Pinellas banned a controversial loan program. Now it’s here anyway.

For years, Florida counties have sought to curb a controversial loan program that has become infamous for burying unsuspecting homeowners under insurmountable property tax bills.

Pinellas County barred the residential arm of the Property Assessed Clean Energy program, better known as PACE, in 2017. Within a few years, Hillsborough and Hernando counties had stopped the program from operating locally, and Pasco had imposed its own regulations.

But local governments’ ability to ban or regulate the program may have evaporated. In late 2022, a judge in Leon County ruled that the Florida PACE Funding Agency, one of the special districts created to administer the program under state law, can give out loans wherever it wants, regardless of local ordinance.

Last month, Pinellas County sued the funding agency in an effort to halt loans in the county and reassert local governments’ ability to decide where they can operate. But the program is already here: Since the beginning of this year, according to court filings, the funding agency has issued more than 30 liens or lien notices on homes in Pinellas, indicating it has loans outstanding there.

The PACE program allows homeowners to finance energy-efficient or storm-hardening features — from heat-and-air systems and solar panels to hurricane windows — with no credit check or money down. Homeowners pay them off through assessments added to annual property tax bills.

Pinellas allows a version of the program for commercial development, but it banned residential PACE loans over concerns that unsuspecting homeowners could be stuck with tax bills they can’t afford. A 2020 Tampa Bay Times investigation found those fears were coming true elsewhere in the state, with some loan recipients’ tax bills jumping by thousands of dollars.

The path to the current conflict began last year, when the funding agency sought a hearing to make sure it could give PACE loans to homeowners who want to build seawalls. A judge in Leon County determined it could. The judge also determined, as part of the same case, that the funding agency has the right to administer PACE loans wherever it wants in Florida.

Pinellas County’s lawsuit is multi-pronged: It alleges procedural problems in the Leon County case, including that it was never given a chance to defend itself in a case that ultimately affected the county. It also argues that the ruling itself improperly tramples on the county’s home-rule powers.

“We have the right and responsibility to pass local ordinances that help protect the citizens of Pinellas County,” said Kevin Knutson, an assistant county administrator.

Jamy Dinkins, an attorney for the Florida PACE Funding Agency, called the lawsuit “an end run around the justice system,” which he believes has already settled the issue.

PACE, Dinkins said, gives homeowners another way to finance improvements amid rising housing costs and Florida’s home insurance debacle, one that’s better than using a credit card or home-equity loan.

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But those costs in the long run may be far greater than homeowners anticipate, Knutson said.

“There’s higher interest rates and things involved with it, and that’s not always clear,” he said. “Part of the reason the Board (of County Commissioners) decided several years ago to not provide residential was because of concerns that it would be confusing or unclear for residents.”

In a letter it sent to the county earlier this year, informing it of its plans to start offering PACE loans to Pinellas residents, the Florida PACE Funding Agency said it provides “industry-standard homeowner protections.” According to PACENation, a national pro-PACE advocacy group, those measures include disclosures about total costs and interest rates and an option to cancel the loan without penalty within three days of the agreement.

Still, consumer advocates say there’s a troubling lack of oversight when it comes to the program. It’s exempt from the federal Truth in Lending Act, which requires that lenders make sure borrowers can pay back loans and understand what they’ll ultimately pay. Florida is one of just three states with a residential PACE program and has the fewest protections in the country for PACE loan recipients.

The PACE system itself is a complex tangle of public and private entities. Special districts — such as the Florida PACE Funding Agency, which was created by an agreement between the city of Kissimmee and Flagler County — technically administer the program. But a slew of third-party firms, which each pay an administrative fee to one of the special districts, hire the contractors who do the work, and those contractors hire salespeople to find homeowners to take out loans.

The Florida PACE Funding Agency is run by an unpaid, unelected board comprised of current and former public officials. Its director is Michael A. Moran, who last year made $185,000 doing the job, according to a state financial disclosure, while also serving as a Sarasota County commissioner. Moran was not available to be interviewed for this story, Dinkins said.

Other counties are taking action. Pasco County Tax Collector Mike Fasano said his office won’t include PACE payments on tax notices if the PACE administrators and providers don’t follow the county’s rules. On Wednesday, Hillsborough County Commissioner Pat Kemp asked the county’s legal staff to investigate recent mail solicitations offering homeowners loans, paid off through tax assessments, for home repairs — a description of PACE, even if the mailers didn’t identify it as such.

“I just want this to stop,” Kemp said.

Fasano, an advocate for greater oversight of the PACE program, said the program has worked with the understanding that PACE providers, those third-party firms, still need contracts with the local governments where they work. If the Pinellas suit fails to establish that that’s still the case, he said, local oversight of the program will be wiped out.

The Florida PACE Funding Agency has something to gain here, he said: With the Leon County ruling under its belt, it can woo providers with the promise that they can work anywhere in the state. But in doing so, he said, the funding agency may have also opened a can of worms it didn’t anticipate.

“In most cases, most legislators, most county commissioners, most tax collectors, they never cared about PACE, because it wasn’t happening in their county,” he said. “Now they’re very concerned, because it’s going to be pushed on them whether they want it or not.”

Times staff writer C.T. Bowen contributed to this report.