Collier commissioners move to end controversial financing program for homeowners
Marceau Berteau talks about the solar panels he had installed and financed through a PACE program in Collier County. He said he was misled about the financing and can't afford it. Wochit
Collier County commissioners have taken the first step to end a controversial program that helped residents finance upgrades designed to make their homes safer and more energy-efficient.
Concerned about some "bad apple" contractors, county commissioners voted unanimously Tuesday to have the county attorney prepare a notice to discontinue the program known as PACE (Property Assessment Clean Energy) for residents in the unincorporated area.
The notice of termination will be discussed further at the board's next meeting, March 26.
The termination wouldn't apply to business owners, allowing them to continue tapping PACE financing for energy-saving and storm-hardening projects.
The vote to put the brakes on the financing program for homeowners came after Commissioner Penny Taylor proposed an ordinance to better protect consumers against any abuses by participating contractors. She wanted to make the financing providers more accountable for the actions of unscrupulous contractors.
Several commissioners and speakers said the new rules Taylor suggested didn't go far enough to end the abuses that have hurt Collier County's homeowners. Some homeowners have complained that contractors have deceived them about how the financing works — and in some cases signed them up without their knowledge or approval for loans they didn't want and couldn't afford.
Some homeowners have alleged they didn't know a PACE loan would result in a lien on their property. A property assessment automatically becomes a first lien on any property — putting both the borrowers and mortgage lenders at risk.
A default on the loan could potentially result in a foreclosure. In that case, the PACE loan would have to be paid off first, ahead of the mortgage.
The lien can also make it difficult for borrowers to refinance or sell their homes without first paying off the PACE loan.
Businesses not having same problems with PACE program
Commissioner Burt Saunders — once a big proponent of the PACE program — motioned to bring it to an end and Taylor swiftly and enthusiastically seconded his motion. After more discussion among commissioners, Saunders agreed to modify his motion to apply only to homeowners, saying it made a lot of sense.
Taylor and other commissioners said they haven't heard the same kind of complaints from business owners as they have from homeowners.
"Frankly, they are in business and they look at it as a business proposition," Taylor said.
In Collier County there are several approved PACE lenders: Florida Green Finance Authority, Florida Pace Funding Agency, Florida Resiliency and Energy District, and Green Corridor Property Assessment Clean Energy District. Interest rates can vary, but they can be more than 8 percent.
Through the PACE program, the county can collect on the loan through a special tax on the property for up to 30 years. Borrowers can pay more than double the cost of the project over the life of the loan.
Once the providers of PACE financing are notified of the termination of their residential business in Collier County, they can no longer take applications for homeowners in the unincorporated area — and the financing companies would have 90 days to wrap up any lose ends in that side of their business, said County Attorney Jeff Klatzkow.
Several commissioners, including Chairman Bill McDaniel, asked for more information on the PACE financing program, including the number of homeowners who have signed up for it in the unincorporated area since it has been offered. Klatzkow said that information could be provided at the next meeting.
McDaniel said he didn't have all the data to justify terminating the program for homeowners, but "one person being hurt by this is not the path we need to be traveling."
Commissioner Andy Solis agreed.
"I want to get some more data because I want to make sure we are not getting rid of something that is actually of benefit based upon the actions of a few bad actors," he said.
Against it from Day 1
Commissioner Donna Fiala, who voted against offering the PACE financing in the unincorporated area along with Taylor in 2017, said she had misgivings about the program from Day 1. The contractors, she said, went after the elderly, the poor and the less educated, just as she had feared.
Fiala said she wanted to cripple the program in any way she could before anyone else gets hurt.
"I didn't like the program in the beginning and couldn't vote for it and objected bitterly to it," she said.
In a company statement, Ygrene Energy Fund, which administers the Green Corridor Property Assessment Clean Energy District, one of the most active PACE financing providers in Collier County, said it's proud of the access to affordable home improvement financing it has provided in the county.
"The consumer protections, underwriting standards, and overall customer service provided far exceed that of other financing products in the overall home improvement market. Over 97 percent of homeowners in Collier County who utilize Ygrene and PACE to pay for their hurricane mitigation and energy-related projects are satisfied and report no complaints," Ygrene said.
Ygrene also stated it's had zero delinquencies in property tax payments and no foreclosures in the county.
Ygrene's consumer protections include a comprehensive financial disclosure form and conducting a recorded "confirmation of terms" call for every project. "These are just a few of the elements of the PACE program that make it one of the safest and most effective forms of financing for eligible home improvement projects," the company stated.
In a phone interview Monday Taylor said she'd prefer to do away with the PACE program, at least for homeowners, but she doubted she'd have enough votes to do it at the commission meeting.
"If there was a vote to kill the program, then I think that would be a great gift to this community," she said.
A way to help consumers with credit problems, limited income
When county commissioners voted to join the PACE program those who supported it saw the program as a good way to help residents with credit problems and limited incomes upgrade their homes to cut energy use and harden them against storm damage.
Taylor voted against the program, fearing some residents could sign up for it not realizing all of the risks involved, especially the elderly.
After recently hearing concerns that contractors may have purposely misled some homeowners about the PACE financing, Taylor suggested creating a Collier County Property Assessed Clean Energy Consumer Protection Ordinance, which included more pricing and disclosure rules.
"It's too easy to trick the homeowner. It's too easy and it's wrong. And what it is, is it's a financial instrument guised in green clothing," Taylor said.
PACE financing has been in the news lately in Southwest Florida because of a state probe involving Bruno Total Home Performance, an air conditioning, plumbing and electrical contractor headquartered in Bonita Springs.
The company's owner, Louis Bruno, heavily promoted the benefits of PACE through radio ads and billboards, but customers complained to the Florida Attorney General's Office that he and his employees deceived them about the financing.
Concerns raised by Habitat for Humanity
Taylor has also heard concerns from the head of Habitat for Humanity in Collier County, who suspects unscrupulous contractors have preyed on Habitat's low-income owners, signing them up for pricey loans they can't repay. The nonprofit housing agency has identified 25 contracts involving PACE financing and its homeowners.
Taylor has described what's happened to some of Habitat's naive homeowners as a "travesty."
It's fairly easy to qualify for PACE loans, with no credit check required. The financing also requires no money down and offers a fixed rate of interest, making it an attractive alternative to a traditional second mortgage or an equity line of credit.
Lisa Lefkow, CEO of Habitat for Humanity in Collier County, applauded the commission's actions to stop more homeowners from getting taken advantage of through the PACE program.
"On behalf of the small number of Habitat homeowners and the wider community of the most vulnerable Collier homeowners, I’m grateful to this commission for taking the bold action to terminate the PACE program for residential property," she said in an email. "This will certainly protect those who are most likely to fall victim to the predatory practices of those unscrupulous contractors that used the PACE program in inappropriate ways."