California legislature approves landmark PACE consumer protections
The most successful energy-efficiency financing program in history has become even better, experts say, as the California Legislature approved a comprehensive consumer protection, underwriting and regulatory framework for Property Assessed Clean Energy (PACE), according to a release.
The measure has been sent it to Gov. Jerry Brown for his signature.
The companion pieces of legislation – AB 1284 and SB 242 – are the result of a year of development and negotiations among low-income consumer advocates, environmental and clean-energy groups, the banking industry and private-sector PACE program administrators aimed at improving PACE by strengthening consumer protections.
"Homeowners have shown they want this type of solution,” said J.P. McNeill, CEO of San Diego-based Renovate America, the nation's largest PACE provider. The new measures have “evolved PACE into a long-term viable solution for homeowners, while providing a model for states across the nation to base PACE on income and ability-to-pay, and with a comprehensive suite of consumer protections and enforcement tools."
PACE is a California success story that has empowered more than 150,000 homeowners to make energy and efficiency improvements to their properties and pay for them over time via an additional line item on their property taxes, officials said. The innovative public-private partnership at the heart of PACE financing is saving homeowners billions of dollars on their utility bills, reducing greenhouse-gas emissions by millions of tons, and creating thousands of clean-energy jobs – at no cost to local-government budgets.
AB 1284 would significantly enhance PACE underwriting, regulate PACE at the state level and enforce compliance with all PACE laws by PACE administrators and individual contractors. Specifically, the bill would:
• Strengthen and standardize the current underwriting standards in PACE based on home equity and on-time mortgage and tax payment history; and require that the most accurate automated valuation models are used for establishing the value of the home;
• Establish new underwriting standards predicated on income verification and ability-to-pay to determine that property owners can meet their annual PACE obligation in addition to their current debt obligations and basic household expenses; and
• Establish a licensing and regulatory framework for the PACE industry in California, which will be subject to oversight by the California Department of Business Oversight (DBO).
The California Low-Income Consumer Coalition, made up of 11 consumer policy and legal advocacy organizations, worked to improve the legislation and says AB 1284 "introduces protections that have been absent from, and critically needed in, PACE programs." The coalition moved from opposing the legislation to neutral, stating some reservations which the Department of Business Oversight will likely address in its regulatory process.
SB 242 would establish state-of-the-art consumer protections, further setting PACE apart from other forms of financing. Chief among these is the requirement that PACE providers conduct a recorded, live, confirmation of terms call with property owner before they sign their assessment contract, as a reinforcement to written disclosures modeled on the federal Know Before You Owe mortgage form.
The bill also establishes data reporting requirements to local government partners, including data that speaks to the projected energy and water savings and local economic and job impacts, as well as on categories of products installed and homeowners served.
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