TAMPA — A state-authorized program to help property owners finance energy-efficient or storm-resistant renovations faces another test at the Tampa City Council today.
Toward the end of their 9 a.m. meeting, council members are scheduled to get a report on the PACE, or Property Assessed Clean Energy, program and could decide whether to allow it to operate inside the city limits.
The Legislature authorized the PACE program in 2010 but it still has to be approved on the local level, county by county and city by city. Around the Tampa Bay area, Hillsborough and Pinellas counties have opened the door to two different versions of PACE, but it's not allowed in Tampa without City Hall's okay.
PACE allows private lenders to make loans to install solar panels, new roofs, insulation, skylights, doors, solar-powered water heaters, weather-stripping, air conditioners or wind-resistant windows and garage doors — essentially, anything that saves energy or hardens a building against bad weather.
The key to the program is the repayment plan. The debt payments appear as an annual assessment on a property owners yearly tax bill.
The lenders match property owners with authorized contractors, and finance the improvements. Property owners can finance the entire cost of a home improvement, but the debt is capped at 20 percent of the home's value. Contractors are not paid until the projects are complete.
The four lenders interested in working in Tampa offer annual interest rates from 5.99 percent to just below 8 percent, according to Terry Stark, director of government affairs and commercial sales for the Ygrene Energy Fund, which is based in Miami.
Twenty counties and more than a dozen cities have okayed the program. Statewide, there have been more than 10,000 projects, Stark told the city council last month. At that time, about 175 had been approved in Hillsborough, and 77 of those were complete. PACE improvements can get 100 percent financing over five to 20 years, with approvals based on the amount of equity in the property.
After hearing from PACE lenders, City Council member Charlie Miranda was skeptical.
Last year, he said, he voted against putting a new city assessment for flood-control improvements on property tax bills. Now, he said, he is just as inclined to oppose using tax bills to collect a private debt.
"I don't like to put anything on anybody's tax bill. I'm for less government, not more government," Miranda said. "It all sounds too good."
It is too good, says the Greater Tampa Realtors association, and it raises many red flags.
Providing easier financing for energy conservation or hurricane protection is an admirable goal, but the program can have unintended problems that outweigh the benefits, according to Michael Peterson, the group's governmental affairs counsel.
Florida law requires PACE liens, which have a status like a property tax assessment, to take precedence over other mortgages, which can complicate the process of selling or refinancing a home.
In emails to the City Council, Peterson says contractors could use high-pressure sales tactics to get elderly or low-income residents to take out ill-advised loans they don't understand. Moreover, neither Fannie Mae nor Freddie Mac will buy a mortgage on a home with PACE lien. That scares primary lenders away from those properties out of a fear that they wouldn't be able to make a loan that they could sell to a secondary lender. And that, Peterson says, makes the properties harder to sell.
At a minimum, he says, the city should build a two-, three- or five-year sunset provision into any PACE program it allows.
In 2013, the Pinellas County Commission voted to authorize the PACE program, but only for commercial properties. Commissioners said including residential properties could have undermined the county's still-recovering real estate market.