Pitkin County energy loans tied up in nationwide fight
July 19, 2010
ASPEN – Pitkin County’s Energy Smart Loan Program remains in limbo while a fight with mortgage underwriters over such programs heats up on both coasts.
A bill introduced Thursday in Congress would prevent lenders from imposing stricter criteria in communities with Property Assessed Clean Energy (PACE) programs. Meanwhile, California’s attorney general is suing the federal government to allow a program that lets homeowners pay for installing energy efficient devices through their property taxes.
PACE programs, such as the one envisioned in Pitkin County, let homeowners better insulate their homes, install solar panels or take other steps to improve energy efficiency, and pay for the improvements through property tax assessments.
California’s lawsuit contends that government-sponsored mortgage buyers Fannie Mae and Freddie Mac are blocking the program by indicating they won’t buy or guarantee mortgages on properties that participate. Fannie Mae and Freddie Mac have said the loans are a “senior lien” on property, which puts lenders in a subordinate position in case of default. The Federal Housing Finance Agency, which regulates Fannie and Freddie, agreed.
Pitkin County’s program came to a standstill even before it commenced as a result.
“Pretty much everybody has put the brakes on around the country,” said Dylan Hoffman, Pitkin County energy program manager.
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Eagle County, however, is considering writing a few Energy Smart loans this year to homeowners who don’t have mortgages held by Fannie Mae or Freddie Mac.
Hoffman is hesitant to do even that.
As things stand now, it’s possible any homeowner or home buyer in a PACE community, regardless of whether they’re a Smart Energy Loan Program participant, could feel the consequences of the FHFA guidelines, he said.
The county’s $50,000 cap on Smart Energy loans could come off the top for a first-time home buyer seeking a loan, according to Hoffman. Someone seeking $150,000, for example, would only be approved for $100,000 because the potential for a loan of up to $50,000 exists.
“We want to make sure that wouldn’t be the case,” Hoffman said. “If we had a negative impact on those nonparticipants, that’s unacceptable.”
Though the county’s program is on hold, county commissioners last week approved a National Association of Counties resolution in support of PACE programs.
“The FHFA’s action threatens the viability of PACE programs, which in turn will hamper job creation and deny homeowners an opportunity to responsibly reduce their energy consumption, reduce their utility bill and benefit their community,” the resolution reads in part.
In addition, the county has drafted a letter to Colorado’s congressional delegation urging them to support legislation that allows PACE programs to proceed.
Pitkin, Eagle and Gunnison counties have collaborated on setting up the a Smart Energy Loan Program that has many common elements, after voters in all three counties approved Energy Smart programs last fall. In Pitkin County, voters authorized $7 million in borrowing to fund the loan program, though the county intended to start with $1 million.
In addition, the three-county partnership was awarded a $4.9 million Energy Efficiency and Conservation Block Grant to support energy retrofits, among other efforts.
The Associated Press and Vail Daily contributed to this report.