The Property Assessed Clean Energy program, which held so much promise for helping homeowners finance solar and efficiency improvements, may be resurrected. In the current uncertain political (and funding) climate, it remains a long shot. Just maybe, however, the odds are improving.

By David A. Hill

Last week, three members of congress introduced legislation to relaunch the PACE program, which allows homeowners to finance solar installations and efficiency improvements through an assessment on their property.

If passed, the PACE Protection Act of 2011 will over-ride actions taken by semi-public federal mortgage lenders, which effectively killed the program in July 2010.

“PACE programs in our states have allowed homeowners to make energy-saving modifications on their houses through a voluntary assessment on their own property, at no cost to local taxpayers,” stated Representative Nan Hayworth (R-New York), a sponsor of the bill. Co-sponsors included Representatives Mike Thompson (D-Ca) and Dan Lungren (R-Ca).

“Our bill addresses the concerns of Federal Home Finance Administration and facilitates participation by homeowners in every state with a PACE program, which will in turn promote conservation, energy savings, and job creation.”

Hayworth was  joined by U.S. Representatives Mike Thompson (D-Ca) and Dan Lungren (R-Ca) in sponsoring the bill.

The PACE model is based upon the first successful application of such a program in Berkeley, California, which offered loans to homeowners to make energy efficiency improvements or install renewable energy systems, by using their property as collateral, similar to a home equity loan or second mortgage.

As we reported in Colorado Energy News last year, the PACE model spread across the country at a rapid rate. Boulder was one of several cities replicating the Berkeley model.

Then, the door was essentially slammed shut by the two federally controlled lending agencies, FHFA and the Federal Home Loan Mortgage Corporation (Fannie Mae and Freddie Mac). The lending giants objected to the PACE provision that would have paid off local governments before mortgage loans in the event of default.

In May of 2010, the agencies began sending out letters stating that homes mortgaged through the agencies would not be eligible to participate in PACE programs. Because a large portion of U.S. homes are mortgaged through the agencies, this effectively killed the program.

While a bipartisan trio sponsored the new bill, it seems unlikely it will garner the political support to pass in Congress. Let’s hope that isn’t the case.