Congress Threatens FHFA, Fannie Mae and Freddie Mac

"These guys don't want to pick a fight with Congress," Rep. Mike Thompson of northern California said of Fannie and Freddie. "There's no value in that. I've been absolutely mystified as to how they've come to the conclusions they've come to, and I'm not sure why they're doing what they're doing. I think they're way off base and I'm hopeful we'll be able to bring them back into this universe."

PACE programs let home and business owners pay for rooftop solar arrays, high-efficiency furnaces, insulation, and other improvements through a surcharge on their property tax bills, removing high up-front costs. Fannie and Freddie dislike that those tax assessments have senior lien standing to mortgages, even though analyses and pilot programs have found that energy efficiency and PACE programs can make borrowers more financially secure.

The bill would ban lenders from imposing penalties or stricter criteria on municipalities that use PACE; Fannie and Freddie recently told lenders to do just that. The bill would also prevent lenders from requiring homeowners to pay off assessments before refinancing their mortgages or selling their property.

The finance tool certainly has a lot of friends. It's been backed by $150 million in Department of Energy stimulus funding, the vice president's Middle Class Task Force, 23 state legislatures, governors such as Arnold Schwarzenegger [PDF], and mayors such as Michael Bloomberg [PDF]. California Attorney General Jerry Brown sued Fannie and Freddie yesterday to defend the PACE programs, the largest of which are in California.

More ...

CA Attorney General, Jerry Brown, Sues Feds over PACE

Today at the California Center for Sustainable Energy (CCSE) a press conference was held by California State Attorney General and former Governor, Jerry Brown.

Brown has announced that he is suing the Federal Housing Finance Agency as they recently put the kibosh on Property Assessed Clean Energy (PACE) programs across the nation, programs that allows property owners to pay for energy upgrades over time through special tax assessments.

On July 6, the Federal Housing Finance Agency (FHFA) issued a statement saying that PACE assessments would put unusual risk on on Private Mortgage Companies, like government-sponsored enterprises Fannie Mae (FNMA) and the Federal Home Loan Mortgage Corporation (A.K.A. Freddie Mac).

“Fannie Mae and Freddie Mac received enormous federal bailouts but now they’re throwing up impermeable barriers to bank lending that creates jobs, stimulates the economy and boosts clean energy,” - Says Brown.

In tandem with local and state officials from San Diego City Council's, Marti Emerald and Mayor Jerry Sanders, to County Supervisors, like Pam Slater-Price and Diane Jacob, Jerry Brown called for a common sense approach that will jump start our new economy.

Even State Assemblyman, Marty Block put in his two cents. Yet, the only Federal Presence was Congressional Candidate, Ray Lutz, an electrical engineer who combats the power of big energy utilities. We need to speak to our Federal Politicians, and get them to take their foot off the breaks.

You can add your independent voice to the call for a new clean energy revolution by writing your Federal Representatives about PACE.

PACE programs are an important part of the puzzle, a necessary financing tool to allow building efficiency work and renewable energy upgrades in these tough economic times.

"These PACE programs are literally the catalyst, our sustainable future is waiting."

When these PACE programs become regular practice, we will see thousands of new jobs and hundreds of new industries move forward, as our energy economy shifts to efficient renewable energy sources.

Three important points about these programs:

• First, all PACE programs should follow established Department of Energy (DOE) "Best Practices" Guidelines for PACE Programs.
• They must include third party Energy Audits and require property owners to decrease waste before adding expensive renewable generation, like Solar Photovoltaic Systems.
• Because they use local property assessments as financing guarinetees, they should require a 'loading order' for energy imporovements that requires the largest 'bang-for-the-buck'.  

For example, after energy efficiency and insulation envelopes are inspected, Solar Thermal Hot Water is the biggest energy saver and more cost efficient than Photovoltaic Electricity. Unless the Heating, Ventilation and Air Conditioning system is efficient, all the Solar Panels in the world are just decretive ornamentation.

A little 'accident' in Louisiana

Watch FUEL

"The Best Movie I've Seen ALL YEAR!"

"We use 25% of the world's oil, we have 2% of the worlds oil, we can't drill our way out. It is easier to put a man on the moon than to drill at the bottom of the ocean."

Oil processing kills:
• would you like a child with birth defects?
• Would prohibition have happened if not for Standard Oil (Exxon Mobil)?
• Was Diesel Killed?

Former Alaska Senator, Ted Stevens, indicted for taking bribes from big oil, ended his three-decade carrier.

America was once the great hope of all man kind, people around the world were hungry for American moral authority and leadership. After 250 years of disciplined leadership by republicans and democrats, the oil slaves in the White House, because of monumental arrogance and incompetence have drained the reservoirs dry. - Robert Kennedy, Jr.

Germany will be "Carbon Free" by 2050. Sweeden will be oil free by 2020, just ten years. Bio-Diesel should be used in every School Bus, Every 18-Wheeler, Every Navy Ship. Every Train should use Bio-Diesel. Is the global ban on Bio-Fuel a big scam?

• It takes as much energy to create a gallon of gas as is in that gallon, so you really burn two gallons.
• It takes as much energy to create a gallon of ethanol (CORN) as is in that gallon, so you get out what you put in, no energy.
  
• It takes about 1/3rd as much energy to create a gallon of Bio-Diesel (Soy) as you get out, but it takes lots of fertile land, which makes people cut down their forests, and kill millions of species.
• Is the cost of the oil wars worth more than researching our energy future? Could Algae replace oil, using just our waste?
• What if we put as much money into wind turbines as we put into Iraq? ($2-Trillion = all the energy we need, forever)
• Clean, Quick, Cheap, and immediate return. Conservation, we waste 40-50% of the energy we use.
• It is time for you to lead. Does the mayor know who you are?

Interesting Emerald Energy, and Mega-Flora Trees.

Sustainable Government - a Lesson from Lawrence Lessing of Change Congress

So, you are wondering when the recession will end? You want to know when you'll get your job back? Or when you can get your retirement savings back to previous levels? (Ha, ha, he, he ...)

First, you need a democracy dependent upon people, not corporate lobbies. Problem is, most of us work for corporations or unions that lobby? So, in order to have a just system that builds upon the common good, we must all give up some small measure of our 'power to influence' via campaign contribution$. That's not a 'Free Market', say those who believe politics should follow the directions of the funders.

"Who will ever vote against their own 'self-interest'?"
You do.

Until you are enlightened.

Look, until things change, nothing will change. So, Fix Congress First.

Help Support Property Assessed Clean Energy (PACE)

With the potential stoppage of financing for renewable energy retrofits we risk not only our ability to control our local economy, but also our Sustainable Future.

America’s energy problems — from economic crisis to global climate change — will only be solved by a national transition to renewables. Energy Efficiency and Clean, homegrown, reliable solar energy is ready to play a large part of the solution, but we have still just scratched the surface of our vast energy saving potential. In order to bring the technology to scale, we need to bring down costs, and supply long term financing in these rough economic times. The solution could be Property Assessed Clean Energy (PACE).

There is an urgent need to get our Federal leaders involved and make them aware of PACE programs to make them viable. Please use the sample letter below and/or go to Vote Solar to send your Federal Representatives a note.


Sample Letter:

Dear Representative:

Cities and counties throughout the U.S. are developing new finance programs that support clean energy building retrofits. Called Property Assessed Clean Energy (PACE), these programs represent a promising tool for local governments to bring new jobs, energy bill savings, and environmental benefits to their communities. To date, 23 states have authorized PACE, and and over $100 million in federal funds have been allocated to implement PACE programs around the country.

Unfortunately, PACE is facing a serious threat that could render these programs dead in the water. On May 5, Fannie Mae and Freddie Mac issued ‘Lender Letters’ that suggested that property owners with mortgages from these lending giants may be prohibited from participating in PACE programs. The move attacks the constitutional right of local governments to assess property taxes and throws a massive wrench in American green job growth and investment. It’s a big problem.

As a supporter of our new green economy, I am writing to request your assistance in this urgent matter. Specifically, I request that your offices:

1) Engage with the Federal Housing Finance Agency (FHFA), Fannie Mae, Freddie Mac, and other relevant regulatory agencies to seek immediate clarification of the Lender Letters sent on May 5, 2010. Existing PACE programs—especially the ones receiving federal ARRA funds and following DOE underwriting guidelines—should be directed to proceed without any concern that they might violate the terms of the Fannie Mae or Freddie Mac uniform mortgage instruments, or be otherwise subject to adverse action by the Government Sponsored Enterprises (GSEs); and

2) Convene a meeting among your offices, the GSEs, FHFA, other interested regulatory agencies, and PACE stakeholders to chart a course toward resolution of the parties’ concerns.

If this situation is not addressed immediately, the Fannie Mae and Freddie Mac “Lender Letters” will likely mean that:
• Federally authorized and supported PACE programs across America will shut down, employees will be laid off, and our nation will lose the ability to unlock an extraordinary new means to retrofit homes and buildings across America.
• A significant and troubling precedent will be set by allowing financial institutions to curtail the authority of local governments to levy taxes in pursuit of a public purpose.

I thank you for your time and support.

Sincerely,

Nuclear Dialog

From TED: Stewart Brand and Mark Z. Jacobson square off over the pros and cons. A discussion that'll make you think -- and might even change your mind.

The main problem with nuclear is not that it requires carbon energy, or that it takes high security, and a long time to build out. The main problem is that just ONE ACCIDENT, like Tree-Mile Island or Chernobyl will WASTE AN ENTIRE CONTINENT.

The other problem I have with nuclear is that it too is non-renewable, Yes, I know about breeder reactors, but the main source of nuclear fuel today is uranium, mined like coal, and then refined to useful levels. Once that resource is used, just like oil or coal, it is gone forever. We shouldn't waste our resources, we should bank them as a back-up source of energy in case of emergency.

Having said all that, I do think that nuclear should play a part in our energy portfolio. I think we should have Nuclear for special purposes, like space exploration, and National Defense. And I think we need to have nuclear capacity built to handle up to 20% of our energy needs, for security. Then we should use just enough nuclear to balance out the bumps and spikes in our renewable energy supply and demand curve (keeping the nuclear generation to about 3% of our total power used).

Nuclear should NEVER be located near population centers, and it should never be put down-wind of agricultural areas. It needs to be built in the wastelands, seismically safe, underground, and with adequate self-storage of all fuel and waste. Given these restrictions, Nuclear is viable and necessary. Not a profit center, just another small piece of the energy puzzle.

Use the comments section to tell us what you think.

Slow PACE

This is an update on the new Property Assessed Clean Energy (PACE) programs in San Diego. At a Home Energy Professionals meeting at the California Center for Sustainable Energy the other day the PACE Program Manager, Jeremy Hutman, enlightened a group of Energy Efficiency Auditors about new developments.

PACE Programs, in general, are a clever way to finance energy efficiency and renewable energy retrofits on existing real-estate. They allow the property owners to take out specialized long-term loans, similar to a second mortgage, but using government property law to place a primary lean against the property. This frees the loan from an individual's credit, and ties it instead directly to the property that the loan is intended to upgrade. That allows the owner to get the work done, to reduce energy waste, and save money on utilities, regardless of their personal credit. Additionally, the property can be sold, and the loan stays with it, transfered to the new property owners, who will directly benefit from the energy efficiency and generation.

The City of San Diego has been preparing such a program since October 2008, and keeps running into obstacles. They had been planning a roll-out of the program in March 2010, but found that they needed to change the Municipal Code. Now the program should begin late Summer 2010, but there's now a new hitch.

On May 5, 2010, the Federal Housing Financing Agency (FHFA) and Fanny May and Freddy Mac, issued letters that questioned the legitimacy of PACE loans as being senior to their mortgages. That was a reversal of what they originally said back in fall 2009, which was that they were going to accept it as an assessment on the property just as any other.

According to Jeremy Hutman from the CCSE, no PACE program anywhere in the nation will be moving forward until the Federal rules are worked out.

The ultimate purpose of these programs is reducing energy waste, and to allow for the creation of new markets for renewable energy, so we can put people to work by directly funding infrastructure improvements on existing real-estate. To this end, many of the unemployed have been re-trained to perform the work necessary, and many start-up businesses in renewable energy and energy conservation businesses are waiting for the money to become available. Yet, because of the unscrupulous corruption of the home financing markets, which have caused our economic recession, these privately owned government sponsored enterprises that actually own the debt, are rightly worried about potential waste or unwise loans with a priority claim on their properties.

There is a learning curve that needs to happen, but unfortunately there is not enough time to get that done before the PACE programs are supposed to get up and running. So, the big push right now is the Department Of Energy (DOE) has put out specific guidelines, or recommendations, for pilot PACE programs nationwide. What they are pushing is that Fannie (FNMA) and Freddie (FHMA) just accept that the new programs that are coming out will follow those guidelines. Including, specific (financial) loan loading order, cost effectiveness and a simple payback, that the system pays for itself in the lifetime of the loan.

The problem with renewable energy technology is that it is EXTREMELY EXPENSIVE, often costing ten to twenty years worth of carbon energy on the front end. Americans tend to worry little about wasting energy, which has traditionally been directly subsidized (editor note: and indirectly through defense expenditures related to contingencies in the Persian Gulf) by our government. So, instead of reducing energy use, we simply buy enough solar panels to meet current usage, and then end up wasting half the energy through inefficiency. Solar installers haven't always required efficiency measures, but for some reason the banks now want property owners to be able to pay back their loans. So, they want to require that any new property loans make financial sense, go figure.

Fortunately, for anyone involved with the energy efficiency business (like me) the only way to meet the DOE requirements is to do the energy efficiency work first, then add just enough renewable energy equipment to meet the need of the building.

There are basically two different legal mechanisms that are intended to be used for financing these PACE programs in the County of San Diego:
1) CaliforniaFIRST - based upon AB811 - a 2008 law that permits cities, counties, and joint power authorities to create clean energy financing districts under an alternative legal framework. Plus, AB474 - from 2009, which added water conservation to AB811 financing options. Property owners can take advantage of financing through CaliforniaFIRST after their local government joins the Program.

2) The City of San diego is not doing an AB811 program, they are using Mello-Roos program for renewable energy, efficiency, and water as well. The City of San Diego's Clean Generation program based upon a special voluntary opt-in Mello-Roos property tax assessment district, designed to see after our communities facilities district (CFD).

The City of San Diego finds itself in California  Climate Zones 7 and 10. In these mild climate zones, some energy efficiency measures make sense and some do not. Therefore, their will be very specific financial loading orders, program guidelines, and vetting and verification. This is to make sure that you take prudent energy efficiency measures before spending money on renewable generation.




Most energy efficiency measures are more effective than renewable energy, but if you have a newer home that was built after 2000, then your home is already meeting tight Title-24 energy efficiency measures. Perhaps all you can do to save money is add renewable energy systems, like solar-thermal hot water.

The bottom line is, right now we're looking late summer at the earliest for the City (of San Diego, Clean Generation) program, and before the end of the year for CaliforniaFIRST program.






Acronym Appendix
Industry Jargon
(apologies for the lack of clarity above, here is s primer on some of the terms and acronyms used in the home energy and finance industry)

AB811 = California State Assemble Bill number 811, from September 2008 - allows local municipalities to create special voluntary property tax districts for energy efficiency and renewable energy retrofits and upgrades. Includes things like Heating and Air Conditioning systems, EnergyStar Appliances, Solar-Thermal Hot Water, and Solar-Photo Voltaic Panels.

AB474 = California State Assemble Bill number 474, from October 2009 - adds financing options for Water Conservation measures, like low-flow pluming, grey water, and landscaping, to AB811 programs.

PACE = Property Assessed Clean Energy. Also know as, CA AB811 programs. Two such programs are the City of San Diego's Clean Generation Program, and the state wide California First program for Counties.

Clean Generation - The City of San Diego's PACE Program provides a financing for energy efficiency upgrades and renewable energy installations on private property. Participants agree to be part of an assessment district and will pay for the cost of the improvements, plus interest, over a 20-year period on their property tax bill. Qualified projects include renewable energy installations as well as retrofits associated with energy efficiency and water conservation. By making it easier for City residents to embrace clean technologies, the program will lower GHG emissions, stimulate the demand for local cleantech products, and save property owners money.

GHG = Green House Gas - the reduction of which is one of the major goals, along with energy security, energy distribution, and energy cost.

DOE = The U.S. Federal Department Of Energy,

Mello-Roos = named after the authors of the bill that made it California law in 1982. Mello-Roos is a form of financing that can be used by cities, counties, and special districts (such as school districts). Mello-Roos Community Facilities Districts (referred to as "CFDs") raise money through special taxes that must be approved by 2/3rds of the voters within the district. A CFD is formed to finance major improvements and services within the district which might include schools, roads, libraries, police and fire protection services, or ambulance services. The taxes are secured by a continuing lien and are levied annually against property within the district. The assessment appears on your annual property tax bill. If you are in a Mello-Roos district, you must disclose that information to someone who is buying your house. (Editors Notes: When California Proposition 13 passed in 1978, it severely limited the ability of local governments to use property taxes to construct public facilities and services. As a result, new ways to fund public improvements in respective locales were constructed.)

QA/QC = Quality Assurance, Quality Control. In the case of home energy retrofits and renewable energy installations, the government regulations require vetting and verification in the form of Home Energy Audits before and after the work, in order to realize real results.

IOU - Private Investor Owned Utilities, that have been granted a monopoly on a geographic area, like Sempra and PG&E, as opposed to Utilities owned in a Public Trust (like in Riverside). They have been allocated hundreds of millions in government money to administer energy efficiency (EE) programs. While all parties recognize there is an inherent financial conflict of interest between selling and saving energy, parties differ on the extent to which regulatory mechanisms can align IOU and customer (i.e. public) interests. See: Energy Efficiency Performance Incentives. Usually, these incentives require a 10%-20% decrease in energy use to qualify.

Renewable Funding, LLC - a short-term financing company that also administers some programs. They provide the bridge loans that keep property owners from having to shell-out money up-front, to do the retrofit work and/or buy equipment. The short-term finance company gets paid a percentage, and then re-package the loan for a long-term funder after the work and equipment has been vetted and verified. (editors note: these guys are genius.)

TBD = 'To Be Decided' (Who will verify and audit the buildings and systems to make sure everything works?)

Surveys VS. Audits - A "Survey" is an informal inspection that doesn't meet any legal standards for regulation or certification. For example, a municipal building department may survey a building system to see that it is installed, but not test the system to see that it works. A professional, third-party "Audit" is a required inspection that is used to document scientific measurements of systems and their quality for the purpose government regulations and financial incentives or credits.

FHFA = Federal Housing Finance Agency, their mission is to provide effective supervision, regulation and housing mission oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Banks to promote their safety and soundness, support housing finance and affordable housing, and support a stable and liquid mortgage market. (Editors Note: at which they are doing a bang-up job!)

FNMA = The Federal National Mortgage Association, nicknamed Fannie May. Fannie May was created in 1938 as part of Franklin D. Roosevelt's New Deal. Fannie Mae was established in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing.

FHMC - Federal Home Mortgage Corporation, nicknamed Freddie Mac, its mission is to provide liquidity, stability and affordability to the housing market.

It is important to note that both Fannie May and Freddie Mac are Private Corporations that are Government Sponsored Enterprises (GSEs), This means that, although the two companies are privately owned and operated by shareholders, they are protected financially by the support of U.S. tax payers. These government protections include access to a line of credit through the U.S. Treasury, exemption from state and local income taxes and exemption from SEC oversight.

To clear up one thing; there shouldn't be any up front fees for participating in the CaliforniaFIRST or Clean Generation PACE programs. So, do not let anyone scam you into putting-up a large 'down payment' toward future work. In spite of some confusion, these programs are setup to be pain free, so the loan process is quick, about two weeks before you have funds in hand. Therefore, all auditors, contractors, and inspectors can be paid by the property owner directly out of the loan funds without the homeowner having any out-of-pocket expenses.

See the CCSE presentation here.