Why isn’t the Obama team
trying harder to save the promising PACE clean-energy model?

Mortgage giants Fannie
Mae and Freddie Mac have essentially quashed Property
Assessed Clean Energy
(PACE) programs, which have been launched in local
communities around the U.S. to make green improvements more affordable to homeowners. The Obama administration has taken modest
measures to help out, but it hasn’t put its top people on the case. If it did,
there’s reason to think PACE could be quickly restored.

Instead, Fannie and Freddie
are undermining administration priorities like clean energy, energy efficiency,
job creation, homeowner relief, and economic stimulus.

“If [the White House]
wanted Fannie and Freddie to look at it, Fannie and Freddie would look at it,”
said John
, who spent five years at Fannie and is now a senior fellow for
housing at the Urban Land Institute. “It
hasn’t reached a high enough policy level within the White House. … It’s just
a shame.”

PACE works by letting
homeowners pay for rooftop solar arrays and energy-saving retrofits through a
surcharge on their property tax bills, paid back over 10 to 20 years. In this
way it removes high upfront costs and ensures that property owners don’t lose
out if it they sell — the new buyer inherits both the home improvements and
the tax assessment. The Berkeley-born
creates work for building contractors, cuts carbon pollution, and essentially
runs on private capital, since cities and towns that offer PACE fund it through
municipal bonds.

Until late spring, PACE
was spreading at a steady clip: Twenty-two states had endorsed the model and
encouraged municipalities to set up programs. San Francisco had just launched a
program and Los Angeles was preparing for one later in the year. The Obama
administration backed the model with $150 million in stimulus-act funding and an endorsement from the vice
president’s Middle Class Task Force.

Then Fannie and Freddie
threw the nation’s first programs into confusion in May by warning
to stay away from properties with PACE assessments. The mortgage-finance
corporations object to the liens that PACE puts on properties, which get paid
off ahead of mortgages if a borrower defaults. That adds a theoretical risk
into an already jittery credit market.

But it’s an unfounded
fear, since well-designed energy retrofits can add to a homeowner’s financial
security, cutting their utility bills and making them a safer bet for lenders. A
report commissioned by a major financial institution last year found that energy-efficient homes had default and delinquency rates 11 percent lower
than other homes. PACE advocates have worked to integrate standards to ensure
the quality of energy retrofits, but that work can’t continue with programs
stalled out.