Note: In 2010, the Federal Housing Finance Agency (FHFA), which has authority over mortgage underwriters Fannie Mae and Freddie Mac, directed these enterprises against purchasing mortgages of homes with a PACE lien due to its senior status above a mortgage. Most residential PACE activity subsided following this directive; however, some residential PACE programs are now operating with loan loss reserve funds, appropriate disclosures, or other protections meant to address FHFA's concerns. Commercial PACE programs were not directly affected by FHFA’s actions, as Fannie Mae and Freddie Mac do not underwrite commercial mortgages. Visit PACENow for more information about PACE financing and a comprehensive list of all PACE programs across the country.
Oklahoma enactedS.B. 102, effective November 2011, to make PACE loans junior and inferior to other liens. This law should allow local governments to adopt PACE programs that are within the acceptable parameters established by the FHFA.
Property-Assessed Clean Energy (PACE) financing effectively allows property owners to borrow money to pay for energy improvements. The amount borrowed is typically repaid via a special assessment on the property over a period of years. Oklahoma has authorized county governments to establish such programs, as described below. (Not all local governments in Oklahoma offer PACE financing; contact your local government to find out if it has established a PACE financing program.)
Oklahoma enacted S.B. 668 in April 2009, authorizing counties to create County District Energy Authorities. The Authorities are authorized to issue notes and bonds, seek out public and private lenders, or apply for grants and loans from other governmental entities in order to establish and fund local PACE programs. Once a county has established the Authority and PACE program, a property owner in the county may enter into a contract with the county to receive a loan for permanently fixed renewable energy or energy efficiency improvements to the property. A loan is then repaid through property taxes and constitutes a lien on the property until paid in full.
Any resulting county loan program established must require participating property owners to undergo an energy audit (the cost of the audit may also be rolled into the financing received). The efficiency equipment must be ENERGY STAR-rated. Finally, the legislation authorizes the County District Energy Authorities to establish a grant program for nonprofit organizations that are exempt from property taxation.