The innovative program for financing energy retrofits that was pioneered in his district is “certain” to continue, according to Rep. Mike Thompson (D-CA), who is pushing legislation in Congress to ensure that outcome.  He said the legislation he sponsored to preserve the Property Assessed Clean Energy Program (PACE) now has 50 cosponsors, including republicans as well as Democrats.  

“I am very confident we will push it through,” he said in reference to the proposed PACE Protection Act.  Rep. Thompson was speaking at the dedication of a solar installation at a large commercial facility in Rohnert Park, CA, which is said to be the first such project financed using private capital and the PACE repayment mechanism.

The use of property tax assessments to finance energy retrofits to existing buildings got off to a very good start in 2010 but was quickly stifled by federal housing finance regulators. Now, if a bipartisan group in Congress gets their way, the program could get a fresh start.  

The Property Assessed Clean Energy Program (PACE) hit a snag in the summer of 2010, when the Federal Housing Finance Agency (FHFA), intolerant of further risks to the battered portfolios of Fannie Mae and Freddie Mac, statement raising "significant safety and soundness concerns" about the program that led to Fannie Mae and Freddie Mac announcing that they would no longer purchase mortgages on properties that had outstanding PACE loans.

The regulatory agency was concerned that PACE liens generally take precedence over mortgage loans and would undermine the soundness of mortgages guaranteed by Fannie and Freddie.

A bipartisan group of members – including 14 Republicans and 11 Democrats- are cosponsoring the PACE Protection Act of 2011 to promote and protect the PACE program. 

The PACE Protection Act addresses adverse action taken by Fannie Mae, Freddie Mac and their regulators at the Federal Housing Finance Agency (FHFA) which has prevented communities nationwide from harnessing PACE benefits. The PACE Protection Act of 2011 is meant to protect PACE programs from federal overreach by the FHFA and allow them to continue reducing energy consumption, boosting our economy, and creating jobs, without mandates from the government or taxpayer funds. 

“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 Rep. Hayworth. “PACE programs create jobs and help Americans to conserve energy, saving on those costs and protecting our environment.

The PACE Protection Act is in part a response to failed attempts to challenge FHFAs actions in federal court. Two judges in New York were the first to hear legal challenges to the FHFA's 2010 statement against the PACE program. The judges sided with the agency, dismissing the claims. But a recent court ruling in California was more beneficial to PACE advocates.

In an Aug. 26 ruling, U.S. District Judge Claudia Wilken of the Northern District of California declined to dismiss the claims made by California and several local government entities and also ordered that FHFA hold a notice and comment process concerning its approach to the program. In her ruling, she found that the Plaintiffs had standing to sue the FHFA and that the 2010 statement was a final agency action, reviewable in court under the Administrative Procedure Act (APA). FHFA had argued that the statement was a mear policy pronouncement and thus not reviewable in court.

By ordering notice and comment, the FHFA will have to justify its actions and address comments on the value of the PACE program.