When the Federal Housing Finance Agency (FHFA) issued a statement in July 2010 that threatened continuation of Property Assessed Clean Energy (PACE) programs, Sonoma County, Calif., barely missed a beat. Several local governments ended or suspended their programs that finance home energy improvements, but Sonoma County was back in business in a week. And then, the county filed suit against the feds.
That kind of commitment to PACE is hardly surprising in Sonoma County, the first in the nation to launch a countywide PACE program. Since its debut in March 2009, Sonoma’s Energy Independence Program has helped more than 2,800 residences install energy improvements such as solar panels, insulation and more efficient windows.
As a result, homeowners use less energy and save money on utility bills, Sonoma officials say. There are also other benefits, including “the health and comfort improvements on their homes that are almost impossible to monetize,” says Liz Yager, program manager for the county’s Energy Independence Program.
PACE allows homeowners to finance the upfront costs of energy improvements with bonds from local governments repaid through property tax assessments, essentially a lien on the property. But PACE programs across the country stalled when FHFA said that local governments holding a first lien on PACE homes pose a significant risk to federal mortgage giants Fannie Mae and Freddie Mac. The agency advised Fannie Mae and Freddie Mae to refrain from underwriting mortgages that contained PACE assessments, a warning that could dissuade homeowners from participating in PACE programs for fear that it would prevent them from refinancing or selling their homes.
Several environmental groups and local governments, including Sonoma County, filed suit against FHFA. In January, a federal court ordered FHFA to take public comments before making changes to its approach to PACE. The comment period ended in March, and FHFA is expected to issue a proposed rule in late April, with another comment period to follow.
Sonoma County officials say their PACE program is proceeding even under the FHFA shadow. “Right now, we are funding projects,” Yager says. “There are people still participating in the program.”
Yager cites the program’s economic impact, especially for construction and energy contractors in Sonoma County, located about 50 miles north of San Francisco. “Jobs have been a huge component of the program,” she says. County officials say that during three years, the program has financed contracts worth almost $56 million and saved or retained 682 jobs.
The biggest impact may be on the environment. In one example, county officials say new solar installations have generated 7.7 megawatts of energy, the equivalent of removing 800 cars from the road. “We are proud that we have been able to have such a profound effect on the environment in these difficult times,” the County Board of Supervisors said in a letter of support for the PACE program.