HomeMy WebLinkAboutItem 7.1 Support PACE Program~~~,~ OF Dp~l f~
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~9`~-;~~2 STAFF REPORT C I T Y C L E R K
`~~ ~ ~ ~ DUBLIN CITY COUNCIL File # ^0~00-~~^
~LIFOR~
DATE: August 17, 2010
TO: Honorable Mayor and City Councilmembers
FROM: Joni Pattillo, City Manager
SUBJE :- Support of Congressional Action Regarding Property Assessed Clean Energy
(PACE) Programs
Prepared By: Martha Aja, Environmental Specialist
EXECUTIVE SUMMARY:
The Federal Housing Finance Agency (FHFA) recently issued a statement that
frozen residential Property Assessed Clean Energy (PACE) Programs across
response, PACEnow, a national coalition of PACE advocates and stakeholders,
campaign to engage local government partners across the country, calling
congressional action to approve legislation to allow PACE Programs to continue.
FINANCIAL IMPACT:
No impact.
RECOMMENDATION:
Staff recommends that the City Council
to support immediate legislation protect
and authorize the Mayor to sign letter
Representative McNerney.
-%
Reviewed y:
Senior Administrative Analyst
has effectively
the country. In
has launched a
for immediate
adopt a Resolution urging its Congressional delegation
~g Property Assessed Clean Energy (PACE) Programs
; of support to Senator Boxer, Senator Feinstein and
Page 1 of 3 ITEM NO. ~. ~
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DESCRIPTION:
Property Assessed Clean Enerqy (PACE)
PACE is a government program that allows property owners to finance energy-efficiency
retrofits and renewable-energy upgrades by using low-interest bonds that generally have no
recourse for the local governments issuing the program. The White House and the U.S.
Department of Energy have shown strong support for PACE and have dedicated $150 million to
develop local PACE Programs. PACE Programs were made possible within California because
of adoption of AB 811 in September 2008. Under an AB 811 assessment district, the capital
costs of financing energy-efficiency and renewable-energy projects are funded by the issuance
of a revenue bond or by other capital services, such as private financing. An assessment lien is
placed on the property of the participating owner in an amount sufficient to repay the costs of
the project, including administration of the program and financing, as part of each year's
property tax bill. The amount of the assessment is based on the cost including interest spread
over a term that typically would not exceed the life of the asset (20 year period or less). Any
program set up under the guidelines of AB 811 is entirely voluntary and assessments are levied
only against those properties that choose to participate. If the owner sells the property, the
repayment obligation remains attached to the property until such time as the assessment is fully
paid.
There are many advantages to PACE Programs, which include the removal of barriers to
energy upgrades and retrofits in addition to the creation of local green jobs. Residential and
commercial buildings consume large quantities of electricity and are responsible for a significant
portion of U.S. annual carbon dioxide emissions; therefore, investing in cost-effective energy
efficiency and renewable energy improvements to homes and businesses will play an integral
role in the reduction of greenhouse gas emissions. In 2006, the State of California enacted
Assembly Bill (AB) 32, the Global Warming Solutions Act of 2006, which requires California to
reduce GHG statewide GHG emissions to 1990 levels by 2020. The PACE Programs provide
an avenue for homeowners and businesses to reduce their energy consumption and GHG
emissions, which will help California meet the requirements outlined in AB 32.
Federal Housing Finance Agency Determination
On May 5, 2010, the Federal National Mortgage Association (commonly known as Fannie Mae)
and the Federal Home Loan Mortgage Corporation (commonly known as Freddie Mac) issued
Lender Letters that stated: "PACE loans generally have automatic first tien priority over
previously recorded mortgages. The terms of the Fannie Mae/Freddie Mac Uniform Security
Instruments prohibit loans that have senior lien status to a mortgage." Fannie Mae and Freddie
Mac are the two largest mortgage finance lenders in the nation, and together control the
majority of the nation's secondary mortgage market. Fannie Mae and Freddie Mac are
regulated by the Federal Housing Finance Agency (FHFA}. Subsequent to the housing crisis,
both agencies were placed in federal conservatorship under FHFA and the U.S. Treasury.
While the letters did not direct lenders or servicers to take action, this statement indicated that
PACE participants could be in violation of their existing mortgage contracts. These statements
attracted significant attention including that of Senators, Members of Congress, Governors and
others. On Friday Juljr 2, 2010, the House Committee on Energy and Commerce Chair Henry
Waxman and the Committee on Financial Services Chair Barney Frank issued a fetter to the
director of FHFA requesting clarification and support for PACE Programs across the country.
Page2of3
On July 6, 2010, the FHFA posted a statement reaffirming that a senior PACE lien is in violation
of any Fannie Mae or Freddie Mac mortgage contract. As a result, residential PACE financing
cannot move forward at this time. A nationwide PACE coalition is working to take legislative
action that will correct this issue. The coalition has asked all jurisdictions to sign letters to their
congressional representatives and pass resolutions in support of PACE Programs.
CaliforniaFIRST
On February 16, 2010, the City of Dublin elected to participate in the Pilot Phase of the
CaliforniaFIRST Program, which is a Property Assessed Clean Energy (PACE) Program. The
CaliforniaFIRST Program is sponsored by the California Statewide Communities Development
Authority, a statewide joint powers authority sponsored by the California State Association of
Counties and the League of California Cities. California Communities selected Renewable
Funding and Royal Bank of Canada Capital Markets as project partners to offer a complete
PACE program to residents and businesses of cities and counties throughout the State of
California.
The CaliforniaFIRST program is a financing program that uses an assessment mechanism to
enable commercial and residential property owners to finance 100% of the upfront capital costs
of clean-energy projects, with the amoun# financed repaid on a property tax bill. Eligible projects
could include, but are not limited to the following, air sealing, wall and roof insulation, energy
efficient windows, tankless water heaters, photovoltaics (solar energy) and low flow toilets. The
California Energy Commission awarded $16.5 million to the CaliforniaFIRST pilot communities
as part of a grant through the State Energy Program. The grant would have paid for interest
rate buy-downs and other Program start-up costs. Unfortunately, due to the FHFA position, the
CaliforniaFIRST Grant was revoked. In effect, the determination made by the FHFA renders the
CaliforniaFIRST program obsolete at this time.
Staff has prepared a Resolution that urges Congress to take action to protect PACE Programs
(Attachment 1). In addition, Staff has prepared letters to Senator Boxer, Senator Feinstein and
Representative McNerney which asks for their support of legislation to protect PACE Programs
(Attachments 2, 3& 4). Jurisdictions throughout the United States are passing similar
Resolutions and sending letters of support to their Congressional delegates in an attempt to
save PACE Programs nationwide.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
Not Applicable.
ATTACHMENTS: 1. Resolution in Support of Congressional Action Regarding
Property Assessed Clean Energy (PACE) Programs.
2. Letter to Senator Boxer in Support of Congressional Action
Regarding Property Assessed Clean Energy (PACE) Programs.
3. Letter to Senator Feinstein in Support of Congressional Action
Regarding Property Assessed Clean Energy (PACE) Programs.
4. Letter to Representative McNerney in Support of Congressional
Action Regarding Property Assessed Clean Energy (PACE)
Programs.
Page3of3
/ ~~ g
RESOLUTION NO. XX - 10
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
***********
tN SUPPORT OF CONGRESSIONAL ACTION TO AUTHORIZE LEGISLATION FOR
PROPERTY ASSESSED CLEAN ENERGY PROGRAMS
WHEREAS, utility bills represent a major component of operating costs for home and
business owners; and
WHEREAS, persistent unemployment, particularly in the construction industry, continues
to burden families and communities; and
WHEREAS, reliance on fossil fuels continues to threaten public health, the environment,
and our national energy security; and
WHEREAS, residential and commercial buildings consume large quantities of electricity
and are responsi~ale for a significant portion of U.S. annual carbon dioxide emissions; and
WHEREAS, investing in cost-effective energy-efficiency and renewable-energy
improvements to homes and businesses can save energy, cut utility bills, create thousands of
local jobs, reduce reliance on fossil fuels, and dramatically reduce greenhouse gas emissions;
and
WHEREAS, the upfront cost and potentially long payback periods prevent many property
owners from making otherwise cost-effective clean-energy improvements to their homes and
businesses; and
WHEREAS, Property Assessed Clean Energy (PACE) Programs overcame these
obstacles by providing up-front financing, the cost of which is repaid by an assessment lien on
the property; and
WHEREAS, PACE financing programs are an innovative local government solution to
help property owners finance energy-efficiency and renewable-energy improvements - such as
energy efficient boilers, upgraded insulation, new windows, solar installations, etc. to their
homes and businesses; and
WHEREAS, twenty-two states have passed laws enabling local governments to develop
PACE programs; and
WHEREAS, the White House and the U.S. Department of Energy strongly support PACE
and have dedicated $150 million to develop local PACE Programs and issued guidelines to
ensure that PACE Programs meet safety and soundness requirements and adequately protect
both bond buyers and property owners; and
WHEREAS, despite PACE's great promise, the Federal Housing Finance Agency (FHFA)
and the Office of the Comptroller of the Currency (OCC) on July 6, 2010, issued statements that
immediately forced existing PACE Programs to halt operations and froze the development of
dozens of PACE Programs nationwide.
Attachment 1
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NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Dublin calls
on the California congressional delegation to support legislation that clearly guarantees local
governments the right to assess special taxes for clean energy programs and restore the
promise of PACE.
PASSED, APPROVED AND ADOPTED this 17th day of August, 2010, by the following
vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
Mayor
City Clerk
~ ' (~
~
CITY OF DUBLIN
100 Civic Plaza, Dublin, California 94568 Website: http://www.ci.dublin.caus
August 17, 2010
The Honorable Senator Boxer
112 Hart Senate Office Building
Washington, D.C. 20510
Dear Senator Boxer:
On behalf of the City of Dublin, we write to ask for your urgent support for
legislation that guarantees local government the right to establish clean-energy
programs, known as Property Assessed Clean Energy (PACE). PACE is a local
government solution that helps home and building owners finance energy-
efficiency and renewable-energy improvements and is supported by a century of
legal and historical precedent for special assessment districts, including more
than 37,000 districts that have been used to finance sewers, sidewalks, and
other projects that serve a public purpose.
The City of Dublin strongly believes that recent actions by federal regulators
infringe upon state and local power to utilize assessment districts and that PACE
is good for our nation's housing industry and mortgage investors. The regulators
disagree. We must protect our state and local powers and let the facts and data
from our nation's PACE pilot programs determine who is correct. The City of
Dublin urges you to support legislation so our nation's PACE pilot programs can
proceed.
In just the past two years, twenty-two states have passed laws enabling local
governments to develop PACE programs (CA, CO, FL, GA, IL, LA, ME, MD, MN,
MO, NV, NH, NM, NY, NC, OH, OK, OR, TX, VT, VA, WI). State and local
governments have embraced PACE because of its tremendous potential to cut
energy bills, increase homeowner cash flow for mortgage payments, reduce
mortgage default risk, create tens of thousands of local jobs and dramatically
reduce greenhouse gas emissions by spurring investment in clean-energy
improvements. PACE has received strong bipartisan support nationwide
because creating jobs, saving energy and reducing utility bills for families and
businesses is important to all Americans. Our nation's PACE programs were set
to launch a 24 month pilot period this summer, funded by $150 million in grants
from the Department of Energy, incorporating safe and sound consumer and
lender protections that were developed by a White House led inter-agency
working group consisting of HUD, NEC, OMB, CEQ and DOE.
Area Code (925) • City Manager 833-6650 • City Council 833-6650 • Personnel 833-6605 • Economic Development 833-6650
Finance 833-6640 • Public Works/Engineering 833-6630 • Parks & Community Services 833-6645 • Police 833-6670
Planning/Code Enforcement 833-6610 • Building Inspection 833-6620 • Fire Prevention Bureau 833-6606
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Unfortunately, despite PACE's great promise, the Federal Housing Finance
Agency (FHFA) and the Office of the Comptroller of the Currency (OCC,
collectively the "Regulators") issued recent statements blocking our nation's
PACE pilot programs. The Regulators' action is a direct challenge to state and
local powers to levy tax assessments for a public purpose and wrongly asserts
that the consumer and lender protections were not sufficient. The DOE funded
PACE programs have been specifically designed to help the mortgage market,
yet the Regulators' statements simply rehashed old concerns that were cured.
Because of FHFA's oversight of Fannie Mae and Freddie Mac, and OCC's
influence over our nation's banks, the statements forced existing PACE programs
to halt and froze the ability to launch PACE programs already under development
nationwide.
Congress, which chartered Fannie Mae and Freddie Mac, and which established
FHFA & OCC, must quickly intervene to pass legislation that guarantees the right
of state and local government to form special assessment districts to promote
clean-energy programs and restore the promise of PACE.
Thank you for your consideration of this important matter. Again, we ask for your
support of legislation to protect PACE Programs nationwide.
Sincerely,
Mayor Tim Sbranti, on behalf of the Dublin City Council
s~~~ g
CITY OF DUBLIN
100 Civic Plaza, Dublin, California 94568 Website: http://www.ci.dublin.ca.u~
August 17, 2010
The Honorable Senator Feinstein
331 Hart Senate Office Building
Washington, D.C. 20510
Dear Senator Feinstein:
On behalf of the City of Dublin, we write to ask for your urgent support for
legislation that guarantees local government the right to establish clean-energy
programs, known as Property Assessed Clean Energy (PACE). PACE is a local
government solution that helps home and building owners finance energy-
efficiency and renewable-energy improvements and is supported by a century of
legal and historical precedent for special assessment districts, including more
than 37,000 districts that have been used to finance sewers, sidewalks, and
other projects that serve a public purpose.
The City of Dublin strongly believes that recent actions by federal regulators
infringe upon state and local power to utilize assessment districts and that PACE
is good for our nation's housing industry and mortgage investors. The regulators
disagree. We must protect our state and local powers and let the facts and data
from our nation's PACE pilot programs determine who is correct. The City of
Dublin urges you to support legislation so our nation's PACE pilot programs can
proceed.
In just the past two years, twenty-two states have passed laws enabling local
governments to develop PACE programs (CA, CO, FL, GA, IL, LA, ME, MD, MN,
MO, NV, NH, NM, NY, NC, OH, OK, OR, TX, VT, VA, WI). State and local
governments have embraced PACE because of its tremendous potential to cut
energy bills, increase homeowner cash flow for mortgage payments, reduce
mortgage default risk, create tens of thousands of local jobs and dramatically
reduce greenhouse gas emissions by spurring investment in clean-energy
improvements. PACE has received strong bipartisan support nationwide
because creating jobs, saving energy and reducing utility bills for families and
businesses is important to all Americans. Our nation's PACE programs were set
to launch a 24 month pilot period this summer, funded by $150 million in grants
from the Department of Energy, incorporating safe and sound consumer and
lender protections that were developed by a White House led inter-agency
working group consisting of HUD, NEC, OMB, CEQ and DOE.
Area Code (925) • City Manager 833-6650 • City Council 833-6650 • Personnel 833-6605 • Economic Development 833-6650
Finance 833-6640 • Public Works/Engineering 833-6630 • Parks & Community Services 833-6645 • Police 833-6670
Planning/Code Enforcement 833-6610 • Building Inspection 833-6620 • Fire Prevention Bureau 833-6606
Printed on Recycled Paper
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Unfortunately, despite PACE's great promise, the Federal Housing Finance
Agency (FHFA) and the Office of the Comptroller of the Currency (OCC,
collectively the "Regulators") issued recent statements blocking our nation's
PACE pilot programs. The Regulators' action is a direct challenge to state and
local powers to levy tax assessments for a public purpose and wrongly asserts
that the consumer and lender protections were not sufficient. The DOE funded
PACE programs have been specifically designed to help the mortgage market,
yet the Regulators' statements simply rehashed old concerns that were cured.
Because of FHFA's oversight of Fannie Mae and Freddie Mac, and OCC's
influence over our nation's banks, the statements forced existing PACE programs
to halt and froze the ability to launch PACE programs already under development
nationwide.
Congress, which chartered Fannie Mae and Freddie Mac, and which established
FHFA & OCC, must quickly intervene to pass legislation that guarantees the right
of state and local government to form special assessment districts to promote
clean-energy programs and restore the promise of PACE.
Thank you for your consideration of this important matter. Again, we ask for your
support of legislation to protect PACE Programs nationwide.
Sincerely,
Mayor Tim Sbranti, on behalf of the Dublin City Council
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CITY OF DUBLIN
100 Civic Plaza, Dublin, California 94568 Website: http://www.ci.dublin.caus
August 17, 2010
Representative Jerry McNerney
Pleasanton Office
5776 Stoneridge Mall Rd. #175
Pleasanton, CA 94588
Dear Representative McNerney:
On behalf of the City of Dublin, we write to ask for your urgent support for
legislation that guarantees local government the right to establish clean-energy
programs, known as Property Assessed Clean Energy (PACE). PACE is a local
government solution that helps home and building owners finance energy-
efficiency and renewable-energy improvements and is supported by a century of
legal and historical precedent for special assessment districts, including more
than 37,000 districts that have been used to finance sewers, sidewalks, and
other projects that serve a public purpose.
The City of Dublin strongly believes that recent actions by federal regulators
infringe upon state and local power to utilize assessment districts and that PACE
is good for our nation's housing industry and mortgage investors. The regulators
disagree. We must protect our state and local powers and let the facts and data
from our nation's PACE pilot programs determine who is correct. The City of
Dublin urges you to support legislation so our nation's PACE pilot programs can
proceed.
In just the past two years, twenty-two states have passed laws enabling local
governments to develop PACE programs (CA, CO, FL, GA, IL, LA, ME, MD, MN,
MO, NV, NH, NM, NY, NC, OH, OK, OR, TX, VT, VA, WI). State and local
governments have embraced PACE because of its tremendous potential to cut
energy bills, increase homeowner cash flow for mortgage payments, reduce
mortgage default risk, create tens of thousands of local jobs and dramatically
reduce greenhouse gas emissions by spurring investment in clean-energy
improvements. PACE has received strong bipartisan support nationwide
because creating jobs, saving energy and reducing utility bills for families and
businesses is important to all Americans. Our nation's PACE programs were set
to launch a 24 month pilot period this summer, funded by $150 million in grants
from the Department of Energy, incorporating safe and sound consumer and
lender protections that were developed by a White House led inter-agency
working group consisting of HUD, NEC, OMB, CEQ and DOE.
Area Code (925) • City Manager 833-6650 • City Council 833-6650 • Personnel 833-6605 • Economic Development 833-6650
Finance 833-6640 • Public Works/Engineering 833-6630 • Parks & Community Services 833-6645 • Police 833-6670
Planning/Code Enforcement 833-6610 • Building Inspection 833-6620 • Fire Prevention Bureau 833-6606
Printed on Recycled Paper
A ~a~.,.l......,~r,+ ~l
~~~~
Unfortunately, despite PACE's great promise, the Federal Housing Finance
Agency (FHFA) and the Office of the Comptrolier of the Currency (OCC,
collectively the "Regulators") issued recent statements blocking our nation's
PACE pilot programs. The Regulators' action is a direct challenge to state and
local powers to levy tax assessments for a public purpose and wrongly asserts
that the consumer and lender protections were not sufficient. The DOE funded
PACE programs have been specifically designed to help the mortgage market,
yet the Regulators' statements simply rehashed old concerns that were cured.
Because of FHFA's oversight of Fannie Mae and Freddie Mac, and OCC's
influence over our nation's banks, the statements forced existing PACE programs
to halt and froze the ability to launch PACE programs already under development
nationwide.
Congress, which chartered Fannie Mae and Freddie Mac, and which established
FHFA & OCC, must quickly intervene to pass legislation that guarantees the right
of state and local government to form special assessment districts to promote
clean-energy programs and restore the promise of PACE.
Thank you for your consideration of this important matter. Again, we ask for your
support of legislation to protect PACE Programs nationwide.
Sincerely,
Mayor Tim Sbranti, on behalf of the Dublin City Council