California attorney general sues US government to permit popular renewable energy program

Calif. AG sues feds over renewable energy loans

SACRAMENTO, Calif. — State Attorney General Jerry Brown sued the federal government Wednesday, asking a federal judge to stop government-sponsored mortgage buyers from blocking a program that lets homeowners pay for energy efficient devices through their property taxes.

Brown’s lawsuit argues that Fannie Mae and Freddie Mac’s opposition is forcing California counties to back off plans to provide the incentives. He sued the buyers and their regulatory agency, the Federal Housing Finance Agency, in San Francisco U.S. District Court.

The voluntary Property Assessed Clean Energy program would encourage homeowners to install solar panels, better insulate their homes and take other steps to improve energy efficiency, Brown said. Homeowners pay for the improvements through their property tax assessments over a decade or more.

Fannie Mae and Freddie Mac said that the programs could give counties top priority to be repaid if homeowners default on their mortgages. As a result, they said they could not buy or guarantee mortgages on properties that participate.

The Federal Housing Finance Agency, affirmed that legal interpretation July 6.

Agency spokeswoman Stefanie Mullin said Wednesday that she could not immediately comment.

Brown said in a written statement that the federal programs are “throwing up impermeable barriers to bank lending that creates jobs, stimulates the economy and boosts clean energy.”

He planned an afternoon news conference in San Diego to formally announce the lawsuit. San Diego and about half of California’s 58 counties were offering or preparing to offer the incentives, but they stopped after the federal programs warned in May that they could violate federal rules.

Brown argues in his lawsuit that the government incorrectly interprets the program as providing loans. He contends in his lawsuit that they are classified under California law as tax assessments.

As a result of the federal interpretation, some lenders started requiring homeowners to repay the full amount of their improvements before they could sell or refinance their homes.

The uncertainty led counties to halt the programs while Brown, Gov. Arnold Schwarzenegger and the state’s congressional delegation lobbied the Federal Housing Finance Agency to permit a program they said could cut energy use while spurring green jobs and manufacturing.