San Diego County Board of Supervisors - Courtesy County News Service

Residential PACE comes to Unincorporated San Diego

By Roy L Hales

Screen-shot-2014-03-18-at-3.43.47-PMAs a result of recent Californian legislation, the San Diego County Board of Supervisors has approved the residential Property Assessed Clean Energy (PACE) program. Though commercial PACE is available throughout San Diego, up until now only cities that opted to go on their own have offered residential programs. Now Home Energy Renovation Opportunity Program (HERO), California First and Figtree PACE programs have all been approved for homeowners.

San Diego County Chairwoman Dianne Jacob - Courtesy County News Center
San Diego County Chairwoman Dianne Jacob – Courtesy County News Center

Chairwoman Dianne Jacob was on the Board when the idea of a  residential PACE program was raised six years ago.

“We’ve come a long way from there to get where we are today,” she said.

It was one of the issues that prompted Supervisor Dave Robertson to run for  office.

“Residential PACE gives our county unincorporated residents a great opportunity to install energy-saving devices on their homes. It also puts people to work and really helps to stimulate our economy,” said County Supervisor Dave Roberts. “Residential PACE will result in energy and water savings for County residents, and reduce greenhouse gas emissions.”

Supervisor Dave Roberts, Courtesy County News Center
Supervisor Dave Roberts, Courtesy County News Center

Last February Jacob and Roberts once again brought the idea of a residential PACE program to the Board. That summer the county decided to proceed with Commercial PACE programs, but deferred a decision on residential PACE because of Federal Housing Finance Agency (FHFA) concerns.

PACE liens are considered senior to primary mortgages and, in the advent of a foreclosure, would be paid ahead of the mortgaging institution. As a result, in 2010 FHFA ordered the government-sponsored enterprises to not underwrite mortgages for homes with PACE loans (i.e. – Fannie Mae and Freddie Mac). This slowed the development of Pace programs.

On Sept 26, 2013, Governor Edmund Brown signed SB 96 which, among other things, called for the formation of a PACE mortgage loss reserve program to address concerns raised by mortgage entities. This program was recently approved and will be administered by the California Alternative Energy and Advanced Transportation Financing Authority and be used to refund mortgage holders from losses associated with a PACE lien on the property.

Governor Brown explained, “PACE enables homeowners to buy solar panels, install low-flow toilets and make other smart investments that save energy and water without breaking the bank. As California confronts a severe drought and a rapidly changing climate, this program gives homeowners another opportunity to do their part.”

JP McNeill, CEO of Renovate America, which provides the HERO Program
JP McNeill, CEO of Renovate America, which provides the HERO Program

Installing solar panels is one of the best known usages of the PACE program, but it is also available for whole-home heating and cooling (HVAC), energy-saving windows, doors, roofing and insulation, among other types of energy and water saving improvements. Property owners are currently able to borrow up to 10% of their property value and repay the loans over 5, 10, 15 or 20 years through an assessment on their property tax bills. There is currently legislation on California’s books that would allow PACE loans to be increased to as much as 15% of property value.

As a result of these developments, San Diego County staff recommended that the Board of Supervisors adopt the residential PACE program.

The Board of Supervisors unanimously agreed.

Supervisors Horne, Roberts and Jacob all expressed their appreciation of Governor Brown for the legislation that made this possible.

The Hero PACE program is already operating in some of urban San Diego. Last week the city of San Diego joined Carlsbad, Escondido, Lemon Grove, San Marcos, Solana Beach, Oceanside and Vista as cities that either currently offer the Hero PACE program or have adopted it. 48 projects, worth more than a million dollars, have already been been funded, another 215 contracts have been signed and 376 have been approved but not yet finalized.

Screen shot 2014-04-16 at 9.26.53 AM
Hero’s present operations in San Diego – Click on image to enlarge

Hero has been receiving inquiries from the County’s unincorporated regions for some time and will be launched before the end of the month.

“This program will help to create local jobs while providing energy and water savings for San Diego residents. It’s a win-win for the whole community,” said Dustin Reilich, HERO Director of Municipal Development.

The CaliforniaFIRST residential PACE program operates under the auspices of the California Statewide Communities Development Authority (CSCDA). It will launch this summer in 17 California counties and 167 cities.

Figtree PACE does not yet have a residential program, but a spokesperson said, “we are pleased to the Residential PACE expansion throughout California.”

(Image at top of page: San Diego County Board of Supervisors – Courtesy County News Service)

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