PACE program full of problems

Sustainable home features and environmentally friendly neighborhoods remain important factors for homebuyers when choosing a home.

According to the third annual Realtors and Sustainability Report, 59 percent of surveyedmembers of theNationalAssociation of Realtors reported that consumers have an interest in sustainability when it comes to buying a home. The report surveyed Realtors about sustainability issues facing consumers in the real-estate market. Notably, 83 percent of respondents shared that properties with solar panels were available in their market and 36 percent said properties with solar panels increased the perceived value of the property. Energy efficiency remains important to consumers, with 69 percent of Realtors finding that clients were at least somewhat interested in sustainability.

The Santa Fe Association of Realtors adheres to guiding principles that include policy statements in support of sustainability. The City of Santa Fe recently adopted a Sustainable Santa Fe 25-Year Plan. The Santa Fe Association of Realtors (SFAR) recognizes the value of sustainability and in reviewing the comprehensive list of strategies or recommendations found in the city plan, the association offered several recommendations.

SFAR raised concerns about strategies to adopt “property assessed clean energy,” or PACE, programs or loans. These types of loans can have an adverse impact on credit and mortgage availability. In most cases the mortgage takes priority over PACE liens, but in the case of home foreclosure, the liens are paid before the lender can recoup any money.

Additionally, PACE loans are liens that run with the property so are included in the tax bill regardless of the property owner and would need to be disclosed to a potential buyer. The PACE loan, and the corresponding energy improvement, may be complicated to explain, and the buyer may be confused about the value of the improvement or the nature of the PACE loan, thereby injecting an element of uncertainty into the transaction.

Lastly, there have been incidents of fraud and abuse, such as unscrupulous contractors taking advantage of elderly or low-income owners by not clearly explaining the nature of this kind of loan, doing shoddy work, and the financed improvement may not offer the promised energy or financial savings. Due to these concerns, the association recommended that any effort to advance such a strategy include experts in the areas of real estate, mortgage financing, banking and credit unions.

There are a number of plan strategies that, if employed, would likely raise the cost of housing, potentially decreasing the number of properties available for rent or purchase, especially by low-income residents. Strategies such as updating building-code requirements to include mandatory recycling of construction or demolition debris; adding energy, water and indoor air quality performance standards to the green remodeling code; creating a multi-family residential green building and retrofitting code that would include new performance requirements; and creating sustainable development communities.

While these strategies have merit, the association recommended that cost/ benefit analyses be conducted to justify and instruct any proposed new building requirements.

Rubel “Paco” Arguello is chief executive of the Santa Fe Association of Realtors. Contact him at 982-8385 or paco@sfar. com.