With legal barriers removed, energy financing program can grow, supporters say
Six years after approving legislation to establish a renewable energy financing program in Florida, some supporters say barriers have now been removed that caused the program to get off to a sluggish start.
In 2010, the Legislature passed and Gov. Charlie Crist signed HB 7179 providing authority to local governments to create renewable energy financing programs. Local governments could issue financing that is repaid through property tax bills, with the unpaid portion being assessed to the next property owner.
"I think this is going to attract capital to the state of Florida and I think it will create jobs in the energy efficiencies and solar technology industries," then-state Rep. Adam Hasner, the House Republican leader from Delray Beach and sponsor, said in 2010 after the bill passed.
But the program, called PACE (Property Assessed Clean Energy), has lagged behind statewide on its promise in Florida on the residential side because of legal challenges.
On the national level, concerns expressed since 2010, by lending giants Fannie Mae and Freddie Mac, have caused some banks to avoid residential mortgages involving the program.
But last month, PACE received a boost from the Obama Administration when the U. S. Department of Housing and Urban Development and the U. S. Department of Veterans Affairs issued guidelines for PACE programs that are designed to reduce the risk to borrowers and lenders.
The Department of Energy also released a draft of its updated "Best Practices Guidelines for Residential PACE Financing" for public comment.
"We are thrilled by today's announcement and appreciate the hard work that went into producing this guidance," David Gabrielson, executive director of PACENation, said in a statement after the July 19 announcement.
In Florida in particular, PACE lagged on the residential side because of legal challenges while there was some growth on the commercial side, industry experts say.
Leon County resident Robert Reynolds challenged the validation of bonds by the Florida Development Finance Corp. for Leon County's PACE program.
After a circuit court validated the bonds in 2014, the Florida Bankers Association challenged the bonds as an unconstitutional impairment of contracts.
But the Florida Supreme Court dismissed the challenge because it said the association lacked standing as a citizen, taxpayer or property owner in any city or county where the bonds were being issued.
The Reynolds case and other bond validation challenges have been resolved on procedural issues in lower courts, clearing the way for the PACE programs to move forward more rapidly on the residential side, supporters said.
"That somewhat gray cloud, which kind of held people in the wings waiting for an outcome, has cleared," Stacey Lawson, CEO of the Ygrene Energy Fund, said during a webinar this week. "Now we have seen a rapidly accelerating adoption by cities and counties into PACE programs in Florida, which will follow with broader service territories and more volume on the customer side."
Ygrene says it is is Florida's largest administrator of PACE programs.
Still, the PACE concept is not without its critics. The Mortgage Bankers Association raised concerns about the FHA guidelines in July, saying the program could put taxpayers at risk by making the Federal Housing Administration the guarantor of home improvement loans.
But Erin L. Deady, an environmental land use and energy attorney from Lantana, called the Mortgage Bankers Association statement "rhetoric" and said, "They (FHA officials) are not the guarantor of anything." She wrote a Florida Bar Journal article about PACE that was published in June.
She said having the FHA and VA recognize that PACE assessments are just like any other taxes paid by homeowners provides a path for the program to grow on the residential side in Florida.
"That is important to the investors who invest in PACE financing and its important to the programs to be able to collect it, just like you collect any other line items on a person's tax bill," Deady said. "It is the first time the federal agency who oversees mortgages on some level has signaled they are OK with that."