MIAMI – Florida is on the verge of passing the strongest consumer protections in state history for a problem-plagued home loan program touted to help homeowners pay for energy efficiency projects like solar panels and hurricane protection like impact windows or new roofs.
The Property Assessed Clean Energy program – commonly known as PACE – provides a funding option for people who don’t qualify for or want a bank loan. Instead, the often-expensive projects are paid through a lien added to the property tax bill. The program, while popular, also has drawn complaints from homeowners, critics and county tax collectors across the state who say some consumers have been left in the dark about the true cost of their projects and how the bill will be paid.
Florida’s House and Senate are poised to pass bills this week addressing many of the issues consumer advocates have raised over the years, as outlined in a Miami Herald investigation last year. Some counties, including Miami-Dade, have already implemented some of these protections.
If Gov. Ron DeSantis signs it, they could become law as soon as July.
Rep. Dana Trabulsky, R-Fort Pierce, said she came up with the legislation after some relatives tried to use the program to repair their hurricane-damaged roof a few years ago. Trabulsky said they couldn’t get a traditional bank loan or afford to put the repairs on a credit card, so they turned to PACE.
“This, to me, is what PACE is for. It’s a certain niche group of people who have no other means by which to keep their home,” she said. “It’s not for everybody but it is for a certain group of people. It’s for my family, and for yours.”
Big changes ahead
The program works in an unusual way, by using the client’s house as collateral for a loan. Homeowners pay off the improvements, with a current interest rate of around 11%, on their annual property tax bill. The tax bill bump can wind up huge, adding up to a 200% to 300% increase in some cases.
But unlike a traditional bank loan, PACE providers have never been required to confirm if their clients can afford to repay the loans. And some consumers have complained that they have been misled by shady contractors about final costs and payment methods.
And because the payments are tied to property taxes, if a homeowner falls behind on their annual payments, they could lose their home. That happened several times in California, the birthplace of the PACE program, before the state introduced strict new protections. There have been no reported cases yet of anyone in Florida losing their home because of costs associated with the PACE program.
The new legislation would change some key rules.
It requires PACE providers to make sure the estimated annual payments are no more than 10% of a property owner’s annual income, provide a thorough disclosure form outlining the estimated costs and get permission from the bank holding the property’s mortgage to do the project.
The bills also require – for the first time – stricter regulations of the contractors that do the work. The majority of the complaints and lawsuits against Florida PACE providers reviewed by the Herald concern shoddy construction work or alleged fraud from contractors.
The new legislation would also outlaw many of the at times dubious claims made on the flyers advertising the program taped on front doors across South Florida that tout the program as “free or no-cost.”
Perhaps most importantly, these bills would mandate a state audit of PACE every three years and require PACE providers to self-report information about their customers and projects, including if anyone has lost their home.
“We’re kind of in a pickle here in Florida because we need to harden our homes so that we don’t lose our insurance so that we don’t lose our homes, but we also need to be able to afford the improvements we need to make on our home without being further behind the 8-ball,” Trabulsky told lawmakers while pitching her bill. “If you hate PACE you’ll love this bill.”
While multiple lawmakers expressed distaste for the program in meetings about the bill, it received bipartisan support in both the House and Senate.
“Personally, I’ve always been a big critic of this program just because of the predatory behavior we’ve seen,” said Rep. Anna Eskamani, D-Orlando. “We can still do more in consumer protections, but this bill is a very good step in the right direction.”
Lobbyists from top PACE programs, including FortiFy, ReNew Financial and Home Run Financing publicly supported the additional consumer protections. And it won support from critics too, including noted PACE skeptic Mike Fasano, Pasco County’s tax collector.
“This bill will help make sure people don’t lose their homes,” he said. “You’ve come from zero to batting 750 overnight. Hopefully, we can get to 1,000 in the future.”
Re-asserting local control
These bills could also quash a statewide scuffle between one “rogue” PACE company and half the counties in the state. Last year, a company that bankrolls PACE construction projects interpreted a routine legal finding from Tallahassee as permission to fund projects anywhere in the state, ignoring any community-specific consumer protections they had passed.
Previously, PACE providers had to make specific agreements with individual counties about whether – and how – they could operate. Several counties, including Collier County, do not allow residential PACE at all.
But despite the historic understanding of how the program worked, the Florida PACE Funding Agency started signing up thousands of new customers across the state. Tax collectors started refusing to collect or pass on the annual payments, and both sides started suing.
The new bills from Tallahassee clarify that a PACE provider needs permission from counties to sign up customers within their boundaries.
Septic-to-sewer
These bills would also expand the kinds of things PACE could pay for. In addition to a new roof or impact windows, PACE could now cover elevating homes because of flood risk, fixing up a seawall and something long sought by Miami-Dade County – septic to sewer conversions.
Miami-Dade has more septic tanks than anywhere else in the state at nearly 140,000, and they’re already starting to fail due to high groundwater levels from sea level rise. The county is aggressively pursuing tens of millions in grant money to add the pipes and pumps necessary to switch homes to county sewer lines, but it rarely comes with extra cash to pay the homeowner’s cut of the costs. That can top $10,000, a hefty fee for an average resident.
If these bills become law, Miami-Dade residents could soon be able to use PACE, in addition to bank loans, to pay their half of the project.
Miami-Dade joins in
Following a series of stories from the Miami Herald, commissioners in Miami-Dade have added several new protections for Miami-Dade homeowners. They include a mandatory, detailed disclosure form that lists the exact cost of the improvement plus interest, and a print signature, instead of a digital one, for people over 65.
Last month, commissioners also unanimously passed another round of consumer protections that would require companies to inform customers, as well as the county, if they plan to abruptly pull out of the market – like Ygrene did in late 2022.
PACE providers, like Ygrene, must also now have at least 75% of their funding for the project as cash on hand before they greenlight the project, which was part of the issue that led to a massive service interruption for thousands of Floridians.
“I just want people to know exactly what they’re signing up for,” said Commissioner Kevin Cabrera, who spearheaded the legislation. “This goes a long way to help those people who were affected by the interruption.”
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