There’s a federal program designed to help property owners improve the energy efficiency of their homes and commercial buildings. Its financing can reduce a homeowners’ energy bill by some $1,000 a year, lower carbon emissions by as much as four tons, and create jobs for home weatherization companies and solar panel installers.
So why are federally-sanctioned lenders Freddie Mac and Fannie Mae teaming up with the Federal Housing Finance Agency to kill it?
As much as you might think that “they create jobs” is a winning argument in these days of obstinate 10 percent unemployment, there’s actually another threat these lending giants fear. The program, known as PACE, allows local government to front an energy loan to property owners, who gradually pay it back through higher property taxes, a hike they can afford through their utility bill savings. To pay the upfront costs, however, local governments have to issue some bonds. It’s all well and good, unless — you guessed it — the property owner defaults, something the lending agencies are understandably wary about, especially because the energy loan take precedence before the mortgage. It’s like a high-stakes game of rock, paper, scissors. Grist has a good rundown of the objections to PACE programs here.
PACE has some big-time muscle behind it, including the California governor, the New York City mayor, Vice President Joe Biden, 60 House representatives and some $150 million in Department of Energy stimulus funds. As you might imagine, local governments are pretty pumped about it too — 23 state legislatures have come out in PACE’s corner.
So when, in recent weeks, FHFA essentially put PACE on life support in opposing the program, advocates leapt into action. California State Attorney General (and gubernatorial hopeful) Jerry Brown filed a lawsuit, saying Fannie, Freddie and FHFA were misrepresenting the facts. Residents and leaders in Babylon, New York held a rally last week to air their displeasure.
Now, Grist reports that FHFA is expected to announce any minute now whether it will let a 30-month, 300,000 home pilot project proceed, a compromise reached between the agency and two peeved House representatives who had drafted a bill to reign in the clean energy buzz killers and “bring them back into this universe.”
There’s a lot of dumb things that Fannie, Freddie and FHFA let fly in the years before the housing market collapse and foreclosure crisis. Here’s to hoping that a financially sensible and useful energy program does not end up paying the price of their baseless caution now. Once FHFA makes its official announcement about the PACE compromise, we’ll update this post.
Photo credit: Wayne National Forest