California Legislature OKs PACE Financing Regulatory Framework

September 18th, 2017 by Editor

The California Legislature recently approved a comprehensive consumer protection, underwriting and regulatory framework for Property Assessed Clean Energy (PACE) and sent it to Gov. Jerry Brown’s desk.

 The companion pieces of legislation – AB 1284, co-authored by Assembly Member Matt Dababneh, Sen. Nancy Skinner, and Assembly Member Ian Calderon, and SB 242, co-authored by Skinner and Dababneh – 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.

“Consumers, local governments, environmental advocates, small business organizations, the banking industry, and PACE providers all contributed to establishing enforceable standards, underwriting and a regulatory framework to make PACE like other financing products,” said JP McNeill, CEO of San Diego-based Renovate America, a PACE provider. “Homeowners have shown they want this type of solution. Now the leadership of Senator Skinner and Assemblyman Dababneh has 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 has helped more than 150,000 homeowners to make energy and efficiency improvements to their properties, such as new doors and windows, and pay for them over time via an additional line item on their property taxes. The public-private partnership saves homeowners money on their utility bills, reduces greenhouse-gas emissions and creates thousands of clean-energy jobs – at no cost to local-government budgets.

“Renew Financial is honored to stand with Assemblyman Dababneh and Senator Skinner, as well as the consumer advocates, business leaders and environmental organizations who worked so hard to strengthen PACE financing for California homeowners,” said Cisco DeVries, CEO of Renew Financial and the developer of PACE financing. “This legislation establishes strong industry standards and a robust regulatory framework that will benefit homeowners uniformly across the state. It will also serve as a national model for states that adopt PACE financing so they can provide homeowners with an effective financing option to make their properties more efficient, comfortable and secure.”

AB 1284 would 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.

 

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