California Governor Jerry Brown signed two landmark companion pieces of legislation into law last week which serve to create a comprehensive consumer protection, underwriting, and regulatory framework for Property Assessed Clean Energy (PACE) financing.
Property Assessed Clean Energy (PACE) is a California success story which has allowed more than 150,000 Californian homeowners to make energy and energy efficiency upgrades to their properties while paying for these improvements over time as an additional line-item n their property taxes. To quote from an NREL fact sheet (PDF), “Under PACE programs, municipalities and counties form special tax districts to help property owners finance energy retrofits by allowing a property owner to place an additional tax assessment on his or her property.”
Announced last week, California Governor Jerry Brown signed into law two companion pieces of legislation which will create a comprehensive consumer protection, underwriting and regulatory framework for PACE Financing that serve to improve PACE by strengthening consumer protections.
Specifically, the two pieces of legislation — AB 1284, co-authored by Assembly Member Matt Dababneh, Senator Nancy Skinner, and Assembly Member Ian Calderon, and SB 242, co-authored by Senator Skinner and Assembly Member Dababneh — have been signed into law after a year of development and negotiations between low-income consumer advocates, environmental and clean-energy groups, the banking industry, and private sector PACE program administrators.
According to Renew Financial Group, one of America’s leading home improvement financing companies, AB 1284 will “significantly enhance PACE underwriting, regulates PACE at the state level, and enforces compliance with all PACE laws by PACE administrators and individual contractors.” Further:
- Strengthens and standardizes the current underwriting standards in PACE based on home equity and on-time mortgage and tax payment history; and requires that the most accurate Automated Valuation Models are used for establishing the value of the home
- Establishes 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
- Establishes 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)
Meanwhile, SB 242 serves to establish “state-of-the-art consumer protections, further setting PACE apart from other forms of financing.”
“Renew Financial is proud to stand with Governor Jerry Brown to strengthen PACE financing for California homeowners,” said Cisco DeVries, CEO of Renew Financial. “Since our founding nearly a decade ago, Renew Financial has put consumer protections at the heart of our business. This legislation establishes strong industry standards and a robust regulatory framework that will benefit homeowners uniformly across the state. This is a turning point for PACE and these laws will serve as a model for other states that adopt PACE financing so they can provide homeowners with an effective financing option to make their properties more efficient, comfortable and secure.”