As you will recall, the Property Assessed Clean Energy program allows residents to pay for solar installations through a tax assessment on their property. ?Last year, the Federal Housing Finance?Agency (FHFA) essentially stopped the program with a letter advising mortgage lenders that Fannie Mae and Freddie Mac would not purchase mortgages on homes that also have PACE financing. ?California and eight other parties sued the FHFA to rescind its letter and change its policy.
The PACE lawsuit (Case Nos. 10-cv-03084?CW, 10-cv-03270, CW, 10-cv-03317 CW, 10-cv-04482 CW) continues with a possible end some time in the summer of 2012. ?A trial date is set for April 30, 2012. ?(click here for the Case Management Order). ?Some of my previous coverage of the lawsuit can be found by clicking here. In the beginning of this year, the court asked the Attorney General of the United States to submit a Statement Of Interest offering its position regarding the PACE lawsuit.
Although the executive branch previously endorsed the PACE program, and the creative financing mechanism that is the cornerstone, the Statement of Interest evades the issue at hand (the subrogation of primary mortgages). ?Instead, the DOJ argues simply that the the FHFA has authority to bring and defend its own lawsuits and the DOJ does not see a need or mandate to interfere with FHFA’s handling of the matter. ?The DOJ then states its only area of concern is that the plaintiffs lack standing to bring the suit.? While plaintiffs may lack standing (I doubt it), the DOJ could have also offered analysis of the legitimacy of the program’s structure.
The parties are now heading to the discovery stage of litigation, but frankly there is nothing to discover.? As far as I can tell, there are really no material facts in dispute.? Either the FHFA is going to allow for PACE programs to move forward, follow the Department of Energy guidelines (Full Guidelines Here), and acknowledge the minimal risks involved.? Or, the FHFA will undermine one of the best modern approaches to nurturing mainstream adoption of sustainable development.
Unless Congress passes a law supporting PACE financing, the lawsuit will move forward, and frankly the prospects don’t look good for plaintiffs.? That means PACE programs will essentially become a great idea undermined by the inflexibility of bureaucracy.
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