Posts Tagged ‘Northwest Green Building Law Blog’

What is PACE Financing and Is It Doomed?

On September 27, 2010 Author By Scott Wolfe Jr        

Started in the green revolution’s holy land, Berkley, California, PACE financing is shorthand for Property-Assessed Clean Energy Financing (Wikipedia entry).

The concept is simple:  cities loan money to property owners to install clean energy equipment.   The loans are then repaid to the city through annual property tax assessments.

As originally conceived, it’s a win/win/win situation really.   Property owners get funds to improve their property, paying back the loan with money saved in the the property’s reduced operating expenses.   Cities and communities benefit by upgrading its overall energy efficiency.   Businesses and efficient energy investors benefit because the market grows for its products.

All was going very well for PACE Financing.  PACE legislation was passing across the country, and President Obama’s administration wholeheartedly supported PACE programs.

This progress came to an abrupt halt in June 2010, when the Federal Housing Financing Authority (FHFA) dropped this news:   Properties with PACE loans cannot be purchased by mortgage giants Fannie Mae and Freddie Mac.

Why not?

Well, PACE loans create a lien against properties similar to a tax lien, meaning that the lien has priority over all other debts (including mortgages).   The value of these loans can be between $10,000 and $100,000, and sometimes more.   The problem for these mortgage holders is obvious, as they are losing priority on their collateral.

The news from the FHFA caused more than $150m in funding to get yanked by the US Department of Energy, and has some predicting the demise of PACE Financing as we know it.  And they may be right.

Can PACE Be Saved?

The question now is whether these PACE Programs can be saved.   While I believe they can be, I don’t think the programs will be unaffected by the FHFA determination.   Here is a few things that are happening to help PACE stage a comeback, and a glimpse at how this might affect the PACE Programs:

1)   California is Fighting It:   First, Sonoma County and the California Attorney General have both separately filed suit against the FHFA claiming that the determination is wrong, or that FHFA lacks jurisdiction to make the determination on behalf of states and counties.

2)  Legislation is Being Proposed:   The US Congress (as well as local reps and senators) are introducing bills aiming to protect PACE financing programs.   One such bill is the PACE Assessment Protection Act of 2010.

3)  Re-Thinking PACE: States may be ready to re-think the way they structure these PACE programs, and provide some protections for mortgage companies.   While not passed in response to the FHFA announcement, Louisiana’s new PACE egislation may have predicted these problems, as it greatly accommodated mortgage holders.   The PACE legislation from the 2010 session, for example, requires enough equity in the house to support the loan, and requires permission from the mortgage holder for commercial loans greater than $100k (talked about in this post)

4)  Commercial Focus:   The FHFA restriction really affects the residential markets only.  As such, many states and municipalities may be re-focusing their PACE programs on the commercial market.  One example of this is New Orleans, who anticipated launching a PACE district with the help of funding from the US Department of Energy’s America’s Solar Cities program.   The city says they plan on moving forward with the district, except it will only be for commercial PACE loans.

Hey, What Does This Have To Do With Construction?

The PACE Financing Programs has a lot to do with construction and construction law.   You may or may not know, but our firm publishes two blogs that focuses on green building laws:   The Louisiana Green Building Law Blog and the Northwest Green Building Law Blog.   I am also a LEEP AP, and focus part of my practice on green building issues.

I recently wrote a blog post called:  Think Green Building is Irrelevant?  Think Again. The post discussed a report published by NPR saying that green building accounts for 33% of new construction in the United States.  That’s a remarkable number.   And if these PACE Programs get off the ground, the existing construction green building numbers will be driven up significantly.

Stay tuned.

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Posted in:     Construction News, Green Building  /  Tags: , , , ,   /   1 Comment

Think Green Building Is Irrelevant? Think Again

On September 23, 2010 Author By Scott Wolfe Jr        

Green, green, green, green, green, green. The word gets used so much (see: Greenwashing). Geesh, even companies are changing their logos to green to cash in on the popularity.

Still, despite the PR, many in the construction sector wonder: Does anyone actually build green?

A report from NPR suggests that they certainly do, reporting that green building accounts for 1/3 of new construction in the United States! The article suggests, and I agree, that:

The numbers suggest a revolution is taking place within an industry that is historically slow to change. There are many factors — and many players — in this move toward green building

This article was originally posted on Wolfe Law Group’s topic-specific Louisiana Green Building Law Blog and Northwest Green Building Law Blog.

Posted in:     Green Building  /  Tags: , ,   /   2 Comments

Lane Powell Launches Blog on Sustainability and Climate Change

On April 21, 2010 Author By Scott Wolfe Jr        

While technically our “competition,” there’s nothing wrong with us welcoming the Lane Powell law firm to the sustainability conversation with the launch of their new blog, Sustainability and Climate Change Reporter.

By gleaning over the promo materials, it appears the blog will focus on environmental regulation and sustainable business practices…which, sometimes, fits right in with our focus: Green Building and Design issues.

Our favorite post from Lane Powell’s new reporter so far: Oregon’s Renewable Energy Tax Credit Program Undergoes Revisions.

The new blog from Lane Powell will be well-written and informative, and for those interested in sustainability laws and the green industries, they should subscribe (and subscribe to us, too, of course).

This article was originally posted on Wolfe Law Group’s topic-specific Northwest Green Building Law Blog.

Posted in:     Around The Web, Green Building  /  Tags: , ,   /   1 Comment

Washington Legislation Wants to Define “Green” Homes

On March 11, 2010 Author By Scott Wolfe Jr        

My wife and I were looking for condominiums in the Seattle area a few years ago, and every place we inspected marketed themselves as “green built.”   Being a LEEP AP, I asked a few questions about what the label meant.   Most of the time, it meant nothing.

That’s precisely what a new bill in the Washington legislature is trying to prevent.

The practice of deceptive green marketing has a name.   Wikipedia defines Greenwashing as follows:

Greenwashing (green whitewash) is the practice of companies disingenuously spinning their products and policies as environmentally friendly, such as by presenting cost cuts as reductions in use of resources. It is a deceptive use of green PR or green marketing.

Greenwashing is so serious it has its own Greenwashing Index.

The new bill was introduced just this January 2010 by Senators Becker and Fraser, and requires the state building code council to adopt rules to define “green” home and “energy efficient” home for residential units and residential buildings.   It seeks to prohibit builders and developers from marketing or selling a home as “green” or “energy efficient” unless it meets the specifications.

As currently written, the code must be written by December 2012.  Thus far, the bill has strong support.

Builders and Developers should keep a close eye on this legislation, especially as they begin new projects in the coming years hoping to market the project to green-seeking buyers.

If the bill passes, it will be interesting to see how the definitions are drafted, and whether they will incorporate already existing certification programs, such as the U.S. Green Building Council’s LEED program (as a recent amendment to the bill suggests).   Follow the bill at Washington Votes here, or stay tuned to the Northwest Green Building Law Blog.

This article was originally posted on Wolfe Law Group’s topic-specific Northwest Green Building Law Blog.

Posted in:     Green Building, Washington  /  Tags: , , , , ,   /   Leave a comment

Explaining Seatte's New Energy Disclosure and Reporting Requirements

On February 10, 2010 Author By Scott Wolfe Jr        

Building upon the “Efficiency First” SB 5854 signed into law last year by Washington Governor Chris Gregoire, the City of Seattle announced a new city ordinance that will require owners of large commercial and multi-family properties to measure its annual use of energy.

Why?  Seattle City Council Chair Richard Conlin explains in the city’s press release that “[y]ou can’t manage what you don’t measure.”

New Requirements in Washington & Seattle

In large part, the Washington bill and Seattle ordinance will require certain classes of private property owners to rate their buildings using Energy Star software, and disclose the information to prospective buyers, lessees and lenders prior to any closing transaction.

Here are some highlights of the new state-wide regulations, including information on how it may apply to you:

  • Non-residential buildings greater than 50,000 square feet must rate and disclose beginning January 1, 2011.   Buildings greater than 10,000 square feet required to rate and disclose beginning January 1, 2012.
  • Beginning January 1, 2010, public agencies may not lease or renew space in private buildings with Energy Star rating less than 75.

The Seattle ordinance adds a few wrinkles, highlighted as follows:

  • Multifamily buildings (5 units or more) are subject to disclosure requirements.
  • Rating date must be disclosed to current tenants, if they request it
  • Energy performance data must be reported annually to City of Seattle.   Multifamily properties must report beginning April 1, 2012.  Other non-residential property must report beginning April 1, 2011 if over 50,000 SF, and April 1, 2012 if over 10,000 SF.

Consequences for Failing to Report

Since the state law and city ordinance is so new and not even in full effect, it’s difficult to predict how aggressive the city and state will be in enforcing the regulations.   As time goes on and the challenges of the requirements are examined, these regulations may even be altered to aid in enforcement.

Seattle’s City Ordinance provides the city with the following remedies if a building owner fails to comply:

  1. Failure to Report:  $150 citation, and if not filed within 15 days of the citation, a $150 per day penalty for first ten days of noncompliance, then $500 per day for each day in violation pat the 10th day until compliance is achieved.
  2. Failure to Disclose:  $150 citation for first violation, $500 for subsequent violations.

The failure to disclose penalty is a lot less severe than then failure to report, which can become astronomical to a property owner if they try to ignore the ordinance.    As usual, the ordinance does provide administrative procedures to challenge and mitigate citations.

Related Links

Seattle Green Building Capital Initiative

Raw Text:   Seattle Ordinance 123226

Raw Text:   Washington Senate Bill 5854

This article was originally posted on Wolfe Law Group’s topic-specific Northwest Green Building Law Blog.

Posted in:     Green Building, Regulations, Washington  /  Tags: , , , , , ,   /   2 Comments
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