Gov. Jerry Brown and Rep. Mike Thompson are involved in separate efforts to boost Sonoma County's groundbreaking program to help residents pay for energy-saving improvements to their homes.
The highly touted program, which has funded more than $50 million worth of residential projects since it started in 2009, sustained a major setback in 2010 when federal housing officials said it jeopardized the nation's major source of home mortgages.
While Thompson, D-St. Helena, is seeking to remove the federal roadblock, Brown and state Treasurer Bill Lockyer have created a $10 million fund aimed at offsetting the loan program's potential impact on mortgages.
Thompson's legislation went nowhere in 2010 and 2011, but may fare better this year with a new director, a former Democratic congressman from North Carolina, heading the federal agency that sets mortgage policy.
The fund created by Brown and Lock-yer is intended to address the federal government's concerns and possibly lead to a change in policy, several observers said.
"That was certainly the hope," said Jane Elias, coordinator of Sonoma County's Energy Independence Program.
California's new fund, designed to insure mortgage lenders against any losses due to the energy loan program, "might serve as a model for other states," said Kristina Klimovich, spokeswoman for PACENow, a New York-based nonprofit that promotes the Property Assisted Clean Energy program known as PACE.
Evan Westrup, spokesman for the governor, declined to comment on whether the state fund was intended to prompt a change in federal policy clearing the way for loans enabling homeowners to install energy-saving retrofits, such as solar power systems.
Sonoma County's PACE program, the nation's first ongoing countywide program, got off to a fast start with requests for more than $9 million in funding in late 2009.
But funding applications dropped by half in fiscal year 2010-11 and left the program's future — at least for residential projects — in doubt.
The program, which has funded more than 1,100 residential solar power systems, began rebounding early last year and a report to the Board of Supervisors last week said that 78 residential projects had received $2.1 million in funding since September.
"We continue to get interest in PACE and applications come in weekly," said Elias, noting that the loan program marked its fifth anniversary last week.
Counting residential and commercial projects, PACE loans have financed more than $66 million in retrofitted items, including energy-efficient windows, heating and cooling equipment, insulation and solar panels.
But a major obstacle still hangs over the PACE programs in California and 30 other states and the District of Columbia: A Federal Housing Finance Agency determination that PACE loans to homeowners pose a threat to mortgage giants Fannie Mae and Freddie Mac, which collectively handle about 60 percent of the nation's mortgages.
The problem for the federal agencies is that homeowners repay PACE loans through their property tax bills, based on liens that take priority over a mortgage if the borrower defaults.
In July 2010, Fannie and Freddie said they would stop buying loans on homes that are participating in PACE programs, which have loaned nearly $170 million to homeowners nationwide since 2009.
The National Journal included PACE loans on a list of 11 ways to jump-start economic growth without spending any money, and in Sonoma County the residential and commercial improvements completed by local contractors have created an estimated 721 jobs.