It was recently announced that the HERO financing option of Renovate America is estimated to have created over 25,000 jobs. Renovate America is a leading provider of home-improvement financing in the US. Greg Frost, the organization’s National Communications Director, answered some questions for CleanTechnica.
What is the background of HERO/PACE financing? When did it start, what is its purpose, etc.?
PACE is an innovative form of financing that empowers homeowners to make energy, efficiency and resiliency improvements to their homes with no money down. Homeowners who voluntarily choose to participate in a PACE program pay for the improvements over time through an additional, voluntary line item on their property taxes. Because PACE-financed projects are repaid as property-tax assessments secured by the property itself, the PACE obligation may be able to transfer to a new owner when the property is sold.
Property owners love PACE because they can fund projects with no out-of-pocket costs and spread out the payments over time at a competitive, fixed interest rate. Since PACE financing terms extend up to 30 years, it’s possible to undertake deep, comprehensive retrofits that may result in meaningful utility-bill savings; in some cases the utility-bill savings for a PACE project may exceed the annual assessment payment.
PACE is also popular with state and local government officials. PACE is projected to help save homeowners billions of dollars on their utility bills and insurance premiums while funding projects that may make their homes more comfortable and valuable. PACE-financed improvements to date are also projected to reduce greenhouse-gas emissions by millions of tons. And as I mentioned earlier, it’s estimated that PACE has created tens of thousands of jobs that can’t be offshored or automated. With no cost to local government budgets, it’s easy to understand why PACE enjoys bipartisan support, why PACE-enabling legislation has been approved by more than 30 states, and why hundreds of cities and counties across the country – from California to Florida – have chosen to make PACE financing available to their residents.
Your HERO financing option is now estimated to have created more than 25,000 jobs. How were they created?
Since its introduction over a decade ago, PACE financing has empowered the owners of more than 200,000 U.S. homes to install products that save or capture energy or water or make homes more resilient to catastrophic weather. It is estimated that by spurring demand for contractor services, these improvements have created more than 55,000 local jobs. Many of these jobs – such as installing rooftop solar panels or energy-efficient windows, doors and HVAC systems – are not only key elements of the clean-energy economy, but they are also difficult to automate or ship offshore. It’s estimated that Renovate America’s PACE financing vehicle, HERO, is responsible for just under half – around 25,700 – of the jobs created by PACE financing overall. It’s also estimated that HERO financing activity to date has had an economic impact of $4.59 billion.
Where does the funding for PACE and HERO come from?
The vast majority of PACE programs are public-private partnerships. Under this model, funding comes from the private sector and the program administrators are private, for-profit companies; local governments, meanwhile, sponsor PACE programs and place the assessment on the tax roll, collect the assessment and remit it to PACE project funders. There are a few PACE programs, such as California’s Sonoma County Energy Independence Program, in which the local government is the source of the funding for projects.
What is your roadmap for the next five years?
Regarding the future of HERO and PACE: Since California’s new ability-to-pay law for PACE went into effect on April 1, residential PACE financing activity in the state has dropped between 40%-50% – and in some cases more, depending on the provider. We strongly supported the landmark consumer-protection and regulatory framework for PACE financing – including ability-to-pay – that California lawmakers approved last year and that began taking effect this year. However, we also believe that a legal and regulatory framework that fails to consider the unique attributes of PACE financing, its position as a financing option among many home improvement financing products, and the actual role of the home improvement contractor could have the consequence of disabling PACE as a home improvement financing option in California. To that end, we are currently engaged in proactive discussions with lawmakers and regulators in California aimed at right-sizing the framework in a way that ensures the long-term viability of PACE programs like HERO and their continued success as drivers of economic and environmental benefits while also delivering real and sustained consumer protections.
More broadly, Renovate America continues to expand nationally. HERO is now available to over three million homes in Florida, where in addition to covering energy improvements it can help homeowners protect their properties from severe storm damage. We are also working with policy makers to bring HERO financing to other states. Finally, we are focused on growing Benji, our unsecured home-improvement lending product: we expect Benji to be available in all 50 states by the end of this year.
Image Credit: Renovate America
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