October 7, 2010 - PACE moves forward?

Thursday, October 7, 2010

In Augusta, Maine's capital city, councilors are scheduled to hold a hearing tonight on whether to adopt a PACE ordinance. As readers of this blog know, PACE, short for "Property Assessed Clean Energy", refers to one policy mechanism available to support the development of more renewable energy and energy efficiency projects. Essentially, a property owner can borrow money (often at low rates through municipalities) to develop the project; the property owner then pays back the loan through your property tax bills over a long time (often 15 to 20 years). If the property changes hands, so do the energy improvements -- and so does the PACE loan obligation.

This summer, PACE came under fire from government-backed entities like Fannie Mae and Freddie Mac. These entities issued notices containing instructions for lenders to handle mortgage loan applications that are related to PACE financing. Fannie Mae stated that it would not buy property backed mortgage loans with outstanding PACE liability, unless the PACE program in question gave mortgages priority over PACE liens. Likewise, for refinancing, Fannie Mae intimated that it wanted loan holders to pay off their PACE obligations before being eligible for a refinance. As you can expect, this placed a chilling effect on deployment of PACE-funded projects.

However, municipalities continue to adopt PACE ordinances. Will Augusta be next?

No comments:

Post a Comment