18 Jul 2010 11:37 am
BY Jeffrey Tomich jtomich@post-dispatch.com
314-340-8320
Is Missouri's newest and boldest initiative to encourage energy savings doomed before it takes root?
Gov. Jay Nixon signed a bill on Monday enabling Property Assesses Clean Energy (PACE) programs, which allow cities and counties to issue bonds to help home owners finance energy efficiency upgrades or solar panel installation. Money from the bond sales is lent to property owners, who repay it over a period of up to 20 years through special property tax assessments.
PACE laws have been adopted in 22 states as a way to cut energy use and create jobs by making it easier for homeowners to cut energy use and shrink utility bills.
But Fannie Mae and Freddie Mac, which own or guarantee more than half of the mortgages in the U.S., have been directed to steer clear of PACE loans by their regulator, the Federal Housing Finance Agency. The Office of the Comptroller of the Currency, which regulates national banks, and the Mortgage Bankers Association have expressed similar concerns.
The issue: Like property taxes, PACE liens take priority over mortgages. That makes the bonds easier for municipalities to sell. But if a home is foreclosed on, the liens are paid before the mortgage lender can recoup any money.
That fact has spooked mortgage giants and FHFA, which said in a July 6 letter that PACE loans "pose a significant risk to lenders" and "are not essential for successful programs to spur energy conservation."
The position in effect shut down PACE programs across the country.
California, which pioneered PACE financing, is fighting back. The state's attorney general sued Fannie, Freddie and FHFA on Wednesday, claiming their opposition is threatening jobs and access to federal funding.
In Missouri, energy efficiency advocates acknowledge the uncertainty surrounding PACE but are working to roll out programs anyway, hoping the conflict is resolved.
On Friday, energy advocacy group Renew Missouri held a PACE implementation training conference in Columbia for about 100 energy auditors, solar installers and local government officials.
"Our view is that these concerns and problems will be resolved," said Byron DeLear, a founding partner of Energy Equity Funding LLC, a company that hopes to administer PACE programs in the state.
DeLear also heads the Missouri Association of Accredited Energy Professionals, a year-old state association of energy auditors and contractors. MAAEP helped push PACE legislation in Jefferson City and has a lot riding on the success of the programs.
PACE is expected to spur millions of dollars in efficiency and renewable energy upgrades across the state. That could mean hundreds of new jobs for energy auditors, contractors and home remodelers.
DeLear projects that 80 percent of PACE loans in Missouri will be used to finance energy efficiency projects averaging about $5,000. The rest will also incorporate renewable energy systems such as solar panels with those projects averaging about $25,000. Statewide, the average PACE loan would be about $9,000, he estimates.
Tom Ochsner, a St. Peters energy auditor, is among those counting on the programs to provide a boost to his company, Thermal Vision. He currently has just one part-time employee but hopes to be able to add more staff if PACE is successful.
Ochsner said homeowners, too, would benefit, especially those who earn too much to qualify for low-income weatherization programs but don't have enough in the bank to fund energy savings projects out of pocket.
"Not everyone can write a check for $6,000 or $7,000 or $8,000 for a new furnace or air conditioner and maybe some new windows," he said.
Several cities and counties are anxious to participate in PACE programs, too. One is Ferguson, in north St. Louis County.
"We've been watching and nurturing it for long time, and we hope to get to the point where we can use it," said Rosalind Williams, director of planning and development for the city.
Homeowners have other ways, such as home equity loans, to finance efficiency improvements. But some homeowners are hesitant to tie up their home equity, or don't want to be subject to floating interest rates, said Steve Frenkel, Midwest director for Renewable Energy Funding LLC, a company that administers PACE programs. Others may fear that they will lose the investment if they move, he said. By contrast, PACE liens stay with the home if it's sold.
Also, the Department of Energy and White House have issued strict underwriting guidelines to make sure financing is given to only low-risk borrowers, he said.
The Missouri law requires the formation of local clean energy boards to review PACE applications. The boards would also be required to file annual reports with the Department of Natural Resources, cataloguing projects, loan amounts, administrative costs and cumulative energy savings.
In most cases, energy audits would be required for PACE financing. And energy boards would approve loans if energy efficiency improvements are cost-effective.
Missouri bankers supported the PACE legislation.
Still, lenders won't approve any mortgages associated with PACE loans as long as Fannie, Freddie and FHFA object, said Max Cook, CEO of the bankers association. Instead, they're watching to see if the matter gets resolved. "It's an awfully big question mark," Cook said. "You hope that (the program) works as intended."
PACE supporters reject the suggestion by Fannie and Freddie that the liens are too risky for investors. "These are no different than the kind of special assessments that local governments have created for decades for public improvements like building roads and sewer lines," Frenkel said.
Supporters are hopeful Congress will step in and resolve the stalemate, especially since the administration of President Barack Obama has been a proponent of PACE and set aside $150 million of stimulus funds to help implement programs. Legislation was introduced in Washington on Thursday.
"I really see this as a minor hiccup," said Erin Noble, energy policy coordinator for the Missouri Coalition for the Environment. "It's pretty absurd that PACE is under the microscope that it is."
Wednesday, January 5, 2011
Missouri says, "Show Me The PACE"
19 Jul 2010 11:57 am
Missouri says “show me the PACE”; as has happened for Presidents Bush through Kennedy, does winning Missouri mean winning the country?
Lost in the hubbub over the FHFA and States suing the Federal Government is one bit of great news for the PACE Community: on July 12th, 2010 Missouri became the 23rd state to pass PACE-enabling legislation. Why is this good news, you ask? Well, for three reasons (at least):
1. Missouri voters have correctly predicted the outcome of every presidential election (save for two, 1956 and 2008) since 1904. Perhaps Missouri will once again be a bellwether, this time for PACE at a national scale?
2. Missouri’s a long way from Berkeley. The passage of PACE in Missouri is an indicator that PACE is a concept that transcends political, geographical, and social lines. We’ve seen this highlighted in other states as well, but this recent news reinforces the trend.
3. Missouri’s bankers backed PACE. A source close to the effort told me that participation from the local banker’s association was critical to getting the bill pushed into law, going as far as saying that their participation was “the only way [the bill] got passed.”
The genesis of the bill follows what has become a predictable path for PACE legislation: one local government becomes inspired by PACE and champions it at a state level. In the case of California that local government was the City of Palm Desert, which upon seeing the success of the Berkeley PACE pilot decided to push for state legislation (AB-811) that would enable all local governments to deploy PACE programs, not just Charter Cities like Berkeley. (It should be noted that Palm Desert is itself a Charter City and thus had pre-existing authority to deploy PACE. Pushing AB-811 was truly done out of the goodness of their good ol’ hearts.) In the case of Missouri, that local municipality was the City of Ferguson in St. Louis County. Every PACE program needs a champion, and it sounds like Missouri found it in Ferguson.
One challenge Missouri may have is in getting those PACE projects to pencil. It’s hard to imagine PACE underwriting standards becoming more lax as a result of the FHFA tussle, so any PACE project will most certainly have to be cash flow positive. The average residential retail price of electricity in Missouri is 7.65 cents per kWh, compared to over 15 cents in California and 11.2 cents on average for the U.S. One of the biggest drivers of clean energy economics is the cost of avoided electricity, so these rates will narrow the scope of available projects. That said, the “good” news is that Missouri’s building standards haven’t been as aggressive as other PACE states, so hopefully there are plenty of energy hogs out there to retrofit. And the electricity PACE will save in Missouri is particularly dirty: over four fifths of it comes from coal carted in from Wyoming. Let’s hope the FHFA lets us try.
Renew Missouri, a non-profit that worked to advance Missouri’s legislation held a workshop on Friday to kick off PACE efforts in the state. A PDF of the workshop agenda is available here. According to an article in the Columbia Missourian, they were expecting 50 and 80 turned up from 19 different municipalities. Here’s to you, Mizzurah.
Missouri says “show me the PACE”; as has happened for Presidents Bush through Kennedy, does winning Missouri mean winning the country?
Lost in the hubbub over the FHFA and States suing the Federal Government is one bit of great news for the PACE Community: on July 12th, 2010 Missouri became the 23rd state to pass PACE-enabling legislation. Why is this good news, you ask? Well, for three reasons (at least):
1. Missouri voters have correctly predicted the outcome of every presidential election (save for two, 1956 and 2008) since 1904. Perhaps Missouri will once again be a bellwether, this time for PACE at a national scale?
2. Missouri’s a long way from Berkeley. The passage of PACE in Missouri is an indicator that PACE is a concept that transcends political, geographical, and social lines. We’ve seen this highlighted in other states as well, but this recent news reinforces the trend.
3. Missouri’s bankers backed PACE. A source close to the effort told me that participation from the local banker’s association was critical to getting the bill pushed into law, going as far as saying that their participation was “the only way [the bill] got passed.”
The genesis of the bill follows what has become a predictable path for PACE legislation: one local government becomes inspired by PACE and champions it at a state level. In the case of California that local government was the City of Palm Desert, which upon seeing the success of the Berkeley PACE pilot decided to push for state legislation (AB-811) that would enable all local governments to deploy PACE programs, not just Charter Cities like Berkeley. (It should be noted that Palm Desert is itself a Charter City and thus had pre-existing authority to deploy PACE. Pushing AB-811 was truly done out of the goodness of their good ol’ hearts.) In the case of Missouri, that local municipality was the City of Ferguson in St. Louis County. Every PACE program needs a champion, and it sounds like Missouri found it in Ferguson.
One challenge Missouri may have is in getting those PACE projects to pencil. It’s hard to imagine PACE underwriting standards becoming more lax as a result of the FHFA tussle, so any PACE project will most certainly have to be cash flow positive. The average residential retail price of electricity in Missouri is 7.65 cents per kWh, compared to over 15 cents in California and 11.2 cents on average for the U.S. One of the biggest drivers of clean energy economics is the cost of avoided electricity, so these rates will narrow the scope of available projects. That said, the “good” news is that Missouri’s building standards haven’t been as aggressive as other PACE states, so hopefully there are plenty of energy hogs out there to retrofit. And the electricity PACE will save in Missouri is particularly dirty: over four fifths of it comes from coal carted in from Wyoming. Let’s hope the FHFA lets us try.
Renew Missouri, a non-profit that worked to advance Missouri’s legislation held a workshop on Friday to kick off PACE efforts in the state. A PDF of the workshop agenda is available here. According to an article in the Columbia Missourian, they were expecting 50 and 80 turned up from 19 different municipalities. Here’s to you, Mizzurah.
HOME STAR included in Clean Energy bill
28 Jul 2010 11:04 am
HOME STAR Coalition Applauds Senate for Inclusion of the bi-partisan HOME STAR Legislation in The Clean Energy Jobs and Oil Company Accountability Act.
HOME STAR Coalition Urges Swift Action by Congress and The Administration as coalition supporters grows to over 2,600
WASHINGTON, D.C., July 28, 2010 – The HOME STAR Coalition, a broad-based and diverse group of small and medium sized businesses and nationally recognized companies, labor and environmental organizations and associations, today applauded the inclusion of the HOME STAR legislation in The Clean Energy Jobs and Oil Company Accountability Act. The Home Star Coalition is joining Senate leadership for a press conference today to discuss the bill and the critical need for HOME STAR.
“I’m honored to represent the more than 2,600 members of the HOME STAR Coalition and the millions of families across America that will benefit from this important bi-partisan legislation,” said WellHome President Larry Laseter, who is representing the HOME STAR Coalition at the press conference with Senate leadership today. “HOME STAR is good policy, but even better practicality in its ability to deliver a triple win for America – it creates clean energy jobs for our nation’s skilled construction workers and at U.S. manufacturing facilities, it benefits homeowners through comfort and energy efficient improvements to their homes, and it helps the environment through long-term energy efficiency gains.”
The HOME STAR Coalition also announced its membership increased to over 2,600, the majority of which are small and medium sized businesses and organizations from every state in the country who stand in support of HOME STAR and its widespread benefits for job creation, savings for homeowners, and energy efficiency. To view the complete list of HOME STAR Coalition supporters go here http://www.homestarcoalition.
“I am a second-generation insulation contractor with branch operations in Arizona, Nevada and California,” said Insulation Contractors Association of America (ICAA) President Jeff Banker, of Banker Insulation in Phoenix Arizona. “Passage of the HOME STAR legislation would enable our family-owned business to hire contractors in all of our locations. I urge the Senate to please help small businesses across America by passing HOME STAR.”
The HOME STAR legislation, which passed the House in May, has bi-partisan support and over 30 co-sponsors in the Senate. HOME STAR also has the support of the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM).
HOME STAR is a market-driven, low-bureaucracy program that would create jobs fast by scaling the existing home energy efficiency improvement industry. Consumers nationwide would embrace HOME STAR because it will be simple, accessible, and help them save money.
For more information about HOME STAR and the HOME STAR Coalition visit www.homestarcoalition.org.
HOME STAR Coalition Applauds Senate for Inclusion of the bi-partisan HOME STAR Legislation in The Clean Energy Jobs and Oil Company Accountability Act.
HOME STAR Coalition Urges Swift Action by Congress and The Administration as coalition supporters grows to over 2,600
WASHINGTON, D.C., July 28, 2010 – The HOME STAR Coalition, a broad-based and diverse group of small and medium sized businesses and nationally recognized companies, labor and environmental organizations and associations, today applauded the inclusion of the HOME STAR legislation in The Clean Energy Jobs and Oil Company Accountability Act. The Home Star Coalition is joining Senate leadership for a press conference today to discuss the bill and the critical need for HOME STAR.
“I’m honored to represent the more than 2,600 members of the HOME STAR Coalition and the millions of families across America that will benefit from this important bi-partisan legislation,” said WellHome President Larry Laseter, who is representing the HOME STAR Coalition at the press conference with Senate leadership today. “HOME STAR is good policy, but even better practicality in its ability to deliver a triple win for America – it creates clean energy jobs for our nation’s skilled construction workers and at U.S. manufacturing facilities, it benefits homeowners through comfort and energy efficient improvements to their homes, and it helps the environment through long-term energy efficiency gains.”
The HOME STAR Coalition also announced its membership increased to over 2,600, the majority of which are small and medium sized businesses and organizations from every state in the country who stand in support of HOME STAR and its widespread benefits for job creation, savings for homeowners, and energy efficiency. To view the complete list of HOME STAR Coalition supporters go here http://www.homestarcoalition.
“I am a second-generation insulation contractor with branch operations in Arizona, Nevada and California,” said Insulation Contractors Association of America (ICAA) President Jeff Banker, of Banker Insulation in Phoenix Arizona. “Passage of the HOME STAR legislation would enable our family-owned business to hire contractors in all of our locations. I urge the Senate to please help small businesses across America by passing HOME STAR.”
The HOME STAR legislation, which passed the House in May, has bi-partisan support and over 30 co-sponsors in the Senate. HOME STAR also has the support of the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM).
HOME STAR is a market-driven, low-bureaucracy program that would create jobs fast by scaling the existing home energy efficiency improvement industry. Consumers nationwide would embrace HOME STAR because it will be simple, accessible, and help them save money.
For more information about HOME STAR and the HOME STAR Coalition visit www.homestarcoalition.org.
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