Cities in California look set to revive Property Assessed Clean Energy (PACE) financing programs aimed at funding residential solar installations.
PACE programs allow homeowners to borrow money to install solar panels and to pay the loan in installments as a line item on their property taxes. The program also includes building updgrades that save energy.
The program originally began as a pilot program in the city of Berkeley in 2008 and quickly spread to other states in the country.
In 2010, however, the Federal Housing Finance Agency stopped the expansion of the program across the nation, saying the loans posed an unacceptable risk to mortgage lenders.
Although the innovative financing scheme was blocked by federal authorities three years ago in the wake of the subprime mortgage crisis, California Governor Jerry Brown signed a state bill in September that will create a state-run reserve fund for new PACE programs.
The $10 million fund would cover any losses that federal agencies would face in the case that a bank forecloses on a home with PACE-funded improvements, according to a report on SFGate, the online version of the San Francisco Chronicle newspaper. California is set to launch the new fund early next year.
While San Francisco was forced to shut down its PACE program in 2010, the city is now looking to revive the scheme, now known as GreenFinanceSF.
San Francisco is one of a growing number of cities and counties that are re-introducing PACE incentives throughout the state. State leaders are hoping that federal regulators soften their stance on PACE programs, which could also make their comeback possible in other parts of the country.
San Francisco Supervisor Mark Farrell, who introduced a resolution last week to begin the process of re-establishing the citys PACE program, told SFGate that although there was already "a real movement out there to push forward on this," a reversal by the Federal Housing Finance Agency would be "a game-changer."
SFGate points out that the housing market is in better shape now than it was in 2010, when the Housing Finance Agency stopped the program. In addition, the report says the agency may soon get a new director who is more open to PACE.
Some PACE schemes remained in operation despite the federal opposition and have demonstrated a successful track record, SFGate added.
The San Francisco resolution would solicit proposals from companies rely on private financing.
While California has seen considerable growth in solar leasing programs, the PACE scheme would provide an alternative to homeowners who want to buy their own panels and help mitigate the high up-front costs.
Southern California’s Riverside County boasts the largest PACE program in the state. The Home Energy Renovation Opportunity began in Riverside County and expanded into neighboring San Bernardino County. The scheme has helped more than 5,500 homeowners finance home upgrade projects worth more than $100 million.
Sonoma County in Northern California also has an active PACE program, as does the city of Sacramento, the state’s capital.