Fannie and Freddie bring down Boulder clean-energy finance program
Fannie Mae and Freddie Mac claimed the first casualty in their attack on a promising clean-energy financing tool when Boulder County, Colo., canceled the latest round of its popular ClimateSmart Loan Program on Tuesday.
“We are extremely disappointed by the lack of flexibility and vision we’ve encountered with the FHFA [Federal Housing Finance Agency], and with Fannie and Freddie,” the county Board of Commissioners wrote in cancelling the program.
To date the program has helped more than 600 homeowners invest more than $10 million on rooftop solar panels, home wind systems, and retrofits that cut energy waste — work performed by local businesses. The current funding round had attracted another 173 applicants.
ClimateSmart uses Property Assessed Clean Energy (PACE), a Berkeley-developed tool that adds the cost of solar arrays, energy-saving retrofits, and other home improvements onto a property’s tax assessment. This lets property owners pay back the cost over 15 to 20 years, removing the barrier of high upfront costs and the possibility they will lose out if they sell before the investment has paid for itself.
Twenty-two states and the Obama administration have endorsed the model as a way to spur home-energy investment, help property owners cut monthly bills, and stimulate local economies. Clean-energy advocates consider it a key innovation for spreading building technology.
But Fannie and Freddie, the government-sponsored mortgage-finance corporations, threw existing programs into confusion last month with letters to lenders prohibiting the assessments. Grist reported the full story last week, including the odd nature of Fannie and Freddie’s concern, since energy-saving investments that pay for themselves make borrowers more financially secure, not less.
Fannie and Freddie promised clarification in their May 5 letters, but have so far provided none.
Boulder County’s notice on Tuesday hints at what the disruption is like on the ground for homeowners eager to improve their homes and businesses eager for work.
“We know the decision to suspend the ClimateSmart Loan Program represents a significant disappointment to you — our applicants and partners — who have looked to this innovative option to make valuable and cost-effective energy efficiency improvements on your homes,” the commissioners’ letter states.
“We also recognize and regret the tremendous loss to our business community which has benefitted greatly from the stimulus effect of the first two rounds of the residential program. Since the program was launched in May 2009, the CSLP has generated over $10 million in projects completed by more than 280 local businesses.”
Colorado Gov. Bill Ritter (D) joined a large outcry from governors, mayors, members of Congress, and PACE advocates asking for clarification from FHFA, the lending corporations’ regulator.
Fannie and Freddie’s letters have “put a substantial chill on PACE programs here [in Colorado] and across the country,” Ritter wrote [PDF].
The county said it would refund the $75 application fee to citizens who have already paid it. The PACE program for commercial buildings is still active.