A Florida lawmaker is seeking to expand a loan program that makes it easier for people to make their homes more energy efficient but leaves many saddled with debt payments they can’t afford.
Rep. Randy Fine, R-Palm Bay, filed a bill in late January that would add new ways Property Assessed Clean Energy loans can be used in Florida while building in some consumer protections.
So-called “PACE” programs are advertised as a no-money-down way for homeowners and businesses to finance energy efficiency upgrades, such as rooftop solar panels or storm-resistant windows. Instead of monthly payments, customers are billed in annual installments added to their property tax bills.
But a Tampa Bay Times investigation last year found that many of the program’s participants didn’t understand how the payment system works or how much they would be charged. Unlike with traditional loans, they faced no credit check or other assessment of their ability to meet the terms. Several recipients reported receiving property tax bills for amounts far beyond what they expected and some faced losing their homes.
Hillsborough County and Hernando County halted their residential PACE programs last year over consumer protection concerns, following Collier County’s decision to do the same in 2019.
The Florida House bill would expand how PACE loans may be used, to include flood-proofing homes and businesses or addressing other health and environmental concerns. They could be used to pay for removing septic tanks and connecting to sewer pipes, or to address mold, lead or asbestos problems.
Fine said he “believes in” PACE loans. He filed the legislation to help with a longstanding issue in his district — converting homes that rely on septic tanks that pollute the nearby Indian River Lagoon estuary to sewer 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.
Among their chief concerns with the program are that lenders and contractors are not required to ensure that a customer can afford a loan they are given. The terms of the financing are often unclear, and language barriers mean customers may not understand what they are signing up for.
Fine said his bill addresses those concerns. It gives customers a right to cancel within three days and standardizes how the financial terms are disclosed. It also caps PACE loans at 20 percent of the market value of a home.
But consumer advocates say some of the main protections are unspecific and leave room for the same problems to continue. Alice Vickers, former director of the Florida Alliance for Consumer Protection, was hired by Pasco County Tax Collector Mike Fasano’s office to examine the legislation.
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Under the bill, annual PACE payments would be capped at 10 percent of that household’s yearly income — but only if the annual PACE payment is more than $4,800. Fasano told the Times that most PACE loans in Pasco County would not meet this benchmark.
PACE providers also would need to verify that the homeowner is not in bankruptcy proceedings.
But the bill doesn’t require that PACE lenders ask how much other debt a potential borrower owes, which would help them evaluate the customer’s ability to take on new obligations, Vickers said. To determine that, lenders would need to look at a customer’s debt-to-income ratio as traditional lenders do when someone applies for a mortgage, for example.
If the bill passes, PACE lenders would need to ask whether a customer wants to speak in a language other than English. It does not require lenders to have someone on staff who can speak the requested language or to make arrangements so communication can take place, Vickers said.
And the bill does not say which governmental body would be in charge of enforcing the new rules, she said. Currently, customers have little recourse beyond filing a lawsuit against the contractor or a complaint with local or state consumer protection offices. Often, they are referred back to the quasi-governmental agencies that oversee the program, which are often operated by the companies who provide the loans.
“Why grow the program when we already know we have problems now and we’re not protecting consumers with this bill?” Vickers said.
Fine said he was not aware of criticism of the bill and is open to suggestions on how to improve it.
Ygrene Energy Fund, the state’s largest provider of PACE loans, endorsed the bill.
“This legislation will significantly improve an already tremendously successful policy to ensure its lasting impact and availability for years to come,” its president, Jim Reinhart, said in a release.
The California-based company has donated $19,000 to Fine’s campaign and his political committee since 2018. Ygrene is the subject of a consumer protection investigation by the Florida Attorney General’s Office for its PACE lending practices.
While there was not a companion bill filed in the state Senate as of Monday afternoon, Fine said he expects one to be filed soon. He declined to say who the Senate sponsor might be.