Pitkin County energy loans on indefinite hold
August 25, 2010
ASPEN – An ongoing battle with federal mortgage underwriters has forced Pitkin County to put its Energy Smart Loan Program on indefinite hold.
The county announced Tuesday that the voter-authorized program, which it had hoped to have up and running by May or June, can’t proceed under current circumstances. Instead, the county will be looking at other options to further renewable-energy projects within its borders, said Dylan Hoffman, energy program manager for the county.
“Now we have to figure out what other kind of loan program we can create,” he said. “We’ve shifted gears and said, ‘OK, how can we enhance privately funded projects?'”
County voters approved the Energy Smart program in November 2009, authorizing the county to borrow up to $7 million to create a loan pool that residential property owners could tap into for funds to better insulate their homes, install solar panels or take other steps to improve energy efficiency. The loans were to be repaid through property tax assessments.
The county intended to start with a $1 million loan pool, but the program came to a standstill before it began.
In May, government-sponsored mortgage buyers Fannie Mae and Freddie Mac said such programs violate standard mortgage provisions. The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, agreed.
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Congressional legislation has been introduced that would restrict the FHFA’s ability to alter underwriting standards within communities that have PACE, or Property Assessed Clean Energy, programs such as the one envisioned in Pitkin County.
Until some resolution is reached, however, the county will turn its attention to identifying existing loan options available for energy improvements and explore opportunities to offer loans to residential properties that have no mortgage or don’t have a mortgage tied to Fannie/Freddie underwriting standards. The county may also be able to back loans, allowing homeowners to get a better interest rate on a loan from a bank, Hoffman said.
And, the county is exploring the potential to launch a PACE program for commercial properties, as those mortgages are not subject to FHFA guidelines. County commissioners initially decided to focus first on residential projects, but the recent developments may spell a shift in priorities, Hoffman said.
“Now that residential is not an option for us, commercial is an option where we could go,” he said.
Hoffman said he received plenty of inquiries about the Smart Energy loans, but has no idea how many applicants would have actually come forward had the county been able to launch the program.
“I know there are a lot of people who were interested,” he said.
Hoffman said he knows of 10 specific projects that planned to use Energy Smart funding, but doesn’t know if those efforts have gone forward despite the stalled loan program.
The underwriting issues have stalled PACE programs around the country. Last year, Gunnison and Eagle County voters approved loan programs at the same time Pitkin County voters endorsed one. The three counties collaborated on setting up a Smart Energy Loan Program that has many common elements.