In the largest display of statewide joint powers authority in California history, 14 counties and 126 cities have launched a new variation of the Property Assessed Clean Energy (PACE) program to help commercial property owners reduce their buildings' energy and water use.
The California Statewide Communities Development Authority has created the CaliforniaFIRST program, which allows commercial property owners to use municipal bonds to finance energy efficiency, water efficiency and renewable energy upgrades. The program is available for the owners of commercial and industrial properties, as well as multifamily housing developments with more than five units.
The program will be operated as a public-private partnership, with private capital used to supply the upfront funding for the work. Renewable Funding, an Oakland-based company specializing in PACE program administration, will coordinate the program's operations.
‘Commercial PACE gives businesses a great option for pursuing energy efficiency projects that may have previously been out of reach,’ says San Diego County Supervisor Dianne Jacob. ‘The county's partnership with CaliforniaFIRST provides a mechanism for participants to start spending less money on energy bills and more back into the business.’
‘CaliforniaFIRST's approach has potential to promote energy efficiency retrofits of commercial properties and maintain lien security for mortgage lenders,’ says Wayne Seaton, managing director of Wells Fargo's sustainable public infrastructure group. ‘Wells Fargo's environmental commitment is cultivated in part from an appreciation of the ways in which we can help our clients and our communities achieve environmental goals.’
The PACE program movement began in California when the city government in Berkeley created this financing mechanism for residential property owners in 2008. By 2010, PACE programs were in place in 22 states and the District of Columbia.
However, the Federal Housing Finance Agency (FHFA) nearly derailed the program for residential properties in July 2010 by claiming the program posed safety and soundness concerns for Fannie Mae, Freddie Mac and the Federal Home Loan Banks. In August 2011, the U.S. District Court for the Northern District of California ruled that the FHFA violated the Administrative Procedure Act in its decision to force the government-sponsored enterprises not to purchase residential mortgages with PACE assessments. In June, the FHFA continued its opposition to the PACE program by issuing a notice of proposed rulemaking that would prevent Fannie Mae and Freddie Mac from purchasing loans that are subject to liens under the PACE program.