

PACE Bonds


Debate is continuing currently on PACE Bonds.  PACE Bonds are a way for municipalities to create funds for residents to borrow to make energy efficiency improvements on their property and then repay that loan through a tax assessment rather than as a loan.  That way both the improvements and the cost of those improvements pass to the owner of the property.  The Obama administration is a supporter of PACE Bonds.  FannieMae and FreddieMac are not.  They have essentially stopped all of these programs cold.  Last I checked, we - the American people – owned FannieMae and Freddie Mac.  How is it one part of the government can’t work with another part of government and get this important financing mechanism for energy efficiency working?

Categories: General
Catherine Hill

2 Responses

  1. where's the money says:

    Have been reading this blog for a couple of months and have been disinclined to participate but this one finaly got to me. Let’s get started.

    “Last I checked, we -the American people-owned Fannie Mae and Freddie Mac.” …..Well I think some of the people who have retained their shares would challenge you on that. These entities were started as government sponsored enterprises (GSEs). Stock was sold to the public. A year or two ago the government placed these entities into some type of “conservatorship” but the stocks continued traded on the NYSE. So “ownership” stayed with the shareholders but the government took control. This is an important distinction as Freedie and Fannie probably own over half the residential mortgages in the US and they probably have a negative net worth in the $ billions if not $ trillions. Recently the stocks were delisted from the NYSE and the government appears reluctant to correct “deficiencies”. Essentially the government does not have a plan for what to do with these entities as they know the bailout cost will be hugh. You will note that they were not included in the Financial Reform bill even though their practices were a significant contributor to the housing meltdown……..Since you appear to be a proponent of PACE you certainly must (I hope) understand what they view as a problem. PACE bonds are proposed to take a senior postion over the mortgage. Another words if the homeowner gets into financial trouble the PACE loan is paid first and then the mortgage is the subordinate loan. This is not desirable if you are the one holding the mortgage in a market where foreclosures continue to increase. Secondly it would be municipalities who set up their own rules as to who is a good risk for the loans. Non of this is desirable to Fannie or Freddie and thank god they are resisting.

    Your question as to why one part of government won’t cooperate with another is simply they have differing objectives and responsibilities. Also it continues to appear there are no adults in charge.

    You call this “important financing mechanism for energy efficiency”. Might I remind you there already exists numerous financing mechanisms for energy efficiency. Check with NYSRDA and your local bank it might suprise you. Also what is wrong with a person simply getting a regular old home improvement loan, home equity loan and/or 2nd mortgage. It’s really no different than financing a roof replacement. Why do we need to establish another government program with it’s related cost and overhead – forgot!, more government jobs!

    I have been involved with residential energy efficiecy for a number of years and it seems to me that every year all the government does is make it more confusing for the consumer to understand their options, rebates, tax credits, regulations on net metering, etc, etc.

    If you insist on a financing scheme – try this for solar panels, the utility company installs and owns them, rate is capped for the homeowner – everybody wins. (Currently being done on commercial bldgs on west coast – Target, Kohls, Walmart, etc.) Homeowner has no maintenance headaches, utility gets to depreciate the panels for tax purposes, reduces overall demand for new power generating facility, relieves pressure on the grid, etc, etc .

    Off topic but:

    How about a geothermal installation at cul-d-sacs (spell ?) to provide central heat and A/C for a neighborhood……or…..allow the public water system to be used for geothermal heat + A/C in individual residences instead of needing to drill wells and/or lay pipe (save $10-15,000 per installation and make very affordable)

    Have similair ideas to move solar along very quickly and econmically versus how we do it now…..none of these ideas are new nor are they mine. They are victims of having to deal with government and the negative stonewalling attitudes of government that just wear you down to the point of giving up from frustration.

    Couple final points on solar:

    I am fully qualified to install solar panels on my house but if I do it I can’t get the incentives because I am not a “certified” installer. Why not just allow me to do it and have the local building inspector “certify” it (he can take a course at HVCC if necessary)

    Now if I want to install additional solar capacity for net metering I’m limited to no more than 10% of my current use (assuming rules haven’t been changed). So I’ve spent the last few years bringing down my usage and now I will be penalized as to the capacity of solar panels I can install. So guess I will turn on all of my lights 24/7 for a year so I can run up my bill so I can net meter more.

    …… either of these make sense to anybody except bueracrates

    I’ve vented enough, tired, going to bed…

  2. where's the money says:

    Sorry for all the spelling and grammer errors…tired