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Mission of the York Energy Efficiency Committee

Our mission is to respond to the global warming crisis by promoting energy efficiency, alternative energy, and environmental initiatives throughout the town of York, Maine.

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Praise, doubts on lending plan for energy savings

Senator Bowman has been a champion for Property Assessed Clean Energy Bonds – or PACE – which is a revolutionary way of financing home-energy projects though the use of property taxes.   There has been some push-back from the financial industry – but the objections may not insurmountable.  A measure in Maine is currently being debated in the State House on LD 1717.

Today, the Portland Press Herald ran a story on LD1717

By ETHAN WILENSKY-LANFORD, Kennebec Journal February 15, 2010

A diverse group of interests is gathering in Augusta to shape new legislation on energy efficiency that aims to land perhaps $75 million in federal stimulus money for the state.

The bill, L.D. 1717, would allow towns and cities to lend money to homeowners for energy conservation projects through the Efficiency Maine Trust. It is sponsored by Rep. Patsy Crockett, D-Augusta.

These loans, however, would be attached to properties, not individual lenders, and would be repaid through property taxes.

This lending mechanism was designed to allow homeowners to extend their payments enough to see immediate net savings through decreased energy costs, according to Bob Howe, a lawyer representing the Maine Association of Building Efficiency Professionals.

If a property is sold before the loan is repaid, the remainder would be transferred with the property to the next owner to continue repaying.

This proposal has run into problems with the banking, credit union and real estate industries, however, according to lawmakers and advocates.

A national model for lending mechanisms of this sort – called “property assessed clean energy,” or PACE – usually calls for property liens created by efficiency loans to take precedence over other liens, such as mortgages.

Chris Pinkham, president of the Maine Association of Community Banking, said that provision could create problems in the secondary mortgage market, which allows banks to bundle and sell mortgages to investors.

“We think the concept is great,” he said. “At the same time, we absolutely have to make sure that our normal outlets for the sale of mortgages are not hesitant about accepting these changes.”

Last summer, Pinkham said, he received a letter from the Federal Housing Finance Authority, which regulates main players in the secondary mortgage market Fannie Mae and Freddie Mac, warning of “superior liens” such as those proposed by L.D. 1717.

The FHFA suggested these loans might increase indebtedness and foreclosures and decrease values of mortgages in the secondary market.

Sen. Barry Hobbins, D-Saco, co-chairman of the Utilities and Energy Committee, said the financial community brought up good points the committee had not previously considered for this legislation.

“If we did not have all the stakeholders in one room,” he said, “it could have blown up the whole bill.”

A revision has been submitted to give efficiency loans “junior status” against mortgages, which Hobbins expects will satisfy bankers’ concerns. The group of stakeholders is also working on establishing a reserve fund to address defaults on these efficiency loans.

Interested parties will meet again before reporting back to the committee on Thursday.

The bill is being considered as “emergency” because of stimulus funds awarded by the Department of Energy.

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