Judge Orders Lease on Life for Moribund Green Finance Program
Categories: Environment
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But Green Finance SF -- which I described in a column as financially reckless -- might have a new lease on life, thanks to an institution beloved by San Franciscans known as the public comment period.
A ruling Friday in federal court says people must be allowed to submit complaints about the 2010 warning. This will "allow the public, for the first time, to weigh in on why the Federal Housing Finance Agency's hasty action to halt PACE efficiency programs were unsupported by fact, policy, and law and should be swiftly reversed," Kit Kennedy, counsel for the environmental group NRDC, wrote in an e-mail to SF Weekly.
Last April, then-Mayor Gavin Newsom announced what he called an Internet town hall to explain how property owners could save on their PG&E bills with a special loan for energy-saving improvements, including wall insulation.
San Francisco, like other communities, would help finance the upfront installation costs, and homeowners would repay that through assessments on their property tax bill. That way, energy-conscious homeowners could take on additional debt, despite a global mortgage meltdown that had frozen credit for the average person.
In order to handle the tax payment scheme, San Francisco was to set up a "special taxation district" encompassing houses participating in Green Finance SF. Tax payments take priority over mortgage payments under law, which means the government has a good chance of collecting its money on time. But the problem was that the weakened mortgage lenders probably wouldn't be able to collect payments after such a harsh financial meltdown.
Last July, the Federal Housing Finance Agency warned that Property Assessed Clean Eneregy (PACE) programs, including Green Finance SF could exacerbate the mortgage crisis.
California homeowners and governments had already been financially ruined by special taxation districts like the ones behind Green Finance SF. In the early 1990s, dozens of similar districts were created so developers could pay for improvements, including sewers and sidewalks -- and then cities would tax only the homeowners who benefited.
As 1992-recession era development deals collapsed, however, counties ended up on the hook for failed special taxation districts. Nevada County -- 150 miles northeast of here -- actually went bankrupt, thanks to the failure of this very kind of deal, because the city couldn't pay off bonds floated to cover the cost of improvements.
Fast forward a decade, and regulators saw potential disaster zones.
Following the federal regulator's warning, mortgage lenders of last resort, Fannie Mae and Freddie Mac, announced they would not touch loans tainted by PACE, which caused the program to fizzle nationwide.
Environmentalists encouraged the California Attorney General to help sue.
The resulting suit claimed that, when regulators warned of the dangers of PACE, financial regulators were actually making environmental policy. And under the National Environmental Policy Act, agencies conducting environmental policy must listen to public input before they proceed.
And so financial regulators were ordered Friday accept comments from environmentalists, and anyone else, about their 2010 warnings.
If the hours-long public comment droning at San Francisco government meetings is any guide, the words of San Franciscans will be well-represented in that slush pile.
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