California pulled funding for its home solar and energy-retrofit loans yesterday in response to federal mortgage overseers' negative ruling on the program.
The California Energy Commission's (CEC) decision removes $30 million in federal stimulus funds awarded by the state last February to five counties for county and municipal home energy loans. The state said the five were expected to create 4,400 jobs and avoid 187,000 tons of greenhouse gas emissions through 2012.
Loans from the property-assessed clean energy (PACE) program are tied to property tax bills, allowing homeowners to extend payments and carry loans over when the house is sold.
A 2009 bill expanded California's program to cover water-efficiency improvements in addition to energy projects, and Gov. Arnold Schwarzenegger (R) signed a bill last April establishing a $50 million reserve fund to back local government bonds.
The programs had also been gaining momentum in other states. About 18 states and dozens of local governments have passed legislation allowing governments to aggregate the loans and issue bonds to get a better interest rate for such programs.
But the Federal Housing Finance Agency (FHFA) issued a May statement against the programs, saying the loans cannot take precedence over primary mortgages. The agency followed up this month with a policy statement covering Fannie Mae and Freddie Mac, the nation's two largest mortgage finance lenders (Greenwire, July 7).
State officials expressed frustration with FHFA, saying they had received mixed messages on whether to back the loans with stimulus money.
"In early dialogue with DOE and Congressional leaders regarding California placing an emphasis on PACE financing ... the Energy Commission received strong encouragement to follow up California's early leadership," staff wrote in a proposed decision yesterday.
"FHFA's and [Office of the Comptroller of the Currency's] recent direction flies in the face of over a century of lawful priority lien tax assessments issued by local governments to finance public benefits," the paper says.
State Attorney General Jerry Brown (D) filed suit against FHFA two weeks ago, claiming the mortgage companies mischaracterized the programs as risky loans and failed to follow environmental law (Greenwire, July 15). But Schwarzenegger has indicated he supports finding another way to use the stimulus funding.
"I am calling on the [CEC] to adapt to the changed regulatory landscape in a way that will allow full obligation of the reallocated funds by September 30, 2010," the head of the Schwarzenegger-created California Recovery Task Force wrote to CEC, the day after Brown filed suit.
The energy commission will consider alternate funding methods for retrofits at its Aug. 6 meeting.
Calif. expands stimulus-backed appliance rebates
Citing lower-than-expected demand, state regulators yesterday decided to extend federal stimulus benefits to cover most energy-efficient household appliances.
CEC voted to extend benefits to cover dishwashers, freezers, central air conditioning and heaters, in addition to refrigerators, air conditioning units and washing machines.
Since beginning in April, California's program has paid $11 million to 79,000 people, out of $31.7 million total. Nineteen states have already exhausted their allotments.
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