Unfavorable federal decisions creating widespread uncertainty

NORTH BAY – The Solano County Board of Supervisors has decided to hold off investing in an energy loan financing program under Assembly Bill 811 until after the federal officials clear up the regulations the Federal Housing Finance Authority has put on the programs.

AB 811 allowed cities and counties to create financing districts where loans can be taken out and paid back on property tax bills for energy-efficiency improvements like insulation, windows, solar and more.

Sonoma County was the first county to adopt a program under AB 811 when it launched the Sonoma County Energy Independence Program in March of last year. Nearly $45 million in projects have been contracted in the program.

It was from a report given to the Solano board in September of last year that it was decided that energy-efficient upgrade loans were something worth exploring.

In December of last year, the board passed a resolution authorizing the county to join the California Communities Joint Powers Authority, CaliforniaFIRST. This was a statewide program helping to establish Property Assessed Clean Energy programs under AB 811 guidelines. It additionally planned to join Retrofit Bay Area, a partnership sponsored by ABAG to further these retrofitting programs.

The California Energy Commission early this year gave a total of $27.25 million in grants to CaliforniaFIRST and Retrofit Bay Area.

But the recent actions by the housing authority have put these kinds of programs on hold all over.

In May, Fannie Mae and Freddie Mac, the federal agencies that buy more than 70 percent of new home loans from lenders, issued a guidance stating they won’t accept property loans with an energy independence assessment because it holds senior lien status over the mortgage, presenting “a significant risk to lenders and secondary market entities.”

Because instructions to the loan seller say servicers are adjusting the loan-to-value ratios to reflect the maximum permissible loan amount available to borrowers in PACE jurisdictions, the Solano board is concerned borrowers in the county will be at risk for not qualifying for mortgage loans.

The Sonoma County Energy Independence Program was successful in creating contracting jobs, and according to an outlook report by Dr. Rob Eyler, the chair of the economics department at Sonoma State University and the director of the Center for Regional Economic Analysis, there were more to come.

Dr. Eyler said the construction spending in Sonoma County in 2009 showed an average of $364,363 in spending generates one full-time equivalent job in construction.

He estimated that if SCEIP reached $1 billion in cumulative spending by September of 2012, 11,270 new jobs would have been created; if the program reached $500 million, 5,635 would be created; if $100 million, there would be 1,127 new jobs.

Districts all over are now waiting to hear what the outcome of the guidelines will be.

In Sonoma County, the Board of Supervisors decided to keep its program open after the temporary suspension. The board said staff will continue to work with Congress to overturn the lending guidelines and directed staff to work with local banks and credit unions to develop options allowing SCEIP participants to be independent of Fannie Mae and Freddie Mac.