By Roy L Hales
November 26, 2014 (San Diego)--It has been nine months since California approved a $10 million reserve fund, to reimburse mortgage holders if homeowners with Property Assessed Clean Energy (PACE) default. (The residential program has been moving in slow motion since 2010, when, concerned about the priority PACE loans had over mortgages, the Federal Housing Finance Agency ordered the government-sponsored enterprises to not underwrite mortgages for homes with PACE loans.)
In September, Governor Jerry Brown signed AB 2597 and AB 1883 into law. For “California First,” these actions opened the door for their residential program to return to California. It was probably less of a breakthrough for the HERO PACE program which was already either adopted, or in the process of being adopted, by 100 cities as of February. Never-the-less, California legislation furthered PACE’s expansion through-out the state. There are at least four active programs and rumor has it that a fifth may soon be launching, yet two PACE programs dominate California headlines.
HERO, California’s leading residential PACE provider, was founded in Riverside county in December 2011. It spread throughout Southern California, up the central valley and into the North. Another 42 cities and counties recently adopted this program. That brings the current total to 213 cities and unincorporated areas, or 44% of the total households in California. HERO PACE has helped fund more than 20,000 residential efficiency projects, totaling more than $375 million in financing.
Homeowners use this money to install solar panels, HVAC systems and more efficient windows.
As a result of the California drought, approximately 4% of HERO’s projects are now water related. These include outdoor landscaping options, weather based irrigation systems, rainwater catchment systems and thousands of other high-efficiency water saving devices.
One of their better known jobs was replacing San Diego County Supervisor Dave Roberts’ 6,000 square foot lawn with artificial turf (photo at top of page). Artificial turf can reduce water usage by 44 gallons per square foot. Roberts decided to make the switch when he realized that could mean 264,000 gallons a year! Roberts calculated that he would recoup the $45,000 loan, through savings on water and lawn care, in nine years. Of course, like all PACE loans, the payments would be added to his property taxes.
“Up until now, I’ve been doing my part by following recommended watering schedules,” he said in a press release. “But I realized that I could, and should, do more to permanently reduce my home’s water footprint.”
The second largest residential provider is California First. It is run by Renewable Funding, whose CEO Cisco De Vries started America’s first PACE program in Berkely six years ago. Since then, Renewable Funding has operated a commercial PACE program in California and offers consumer loans throughout the US. They helped draft AB 2597 and AB 1883.
This may explains the phenomenal growth California First has had since it re-entered the residential market last August. They have already signed up 168 cities and unincorporated areas. Ninety-four projects have been completed and California First has applications for another $24.4 million in work.
“California continues to lead the way in providing PACE financing options and we are pleased that a growing number of California homeowners have taken advantage of our innovative program. The success of PACE in California bodes well for its adoption in other states that are closely watching our efforts,” said De Vries.
HERO PACE is also looking outside California, though at this point speculatively.
The only PACE program to expand into other states is Ygrene Energy Fund. They have been operating in Miami Bay, Florida, for nearly two years. Ygrene expects to open an office in Georgia early 2015.
“Historically we have focused on partnering directly with local cities and counties, which has had an appeal to some jurisdictions,” said Michael Lemyre, Ygrene’s Vice President of District Development. “We will also being offering a statewide program in the near future that cities and counties can opt into, as well as offering to form a local district with them. Either way we design, develop and operate the PACE programs with local jurisdictions – an option that they really like having.”
Ygrene’s first Californian residential program started up in Sacramento during 2011. Since that time they have expanded throughout Sacramento County, neighbouring Yolo County and into the City of Chula Vista as well as Eastern Riverside county, in partnership with the Coachella Valley Association of Governments (CVAG).
There is at least one other residential PACE program, which operates within Sonoma County.
Rumor has it that San Diego based Figtree PACE is contemplating the launch of a residential program.
“Going Green” from News of the Week from Dave’s Desk)
Spread of PACE programs. Symbol placings are not all county-specific. CF = California First; H = Hero PACE; S = Sonoma; Y= Ygrene
Cisco DeVries, Father of P.A.C.E. and CEO of Renewable Funding
Sacramento Sunrise – Courtesy Robert Couse-Baker, CC BY SA, 2.0