54.3 F
San Diego
Tuesday, Mar 19, 2024
-Advertisement-

Industry Off Base In PACE Financing Criticism

Mary Salas

Gov. Jerry Brown recently signed Assembly Bill 2693 which improves the administration of Property Assessed Clean Energy (PACE) — a popular green finance program that has helped bring to life thousands of improvement projects in our region. The new law will not only help advance the state’s rigorous climate change agenda, it will also make PACE financing more accessible to thousands of property owners in the San Diego area.

PACE is an innovative mechanism for financing energy efficiency and renewable energy improvements on private and commercial property. By enabling local governments to provide property owners with this affordable financing option, the program helps many who would otherwise be unable or ineligible to borrow the upfront costs of energy improvements such as the installation of solar panels and rainwater catchment systems. PACE requires no down payments or credit checks and provides property owners with an alternative to short-term, high interest rate bank loans. It has helped jump-start thousands of important residential and commercial projects.

In Chula Vista, PACE financing backed by Ygrene Energy Fund, helped create Chula Vista’s landmark Gateway Center — the city’s first and largest commercial project to invest in solar energy. Thanks in large part to PACE, 90 percent of the power required by this building and its tenants is now supplied by solar energy. This has resulted in an expected 40 percent reduction in annual energy costs.

Projects like this are key to achieving energy efficiency, cost savings and ensuring clean air for current and future generations. In fact, residential PACE improvements in California to date are credited with saving 9.1 billion kWh of energy, 2.5 million tons of reduced emissions, and helping over 100,000 California property owners save money on their energy and utility bills.

Priority of Lien Status

As the popularity and success of PACE continues to grow, so do its critics. The mortgage industry has argued that PACE’s financing model is unsound because it gives PACE assessments priority lien status over mortgage loans. This arrangement, they claim, would put consumers and the mortgage industry at risk if another foreclosure crisis were to occur.

However, there is no data or evidence behind their claims. In fact, Gov. Brown helped establish a $10 million mortgage loss reserve program in 2014 so that lenders could be reimbursed in the event they suffered any financial losses while in possession of a foreclosed property with a PACE lien on it. As of today, not a single claim has been filed to this fund.

Meanwhile, some of these lenders are simultaneously offering and advertising their own green finance products, raising serious questions about whether their concerns are really just an attempt to weaken competition in the green finance market. Their relentless efforts to dismantle PACE’s financing model has led Gov. Brown to justifiably reproach the country’s largest mortgage lenders, recently stating, “they’re stubborn, they’re unreasonable, and they’re acting like East Coast bankers.”

Improving Disclosures

Authored by Assembly Member Matt Dababneh, AB 2693 correctly identifies important consumer issues with the PACE program and prescribes solutions that preserve its unique structure and benefits, while improving consumer disclosures and safeguards. Among its provisions, the new law will prevent homeowners from taking out more financing than they are able to afford.

PACE administrators would be required to provide consumers with important disclosures, such as notice of a special tax lien, the total amount of interest charged, and notification that some lenders may require the homeowner to pay off the total amount of the assessment if refinancing or selling. Homeowners will also be guaranteed new contract safeguards such as a three-day right to cancel.

AB 2693 helps keep PACE moving in the right direction and is helping California meet its energy efficiency and water conservation goals at a time when addressing climate change is both a state and regional priority. Because of this innovative program, consumers have already saved over $2.5 billion in utility bills and 3.4 billion gallons of water. That is why supporters and participants of PACE, like myself, look forward to implementing AB 2693 — a real solution for improving PACE. With these policy enhancements, we hope to expand the benefits offered by PACE to many more homeowners in our region.

Mary Casillas Salas is the Mayor of Chula Vista.

-Advertisement-

Featured Articles

Promo Drone Modernizes Aerial Advertising

sureti Propels Insurance Tech

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-
-Advertisement-