By Silicon Valley / San Jose Business Journal

The California Energy Commission may cancel more than $30 million in proposed State Energy Program awards to four counties, including Santa Clara County, as the federal government tries to work out the legalities of Property Assessed Clean Energy financing.

According to the commissionâ¿¿s business meeting agenda for July 28, the commission may cancel the grants under the direction of the U.S. Department of Energy.

PACE was expected to create a groundswell of clean energy projects â¿¿ and an estimated 20,000 jobs in the Bay Area â¿¿ as homeowners would be able to finance solar and other energy-efficiency projects via their property tax bills.

For example, a pricey solar installation would become eminently more affordable because payments would be spread out across decades.

The PACE program was expected to launch in July in 14 Bay Area counties, including Santa Clara County and the city of San Jose. The city of San Francisco had already launched its program, and so had Sonoma County, but both programs were put on indefinite hold courtesy of Freddie Mac and Fannie Mae.

In May, the Federal Housing Finance Agency said that FHFA lenders Fannie and Freddie wouldnâ¿¿t issue mortgages on properties with PACE programs attached to them because it would amount to a first lien on the property. Fannie and Freddie guarantee more than half of the U.S. residential mortgages.

According to the state Energy Commission website, the DOE is directing states to consider financing options other than PACE. The commission staff on July 28 will recommend canceling the grants because the solicitation only allowed for financing through the first-priority liens the FHFA opposes, according to the meeting agenda.

The proposed awards under the program were announced in February. Hereâ¿¿s who stands to lose, and how much:

â¿¢ Sacramento County: $16.4 million

â¿¢ Humboldt County: $4.3 million

â¿¢ City and County of San Francisco: $2 million

â¿¢ Sonoma County: $2.5 million

â¿¢ City of Los Angeles: $4.6 million

Santa Clara County had applied for $2 million under the program, but the commission said the countyâ¿¿s application didnâ¿¿t meet the programâ¿¿s technical requirements.

Funding for this program under the SEP was to come from the federal Recovery Act.

Copyright 2010 American City Business Journals

Copyright 2010