FOR IMMEDIATE RELEASE
June 29, 2010
Contact: Barb Halpin, 303-441-1622
Boulder County and other municipalities work to resolve new federal mortgage guidelines that prohibit Property-Assessed Clean Energy (PACE) programs
Boulder County, Colo. – Due to recent decisions made at the federal level that have had an immediate and detrimental impact on property-assessed clean energy financing programs throughout the country, Boulder County has cancelled the third round of residential financing under the ClimateSmart Loan Program.
The residential portion of the loan program, which had been on hold since early May while the county worked through two major issues at the federal level, has been suspended indefinitely.
Boulder County was able to successfully address one of the issues by bringing the ClimateSmart Loan Program (CSLP) into alignment with the Department of Energy’s newly issued guidelines for all property-assessed clean energy, or PACE, programs.
However, the county, working along with other PACE program administrators, has been unable to reverse a policy decision by Fannie Mae and Freddie Mac which prohibits new financing, secured by a Fannie Mae or Freddie Mac mortgage, on properties on which there exists a property assessment for any energy efficiency/renewable energy improvements. Since property financing can switch hands over time, any residential loan secured by a mortgage may be subject to the Fannie Mae and Freddie Mac rules at some point.
Working with Colorado’s Congressional delegation and other stakeholder partners, the county has met complete resistance to modify the policy from the Federal Housing Finance Agency, which helps set national standards for mortgages, and from Fannie Mae and Freddie Mac.
In a letter to ClimateSmart Loan Program applicants and contractors, the Boulder County Board of Commissioners wrote: “We are extremely disappointed by the lack of flexibility and vision we’ve encountered with the FHFA and with Fannie Mae and Freddie Mac, and we’ve been working closely with our local Congressional members as well as other stakeholders around the country to try to resolve these issues as quickly as possible. We initially hoped to get this issue resolved within a few weeks of our receiving notice of this new policy. However, it now appears that it will take several months before we can reach any kind of agreeable solution.
“We are particularly frustrated because the basis upon which the federal regulators are taking this action is purportedly that they do not find any public benefit created by property-assessed energy efficiency/renewable energy finance programs. For over 100 years, states have authorized improvement districts for purposes of creating improvements that both benefit the public as well as have special benefit for individual property owners.
“Moreover, in 2008, Colorado’s legislature added energy efficiency and renewable energy improvements to its list of authorized improvement district projects for which the legislature found significant public benefit. The federal Internal Revenue Code itself recognizes the public benefits of these improvements to private properties, and permits the use of tax exempt financing for those purposes. However, the federal housing regulators, for the first time in history, have now inserted themselves into this determination, and essentially overruled the state legislatures and ignored other federal law in this regard.”
The county commissioners further maintain that the community’s shared climate action goals can only be achieved through the strong support of residents who opt to make improvements on their own properties, collectively helping to reduce energy use, save money, improve air quality and decrease greenhouse gas emissions.
The commissioners also acknowledge the tremendous loss in potential revenue to the local business community, which has benefitted from the stimulus effect of the first two rounds of the residential loan program, as well as the impact on property owners who will need to secure other financing in order to make the desired improvements to their homes.
The current round of CSLP funding included 173 applicants for a total of $3.1 million in projects. Since the program was launched in May 2009, the ClimateSmart Loan Program has generated over $10 million in projects completed by more than 280 local businesses.
Boulder County will continue to explore other options to make funding available for residential energy efficiency and renewable energy financing.
Additionally, because the federal housing agencies’ actions do not impact commercial property improvements and financing, Boulder County’s Commercial ClimateSmart Loan Program is currently seeking applications from qualified commercial and industrial property owners.
If we are working with you on a Climate Smart Loan, we'll be calling you shortly to discuss your options. As soon as we hear anything new on the loan program, we'll post it.