Assessed Clean Energy (PACE) financing concept was established by local communities to help homeowners overcome the high upfront costs of energy efficiency upgrades by allowing property owners to borrow funds from participating local and state governments. Those funds are then repaid over a 15 to 20 year period through an assessment attached to their property tax payments.
Summit County has set up a program along those lines that’s administered by the High Country Conservation Center. But Fannie Mae and Freddie Mac last month issued a lender guideline letter that complicated those efforts by suggesting it won’t accept notes with energy project loans attached.
According to Bennet, the lender guidelines have virtually stopped PACE programs around the country. If the issue isn’t resolved, Bennet said he will ask for a Senate hearing on the issue.
“PACE has helped make our homes more energy efficient, created jobs and lowered utility costs for Coloradans – it’s a win-win-win,” Bennet said. “But Fannie and Freddie are complicating the effort by introducing a degree of uncertainty that has all but brought the program to a halt. We need to develop a path forward that allows Colorado communities and homeowners participate in PACE in the future and moves Colorado’s clean energy economy forward.”
Assistant Summit County manager Thad Noll recently said state officials are also working on a response. He said he doesn’t think the Fannie Mae letter will affect the local program.
The program does put the local energy loan ahead of other debts, but that’s a financing tool that already used commonly to help pay for special improvements. For instance, the Summit Estates subdivision recently formed an improvement district to pay for road improvements.
Just like with the energy loans, the county borrows the money to pay for the work up front, contracts to have the work done, then collects the money with a property tax assessment in a mechanism that’s authorized under state law.
In his letter to the Senate Finance Committee, Bennet points out that the Fannie Mae and Freddie Mac guidelines conflict with other federal initiatives and put at risk the ability of local governments to levy taxes for public purposes.
“PACE programs create jobs, lower homeowner utility bills, reduce carbon emissions and help our country become more energy independent. PACE is a national policy priority with strong support from Congress, the Vice President, Governors, and others. PACE is authorized in 22 states and hundreds of local governments are developing programs, supported by over $100 million in federal funds,” Bennet wrote.