The Hill, a web site covering Congress, politics, political campaigns and Capitol Hill, recently posted an opinion piece titled “Congress should let local communities set their own PACE,” written by Mayor Jeri Muoio Ph.D. (D), of West Palm Beach, Florida. and Mayor Rex Parris (R), of Lancaster, California. We’re linking to it here because it does a great job of explaining both the recent controversy surrounding (mostly) Residential PACE and the reasons why we oppose federal efforts to undermine it.
Like many politically-driven efforts, this one uses deliberately misleading language to conceal its true purpose. The “Protecting Americans from Credit Exploitation Act (or PACE Act)” ostensibly only requires the “same basic disclosure requirements that apply to traditional lenders, including providing to consumers the annual percentage rate, a schedule of payments, and the total cost of the loan.” So far, this seems innocuous. But in reality the legislation adds PACE lenders, including potentially municipalities themselves, to the list of “creditors,” like mortgage lenders, that are subject to licensing requirements and extensive regulations. The net effect, according to PACENation.us, would be to effectively treat PACE financings as mortgage loans. In their view “it is part of a coordinated effort by the banking lobby to kill PACE as a competitor and amounts to the latest attack on clean energy.”
The Mayors write:
In hundreds of counties and cities across America, local officials are embracing Property Assessed Clean Energy (PACE). PACE effectively expands access to credit to help property owners improve or repair their properties with efficient products, while creating and sustaining local jobs at no cost to public budgets. Solution-oriented mayors like us appreciate the innovation and value of PACE – which is why it’s bewildering to see lawmakers in Congress trying to kill it off.
In the rest of the article they detail the achievements and current status of PACE, the impacts the legislation could have, and go on to say:
Just as troubling as the details of the legislation itself are the falsehoods being spread about PACE. PACE is setting new standards for consumer protections in home improvement financing. Unlike home equity lines of credit (HELOC) and credit-cards, PACE providers check licensure status on contractors, and only pay them once the work is completed to the satisfaction of the homeowner. Interest rates and terms for PACE financing can be competitive with some HELOCs and easily beat credit cards. In California, which has done more PACE financing than anywhere else, PACE providers clearly spell out terms and conditions – offering mortgage-level disclosures.
NOTE: Proposed PACE legislation in New Jersey is aimed at commercial properties only, and is therefore unlikely to be affected by the federal legislation. However, treating PACE as a type of mortgage in the residential sector may have a chilling effect on commercial, something we in NJ wish to avoid.