ConstructionPro Week, Volume: Construction Advisor Today - Issue: 78 - 10/22/2010

NRDC Files Suit In Effort to Restart Pace Program

The Natural Resources Defense Council (NRDC) earlier this month filed a lawsuit (No. 10CV7647) against two agencies, demanding a restart of the Property Assessed Clean Energy (PACE) program. The suit was filed in federal district court in the Southern District of New York against the Federal Housing Finance Agency (FHFA), which regulates government-sponsored mortgage buyers Fannie Mae and Freddie Mac, and the Office of the Comptroller of the Currency (OCC), which regulates national banks.

"Federal housing regulators must stop obstructing programs that make energy-efficiency upgrades and renewable-energy projects affordable for American homeowners," NRDC stated in its complaint. 


"Federal housing regulators are standing in the way of programs that make clean energy projects affordable for homeowners and lower electricity bills," said Katherine Kennedy, energy counsel for NRDC. "It defies common sense that the federal government is blocking programs that could create jobs, jumpstart our economy, put money in homeowners' pockets, and fight climate change at the same time. Instead of shutting them down, the federal government should help these programs grow."


NRDC asserted that FHFA and OCC have halted PACE clean energy financing programs that are already under way in California, Colorado, and New York and that have been adopted in 20 other states and the District of Columbia.


With PACE programs, the upfront costs of property owners' clean energy projects are financed by municipalities. Homeowners then pay off the projects as an incremental charge on their property taxes over an extended period of up to 20 years with the savings on their energy bills often exceeding the costs of the payments from the start.


NRDC argued that the program is voluntary and easily transferable to the next property owner if the current resident decides to move. The program can be used to fund anything from small-scale renewable-energy systems such as solar panels to energy-efficiency upgrades such as better windows, insulation, or heating and cooling systems.


The Obama administration has supported PACE programs in the past, with the U.S. Department of Energy (DOE) awarding more than $150 million in federal stimulus funds to support them last year. Federal housing regulators have since halted the programs nationwide through what NRDC called "a backdoor administrative action." In July, FHFA and OCC issued statements to Fannie Mae, Freddie Mac, and the national banks that effectively halted PACE efficiency programs nationwide.


"The result has been a freeze on nearly all existing and planned PACE programs, leaving millions of dollars in federal stimulus funds in question and thousands of jobs implementing the projects in limbo in addition to putting climate-change goals and economic-development plans across the country on hold," NRDC said.


NRDC said it is suing the agencies for halting the programs without justification and for doing so without following the proper protocol as required by law. "This includes failing to conduct a review of the environmental impacts and to provide the public an opportunity to comment before taking this action." 


"Financing is a key barrier for property owners who are interested in lowering their bills with clean-energy improvements," said Greg Hale, senior finance specialist at NRDC's Center for Market Innovation. "PACE programs provide a unique solution, allowing them to overcome this roadblock without relying on public dollars and with virtually no risk to existing lenders. In fact, with PACE programs, clean-energy improvements can reduce the risk of mortgage default by lowering energy bills and increasing property values."


If there were a 3 percent penetration rate for PACE programs over the next decade, approximately 3.3 million homes would be retrofitted, Kennedy told GBI. Such a penetration would result in about 320 million metric tons of avoided carbon-dioxide emissions, she noted.


Spokespersons for both FHFA and OCC informed GBI that their respective offices are declining comment on the lawsuit.


In California, Attorney General Jerry Brown, Sonoma County, the City of Palm Desert, and the Sierra Club have filed similar federal lawsuits. NRDC's lawsuit contains similar claims to the other lawsuits but is the first one to name OCC as a defendant, Kennedy said.


Also, Sen. Barbara Boxer (D-Calif.) and Rep. Mike Thompson (D-Calif.) have introduced congressional legislation that would require the federal government to allow states and localities to move forward with PACE programs (GBI, Sept. 1, 2010, "AIA Seeks Passage of PACE Legislation").  


New York State is one of the 23 states that have enacted PACE legislation, and the state received $40 million of DOE's stimulus funds for PACE energy-efficiency programs. In New York, at least 24 communities and three counties have implemented or are considering PACE programs, including New York City, Babylon, Bedford, Binghamton, Ithaca, Nassau County, Albany County, and Tompkins County.


Steve Rizer, Editor
Green Building Insider




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