LEGAL SETBACK FOR MORTGAGE-FINANCED NEW ENERGY

Another PACE Setback: Court Dismisses Suit, Leaving Uncertainty

Jessica Lillian, 26 March 2013 (Solar Industry)

“…Residential property assessed clean energy (PACE) finance, which allows property owners to pay for solar installations and other energy efficiency improvements through their property tax bills, has been essentially sidelined by mortgage-related legal complications for the past few years. Unfortunately, the most recent court decision failed to raise the hopes of PACE supporters.

“Last week, the Ninth Circuit Court of Appeals in California dismissed a case filed by Sonoma County, the State of California and other parties to challenge the legality of action taken by the Federal Housing Finance Authority (FHFA) to curtail PACE back in July 2010…According to the 2010 statement from the FHFA, which serves as the conservator for government-sponsored enterprises Fannie Mae and Freddie Mac, PACE loans pose ‘significant risk to lenders and secondary market entities, may alter valuations for mortgage-backed securities and are not essential for energy conservation.’”

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“At the time, the agency also questioned whether the PV arrays and other systems installed under PACE programs ‘actually produce meaningful reductions in energy consumption.’ The end result for solar energy companies looking to install PACE-funded projects was a series of new rules for handling mortgages on the properties where the solar arrays were to be installed - halting PACE…

“…Sonoma County and the other plaintiffs [will likely] appeal the decision and petition for a larger panel or the Supreme Court to hear the case - a step that must be taken within the next 45 days…PACE advocates could also seek relief in federal legislation…[but a] bipartisan House bill introduced last year to protect PACE failed to result in a companion bill in the Senate…[and] pulling members of Congress into the fray runs contrary to the program's chief identity as a town- and state-level offering that does not require taxpayer funds or other congressional backing…[But] PACE-enabling bills continue to clear legislatures across the U.S…”

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