PACE Status Update

AUGUST 11, 2010 PACE Status Update By Mark Zimring, Ian Hoffman and Merrian Fuller The Federal Housing Finance Agency (FHFA) regulates Fannie Mae, Freddie Mac, and the 12 Federal Home Loan Banks (the government-sponsored enterprises – GSEs). On July 6, 2010, FHFA and the Office of the Comptroller of the Currency (OCC) concluded that Property Assessed Clean Energy (PACE) 1 programs “present significant safety and soundness concerns” to the housing finance industry. 2 This statement came after a year of discussions with state and federal agencies in which PACE, a novel mechanism for financing energy efficiency and renewable energy improvements, has gone from receiving support from the White House, 3 canonization as one of Scientific American’s “World Changing Ideas” 4 and legislative adoption in 24 states to questionable relevance, at least in the residential sector. Whether PACE resumes its expansion as an innovative tool for financing energy efficiency and clean generation depends on outcomes in each of the three branches of government – discussions on a PACE pilot phase among federal agencies, litigation in federal court, and legislation in Congress – all highly uncertain. This policy brief addresses the practical impacts of these possible outcomes on existing and emerging PACE programs across the United States and potential paths forward. The work described in this Policy Brief was funded by the Department of Energy Office of Energy Efficiency and Renewable Energy, Weatherization and Intergovernmental Program under Contract No. DE-AC02-05CH11231. DISCLAIMER This document was prepared as an account of work sponsored by the United States Government. While this document is believed to contain correct information, neither the United States Government nor any agency thereof, nor the Regents of the University of California, nor any of their employees, makes any warranty, express or implied, or assumes any legal responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by its trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof, or the Regents of the University of California. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof or the Regents of the University of California. Similar programs carry a variety of names: Voluntary Environmental Improvement Bond (VEIB) programs; Energy Loan Tax Assessment Programs (ELTAPs); and Energy Efficiency/Renewable Energy Contracting Assessment District (E- CAD). http://www.fhfa.gov/webfiles/15884/PACESTMT7610.pdf The White House’s October 2009 Recovery Through Retrofit Report is available here: http://www.whitehouse.gov/assets/documents/Recovery_Through_Retrofit_Final_Report.pdf http://www.scientificamerican.com/article.cfm?id=world-changing-ideas&page=2