PACE might be ‘bad for homeowners’, but what does it mean for Visalia?

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Clean energy rated by property died in Visalia.

With this, the number of future solar customers throughout the city.

After six years, city council members sent the program commonly known as PACE in a 4-1 vote following a heated indoor-only council meeting on Monday.

As a result, local Visalia homeowners and contractors are left with one less financing option for energy efficient upgrades and essential home improvements.

The decision comes as a turnaround: the city council of Visalia previously voted to support the program in 2017.

Following: Visalia City Council votes to keep PACE

What is PACE?

PACE is a program that funds the upfront costs of energy and water saving measures on homes and allows homeowners to pay off the loan over time as an item on their property tax bill – similar to general obligations.

Councilor Brian Poochigian spearheaded the council’s decision to reconsider the program after he said several voters approached him, believing the city had approved the loan.

“I don’t think we should approve one private loan over another,” Poochigian said, reflecting the majority view of the board members. “I am happy that Visalia is no longer involved in loan processing.”

He dismissed concerns from solar companies, which rely on the program to help secure funding from residents.

Following: Clean energy programs could bring an economic boom

“Most of the (PACE supporters) were from Sacramento, San Diego, Los Angeles,” the city councilor said. “We are looking for what is best for the Visalians.”

PACE has been an option for Californians since 2008, although cities must vote to join the program.

The program was designed as an option for homeowners who did not have the significant upfront costs associated with energy upgrades, such as replacing solar power and air conditioners.

Since the loan was borrowed against home equity, an individual’s credit and income played a minimal role in loan eligibility, although this has changed with recent state legislation introduced. to strengthen consumer protection.

Advantages and disadvantages

Critics of PACE, however, characterize the program as a “predatory lending program” activated by the local government.

Proponents counter that PACE loans make clean energy affordable for many, improve local air quality, and boost the economy.

“As a business owner, I can say that a significant number of projects and a significant number of jobs would be affected if PACE were canceled,” said Ben Siebert, owner of Planet Solar, a Clovis-based solar entrepreneur. .

Low-income residents with poor credit will be disproportionately affected by the removal of PACE, Siebert said.

Tim Ramage, a solar entrepreneur from Visalia, said his company operates an average of 600 solar systems and 300 rooftop installations in multiple states each month, of which about 10% are funded by PACE.

“For me, it’s all about consumer choice,” Ramage said. “I’m pretty sure we’re still in America and have the right to choose for ourselves what the best loan option is for our homes and our specific situation.”

The Tulare County Realtors Association has fiercely opposed PACE in Visalia, arguing that homes using the program are “un-sellable” due to “super-privileges” placed on properties as a result of PACE , which acts as a second mortgage.

Fannie Mae and the Federal Housing Authority will not offer financing to homes with a PACE loan, further complicating sales, Realtors said.

“My real estate agents are guaranteed job security with (PACE) because they make buying and selling homes so difficult that they guarantee my real estate agent’s job forever,” said Brett Taylor , CEO of the Tulare County Real Estate Association. “We’re not saying here that (PACE) is good or bad for the industry. We’re saying here it’s bad for the owners.”

Taylor and other realtors offered a litany of anecdotes to board members, describing a number of scenarios where owners were misled by PACE directors and found themselves struggling with debts they could not afford to repay.

Supporters highlighted industry reforms and legislation that strengthened consumer protection under PACE from 2017.

“What (the critics) are describing is PACE of 2016 and before,” said Jeremy Hutman of Renew Financial, a PACE loan administrator. “They do not describe PACE as part of the new regulatory legislative scheme that has standardized consumer protection.”

‘A mixed bag’

Since PACE loans are pegged to borrowers’ property tax bills, county tax collectors are responsible for collecting payments. This makes the program unique among private loan programs.

“The idea for PACE is a good thing, but the idea and the implementation seem to be two different things – a little mixed up,” said Cass Cook, Auditor-Comptroller and Treasurer-Tax Collector of Tulare County. .

Staff at the county tax collector’s office report that they have received calls from PACE administrators claiming to be county or state officials.

“Which is interesting, because we are the county and they represented themselves as county employees,” Cook said.

Since PACE payments are assessed on property tax bills, Cook says homeowners who choose to make their payments early are often hit twice.

“For example, if they repay their loan in August, it will already show up in their tax bill which they will then pay in December,” he said, adding that PACE administrators are often late in repaying these payments. “People get angry and come to the tax collector, but our hands are tied and there is nothing we can do.”

Shortly before Monday’s board meeting, Cook said a man went to his office to complain about unknowingly buying a house with a $ 19,000 PACE loan – a loan he is now responsible.

“They came to us asking for help and there is nothing we can do for them,” he said. “Someone dropped the ball, and it was not disclosed by the title company … These are some of the challenges the tax collector’s office faces.”

Cook noted a 4% delinquency rate among PACE loans, similar to typical property tax delinquency across the county.

Currently, 528 homes in Visalia currently hold a PACE loan, Cook said.

Council crushes PACE

Board members relied on Cook’s testimony and comments from realtors in their near-unanimous decision to cancel the program at Visalia.

“It’s a difficult question but my position has never changed,” said Deputy Mayor Steve Nelsen. “I don’t think public government has to be in private industry or support private industry.”

“I object to the fact that we take our tax collector and make it a branch of private industry,” he added. “As an industry, (solar power) should be able to survive without the help of (Visalia).”

Nelsen highlighted a number of PACE alternatives, including “energy loans” offered by banks.

“It takes a bit of work to find it, but it’s doable,” Nelsen said.

Councilor Greg Collins was the sole supporter of PACE this time around.

“We represent the people of Visalia, but I see it a little differently,” he said. “We have people whose energy bills exceed their mortgage payments during the summer months. Maybe their air conditioner turns off, maybe they would like to save water or energy – this program offers that opportunity.

While future PACE loans are no longer available to VIsalians, current borrowers will not be affected by the vote.

“I would like to give low-income people all the opportunities they have to reduce their energy or water costs, or to fix leaky roofs,” he added.

The decision also only affects properties located within the city limits of VIsalia. The owners of the county and neighboring towns – Exeter, Woodlake, Tulare, etc. – can continue to use PACE programs.

“No matter what (the board’s) vote, we’re going to do what’s right for the taxpayer,” Cook said. “We will continue to do our job and do it well.”

Joshua Yeager covers water, agriculture, parks and housing for the Visalia Times-Delta and Tulare Advance-Register newspapers. Follow him on Twitter @VTD_Joshy. Receive alerts and stay up to date on all things Tulare County for as little as $ 1 per month. Subscribe today.


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