By Sacramento Business Journal

The California Energy Commission on Thursday canceled $30 million in awards that would have supported Property-Assessed Clean Energy (PACE) programs in 23 counties and 184 cities, including an award of about $1.3 million that would have gone to Sacramento and Yolo counties.

The action responded to roadblocks created by recent actions of the Federal Housing Financing Authority which damaged the authority of local governments to issue priority lien tax assessments by directing Fannie Mae and Freddie Mac to take punitive actions against home owners who live in communities that participate in PACE programs.

⿿This action is necessary to expand the financial options available to local governments to achieve residential energy efficiency retrofits,⿝ California Energy Commission chairwoman Karen Douglas said in a news release. ⿿It is vital that energy financing programs, including PACE, are offered so building owners can overcome one of the biggest obstacles to investing in energy efficiency and renewable energy projects ⿿ lack of access to long-term, low-interest financing.⿝

The California Energy Commission had invested $110 million of its federal stimulus State Energy Program (SEP) funding in three competitive program solicitations, including about $30 million for PACE programs.

Earlier the commission announced that a pilot group of CaliforniaFIRST would be awarded a two-year, $16.5 million SEP grant. Sacramento County was the lead agency on the SEP grant, which was to help participating jurisdictions market the program and buy down the interest rate for early program participants.

Because PACE is no longer a viable financing option, the state Energy Commission canceled the CaliforniaFIRST award and four others to Sonoma County, Humboldt County, the city and county of San Francisco and the city of Los Angeles.

While the commission canceled the awards, it also said it supports PACE programs and hopes they used as a financing option in the future.

⿿We⿿re not jettisoning PACE,⿝ CEC spokeswoman Susanne Garfield said. ⿿It⿿s viable, but not at this time.⿝

The commission said it would explore other financing options for municipal governments over the next couple of months.

Using PACE financing, local governments could make low-interest loans to property owners for energy upgrades, then collect the loan payments through property tax assessments. Property owners pay off the loans through their property tax bill, as opposed to making a personal loan payment. When a home or other property is sold, the loan transfers to the new property owner.

Copyright 2010 American City Business Journals

Copyright 2010