Annie Henderson Retrofit Programs


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Annie Henderson Retrofit Programs

  1. 1. PACE and the Path Forward Annie Henderson | September 16, 2010
  2. 2. PACE: Simple, Effective Tool City or county Property owners Proceeds from Property owner creates type of voluntarily sign-up PACE repays bond land-secured for financing and bond or other through property financing district install energy financing provided tax bill or similar legal projects to property owner (up to 20 years) mechanism to pay for energy project
  3. 3. Key Benefits for Cities & Counties Helps meet Tax neutral and Promotes energy and no exposure to local jobs climate goals General Fund
  4. 4. Key Benefits for Property Owners Saves money Not based on Repayment on utility bills personal credit transfers to new owner
  5. 5. “ We are going to make it a lot easier to borrow money. We are doing this by encouraging communities to give you the option to pay the expense of retrofitting your home by paying it back on your ” ” property taxes.
  6. 6. National PACE Policy 24 States Have PACE Authority 4 States Have PACE Legislation Pending
  7. 7. FHFA/Fannie Mae PACE Activities   June 2009: FHFA guidance letter –  Concerns regarding senior lien and homeowner risk   September 2009: Fannie Mae lender letter –  Reviewing underwriting guidelines for PACE; Until guidelines are issued, treat payments as a special assessment   May 2010: Fannie Mae lender letter –  PACE “loans” and promise to issue additional guidance and work with federal and state agencies, while “preserving the status of mortgage loans originated as first liens”
  8. 8. FHFA/Fannie Mae PACE Activities   July 2010: FHFA guidance letter –  “Safety and soundness concerns” –  Violation of Uniform Security Instrument –  Reduce loan amount by potential PACE amount   August 2010: Fannie Mae lender letter –  PACE “loans” prior to July 6th must be paid off at time of refinance –  “Fannie Mae will not purchase mortgage loans [with PACE debt] unless the terms of the PACE program do not permit priority over first mortgage liens.”
  9. 9. Impacts on PACE   Active and planned PACE programs on hold around the country   Commercial PACE programs face uncertainty
  10. 10. Path Forward   Negotiations   Litigation   Legislation
  11. 11. Negotiations   October 2009: White House led interagency working group –  Result: White House Policy Framework for PACE –  Release of DOE/ARRA Funds for PACE programs   Spring 2010: Renewed discussions regarding PACE guidelines and pilots –  Result: May 5th Fannie Mae/Freddie Mac letters and July 6th FHFA/ FDIC/OCC letters   July 2010: Congressionally led PACE discussions with FHFA and other regulators –  Result: FHFA sent a letter to Members of Congress breaking off talks.
  12. 12. Litigation   California Files Suit –  People of the State of California vs. Federal Housing Finance Agency (Filed July 14, 2010) –  “California seeks a prompt judicial declaration against Fannie Mae and Freddie Mac that, under California law:   (a) PACE programs operate by assessments, not loans, and such assessments are valid;   (b) liens that may result from PACE assessments, like those resulting from other types of assessments, have priority over mortgages; and   (c) participation in PACE programs is compatible with, and not in violation of, Fannie Mae’s and Freddie Mac’s standardized mortgage documents.”   Additional lawsuits filed by Babylon, Sonoma County and Sierra Club
  13. 13. Legislation   PACE Assessment Protection Act –  HOUSE: HR 5766 (Thompson); 48 co-sponsors –  SENATE: S 3642 (Boxer); 5 co-sponsors “To ensure that the underwriting standards of Fannie Mae and Freddie Mac facilitate the use of property assessed clean energy programs to finance the installation of renewable energy and energy efficiency improvements”   Legislation would require Fannie Mae and Freddie Mac to issue PACE underwriting standards that are consistent with US DOE guidelines
  14. 14. Legislative Strategy   Four key steps –  Make a priority for Congress overall –  Oversight committee support   Senate Banking Committee (Sen. Dodd)   House Financial Services Committee (Rep. Frank) –  Republican co-sponsors in House and Senate –  Attach to appropriate vehicle to get done this year   How to help –  Sample resolutions and other materials at: –  State/Local Governments   Adam Byrnes,, 510-350-3733
  15. 15. Solutions for the Interim   CEC is proposing a clearinghouse of finance options that will include secured and unsecured products
  16. 16. Energy Upgrade   California 
  17. 17. The Program  •  State‐wide energy and water efficiency and renewable  energy genera7on retrofit program for single‐ and  mul7‐family residen7al and commercial buildings  •  Collabora7on between Energy Commission, Public  U7li7es Commission, u7li7es, local governments and  private sector  •  One‐stop resource for informa7on on building retrofit  benefits, financing and incen7ves, finding a qualified  contractor, workforce training and home energy  ra7ngs  •  Coordinates federal, state, u7lity and local government   retrofit program outreach, incen7ves and contractor  and par7cipant qualifica7ons  •  Creates a founda7on for AB 758 and Home Star 
  18. 18. Energy Upgrade California Financing Program  •  Administered by California State‐wide Community  Development Authority  •  Compe77ve solicita7on will be offered for interested  financial ins7tu7ons offering residen7al and  commercial retrofit loan products  •  Low rates expected as the program will offer standard  underwri7ng, comprehensive program roll‐out  (contractor qualifica7on, quality assurance, etc.) and  bundling of State‐wide building stock  •  Offered State‐wide through Energy Upgrade California  web‐site applica7on, subsidized with interest rate  buy‐down and loan loss reserve in leadership coun7es  that commit local resources 
  19. 19. Annie Henderson | | (510) 451-7911