Resolution Regarding Property-Assessed Clean Energy Programs

Resolution Regarding Property-Assessed Clean Energy Programs

Whereas property-assessed clean energy (PACE) is a mechanism for private property owners to finance renewable energy and energy efficiency projects; and,

Whereas most PACE programs are established by municipalities by issuing bonds to fund projects; and,

Whereas the financing is provided by municipalities to the property owner and paid back by the owner through an additional “assessment” to the property (i.e. an extra property tax) levied by the municipality over a set time period, potentially as long as 25 years; and,

Whereas PACE obligations are tied to the physical property, not the property’s owner; and,

Whereas PACE assessments are treated like a tax lien and municipalities are first in line to be repaid-ahead of mortgage agencies, in case of default; and,

Whereas traditionally Fannie Mae and Freddie Mac have objected to the residential prime lien status of PACE and have refused to accept mortgages on properties with PACE liens; and,

Whereas in 2014 the Federal Housing Finance Agency (FHFA) stated that “super-priority liens” created by programs like PACE “increases the risk of losses to taxpayers”; and,

Whereas it is important that consumers have choices in financing and efficiency and renewable energy projects; and,

Whereas, the private lending industry in the U.S. is capable of financing such projects; and,

Whereas, the market should provide financing for these projects, not government; and,

Whereas, PACE has been associated with issues of consumer protection and predatory lending in which contractors have signed up residents for PACE who may not fully understand the conditions and the impact on their property tax bill; and,

Therefore be it resolved that the American Legislative Exchange Council (ALEC) is opposed to government involvement in financing renewable and efficiency projects for private property owners; and,

Therefore be it further resolved that ALEC believes the market should provide financing for these projects not government and the private lending industry in the U.S. is capable of financing such projects.