Florida Bill Seeks to Expand PACE Loan Program
A Florida lawmaker is looking to expand a loan program that allows people to make their homes more energy efficient, but leaves many people struggling with debt payments they can’t afford.
Representative Randy Fine, R-Palm Bay, tabled a bill in late January that would add new ways to use clean energy loans rated by property in Florida while incorporating some consumer protections.
The so-called “PACE” programs are touted as a cashless way for homeowners and businesses to fund energy upgrades, such as solar panels on the roof or storm-proof windows. Instead of monthly payments, customers are billed in annual installments added to their property tax bills.
But one Tampa Bay weather Last year’s survey found that many program participants did not understand how the payment system works or how much they would be charged. Unlike traditional loans, they haven’t faced any credit checks or other assessments of their ability to meet the terms. Several beneficiaries said they received property tax bills for amounts far beyond what they expected and some had to lose their homes.
Hillsborough and Hernando counties halted their PACE residential programs last year due to consumer protection concerns, following Collier County’s decision to do the same in 2019.
The Florida House bill would expand the way PACE loans can be used, to include flood-proof homes and businesses or to address other health and environmental concerns. They could be used to pay for the removal of septic tanks and connection to sewer lines, or to fix mold, lead or asbestos problems.
Fine said he “believed” in PACE loans. He introduced the law to help solve a long-standing problem in his district – converting homes that rely on septic tanks that pollute the nearby Indian River Lagoon estuary into sewage systems.
To make the conversion now, homeowners have to “put it on a credit card, have money lying around, or take out a second mortgage,” Fine said. PACE loans, he said, offer another option.
But the expansion worries consumer advocates.
One of their main concerns with the program is that lenders and contractors are not required to ensure that a client can afford a loan granted to them. Funding terms are often unclear, and language barriers mean clients may not understand what they are signing up for.
Fine said his bill addresses these concerns. It gives customers the right to cancel within three days and standardizes how financial terms are disclosed. It also caps PACE loans at 20% of a home’s market value.
But consumer advocates say some of the main protections are nonspecific and leave room for the same issues. Alice Vickers, former director of the Florida Alliance for Consumer Protection, was hired by the office of Pasco County Tax Collector Mike Fasano to review the legislation.
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Under the bill, annual PACE payments would be capped at 10% of that household’s annual income, but only if the annual PACE payment is greater than $ 4,800. Fasano told the Time that most PACE loans in Pasco County would not meet this criterion.
PACE providers should also verify that the owner is not in bankruptcy proceedings.
But the bill doesn’t require PACE lenders to ask how much more debt a potential borrower owes, which would help them assess the client’s ability to take on new obligations, Vickers said. To determine this, lenders should look at a client’s debt-to-income ratio like traditional lenders do when someone applies for a mortgage, for example.
If the bill passes, PACE lenders will have to ask if a client wishes to speak a language other than English. It doesn’t require lenders to have someone on staff who speaks the requested language or to arrange for communication to take place, Vickers said.
And the bill does not say which government body would be responsible for enforcing the new rules, she said. Currently, customers have little recourse beyond filing a complaint against the entrepreneur or a complaint with local or national consumer protection offices. Often, they are referred to the quasi-government agencies that oversee the program, which are often managed by the companies that provide the loans.
“Why develop the program when we already know that we have problems now and that we are not protecting consumers with this bill? Vickers said.
Fine said he was not aware of criticisms of the bill and was open to suggestions on how to improve it.
Ygrene Energy Fund, the state’s largest provider of PACE loans, approved the bill.
“This legislation will dramatically improve an already hugely successful policy to ensure its lasting impact and availability for years to come,” President Jim Reinhart said in a statement.
The California-based company has donated $ 19,000 to Fine’s campaign and its policy committee since 2018. Ygrene is the subject of a consumer protection investigation by the Florida Attorney General’s Office for his practices of PACE loan.
Although no complementary bills were tabled in the state Senate on Monday afternoon, Fine said he expects a bill to be tabled soon. He declined to say who might be the Senate sponsor.