Eureka Times-Standard: Eureka City Council joins energy efficiency program

March 19, 2015

Eureka residents now have an opportunity to upgrade the energy elements of their homes and commercial properties through a unique lending program with the City Council’s approval of the Property Assessed Clean Energy, or PACE, program this week.

Under the program, homeowners and commercial property owners can borrow money from certain approved lenders and repay those loans through an assessment on their property taxes. There are certain requirements: property owners must have a minimum of 10 percent equity in the property, that they haven’t missed more than one mortgage payment within a specified time period and have not declared bankruptcy in the past two years.

To have such a program available, the related legislative body — in this case the Eureka City Council — has to designate an area where property owners and lenders can enter into this agreement for the purpose of energy efficiency upgrades. The Eureka City Council did just that at Tuesday’s meeting with the unanimous adoption of a required resolution.

“Property owners who wish to participate in the program agree to repay the amount borrowed through the voluntary contractual assessment collected together with their property taxes,” according to the staff report.

The Eureka City Council had been slated to act upon the proposal earlier, but delayed action after it became known that the Federal Housing Finance Agency opposed PACE programs related to a concern that PACE assessments would be ahead of the agency’s own Fannie May and Freddie Mac loan when it came time to pay those assessments back. The agency argued that neither Freddie Mac nor Fannie Mae would issue loans for properties with PACE assessments in place. California FirstPACE counters that homeowners may have to pay off a PACE assessment before their property can be refinanced or sold, but in many situations the PACE assessment is transferable to the new owner.

One of the elements of the PACE program — compared to more traditional financing such as home equity loans — is that the loans are based on the property itself, not the owner’s credit score.

Originally published in the Eureka Times-Standard.