A legal fight to protect a program that allows Sonoma County residents to pay for energy-saving retrofits to their homes through property taxes was dealt a significant and possibly final setback last week.
The court fight is over tighter federal lending requirements that Sonoma County officials and others say hamper such programs by scaring off homeowners.
The new guidelines were crafted by a federal agency in 2009 amid a historic wave of home foreclosures and were intended to minimize further default risks for the recession-wracked lenders Fannie Mae and Freddie Mac.
The move prompted lawsuits from Sonoma County, the state of California and other public and private entities who said those risks were overblown. Their combined case against the Federal Housing Finance Agency said its new guidelines undermined the government-financed retrofit programs and harmed participating homeowners.
The programs enable a range of energy and water-saving upgrades, including solar panels, plumbing and heating improvements on homes and businesses.
On March 19, a three-judge panel for the 9th U.S. Circuit Court of Appeals waded back into the case, ruling unanimously that the Federal Housing Finance Agency was acting within its authority when it directed Fannie and Freddie to tighten lending practices on homes associated with such retrofit programs.
The court panel dismissed the county-state lawsuit and upheld the housing agency's action, echoing similar decisions handed down in the past six months on related cases by two other U.S. appellate courts.
The outcome sets up a steep hurdle that could end the nearly three-year legal fight, county and state sources signaled Tuesday.
"I think we've all been through this enough times and don't want to chase good money after bad," said Board of Supervisors Chairman David Rabbitt.
County officials stressed they were not dropping their retrofit program. Upgrades for businesses have not been affected by the conflict.
The fight on lending practices for home retrofits now shifts back to Congress. A proposal by Rep. Mike Thompson, D-St. Helena, has failed to garner enough support in past years and could remain a longshot in the current session.
In the meantime, many observers are waiting to see if the Federal Housing Finance Agency follows through on a lower court's order to complete a formal rule-making process -- one it was set to finish in September but can now drop due to the appellate ruling.
The agency received a reported 40,000 comments in that process, an outpouring that supporters said showed broad support -- including from other arms of the Obama administration -- for allowing so-called Property Assisted Clean Energy, or PACE programs.
But at least a half-dozen high-powered banking groups have backed the Federal Housing Finance Agency's stance on the retrofit programs, a lobbying campaign that could make a favorable resolution more elusive for program supporters.
In a written statement Tuesday, Alfred Pollard, the agency's general counsel, said it was "pleased" with the last week's court ruling. He did not respond to questions sent through an agency spokeswoman.
The Board of Supervisors is set to review its legal options with attorneys at its April 9 meeting.
A spokeswoman with the California Attorney General's Office said the state was also considering its next move. Those include a second look at the case by the same three-judge panel or the full appellate court, or a request for review by the U.S. Supreme Court.