|AIA Urges Congress to Save Clean Energy Bond Program|
|Tuesday, 20 July 2010 07:38|
Calls on Congress to Pass Legislation Eliminating Regulatory Obstacles to PACE Bonds.
The American Institute of Architects today called on Congress to pass legislation that guarantees local governments the right to establish clean energy programs through Property Assessed Clean Energy (PACE) bonds.
PACE bonds are municipal bonds in which the proceeds from the sale of the bonds are loaned to commercial and residential property owners for the purpose of financing energy retrofits. These loans are then re-paid over long periods of time – much like a mortgage - via an annual assessment on their property tax bill. Given the numerous, well-documented benefits that energy efficient buildings offer, PACE bonds are viewed as an innovative tool to help property owners reduce energy consumption.
“PACE bonds are particularly important now, at a time when a lack of credit and financing for construction projects has devastated the design and construction industry,’ said Paul Mendelsohn, AIA Vice President of Government and Community Relations. “As banks have restricted lending, building owners and developers have cancelled projects, taking work out of the hands of architects, builders and others.” Mendelsohn noted that employment in this sector has dropped by 25 percent since the recession began in 2007, adding to the unemployment rolls.
“PACE bonds provide a new funding source that puts people back to work improving our nation's energy independence. They also help shore up the depressed commercial and residential real estate markets,” Mendelsohn said in a letter to the Chairmen and Ranking Members of the House Financial Services and Senate Banking Committees.
The Federal Housing Finance Agency (FHFA) and the Office of the Comptroller of the Currency (OCC) have recently issued recent statements blocking PACE pilot programs, challenging states’ rights to levy tax assessments for a public purpose and asserting that the consumer and lender protections were not sufficient. Because of FHFA’s oversight of Fannie Mae and Freddie Mac, and OCC’s influence over banks, the statements brought existing PACE programs to a halt and froze the ability of communities to launch PACE programs already under development nationwide.
PACE is a local government solution that is supported by a century of legal and historical precedent for special assessment districts, including more than 37,000 districts nationwide that have been used to finance sewers, sidewalks, and other projects that serve a public purpose. In just the past two years, twenty-two states have passed laws enabling local governments to develop PACE programs.