Peter Schorsch
Reforms are finally coming to Florida’s residential Property Assessed Clean Energy (PACE) program.
PACE financing, created in 2010, gives Florida homeowners access to low-cost, upfront funding for critical storm hardening, energy efficiency, and renewable energy improvements.
Two bills (SB 770, HB 927) sponsored by Sen. John Martin and Rep. Dana Trabulsy would modernize the 14-year-old law by providing significant new consumer safeguards and ensuring local governments will always decide whether PACE is offered in their communities.
Trabulsy, Martin, and Senate President Kathleen Passidomo are credited for bringing together a wide range of stakeholders, including those who support the program and those who have opposed it.
Stakeholders span many groups, including PACE financing companies; local government groups such as the Florida Tax Collectors Association, the Florida Association of Counties and the League of Cities; and consumer protection activists such as the AARP. The diverse coalition has rallied behind the proposal. As a result, PACE reforms are closer to becoming a reality now than at any point in recent years.
“Reforming PACE is long overdue, and today we’re on the cusp of bringing common sense and fundamental changes that will make this program more accountable to those it seeks to help,” Trabulsy said.
Here’s how PACE works: Rather than being paid like a mortgage or credit card, the PACE assessment payments are added to the homeowner’s property tax bill, per state statute. Most who utilize this financing are low-to-moderate income homeowners for whom traditional bank financing frequently isn’t an option. The applicable interest rates are typically only a point or two higher than those charged by banks, and significantly lower than credit card or unsecured loans.
However, the program has experienced its fair share of growing pains over the years, from contractor-related consumer complaints to legal confusion over who can authorize the program.
Pasco County Tax Collector Mike Fasano thanked legislative leadership for their support in protecting Florida homeowners, noting the legislation allows counties to enforce home rule, provides income qualifications to ensure a person isn’t borrowing more than they can afford, enforces disclosure methods to increase transparency, and requires PACE program administrators to notify homeowners of the need to obtain two estimates from non-PACE contractors for home improvements.
“The only thing left in my opinion now, to truly protect homeowners in Florida, is to have the PACE program overseen by the CFO’s office or another Florida governmental entity for accountability and oversight,” Fasano said. “When homeowners, who have entered into a PACE agreement are unsatisfied, they have no where to go and no one to complain to. That is the final piece to ensure that PACE operates safely in Florida and homeowners are properly protected.”
Among the reforms, the proposed bills would close a loophole to ensure local governments must first authorize the program for homeowners in their communities. The measures would bolster consumer protections and strengthen contractor oversight to ensure homeowners have better access to information about the PACE program before deciding whether the financing option is right for them.
The legislation also includes key new provisions that protect consumers, including reducing the maximum term of financing from 30 to 20 years, adding an income test and making clear that no single loan can exceed 20 % of the home’s value. In addition, provisions would strengthen rules about contractors and give homeowners three days to change their minds about PACE financing.
“Often if the value of your mortgage is more than 80 percent of your home’s value, many people, especially seniors and others on a fixed income, cannot afford financing for home improvement projects like roofs, HVAC, or hurricane windows. This program, if administered properly, provides the opportunity to borrow money for the improvements,” Passidomo said.
More than 30,000 jobs have been created by PACE financing in Florida to date. PACE supports local tradespeople, such as home improvement contractors and suppliers, who keep the Florida economy moving while doing important work to protect and improve people’s homes. To date, nearly 130,000 PACE projects have been completed around the state for a total economic impact of $3 billion.
The new legislation also leans into a legislative priority — improving water quality by authorizing local governments to allow homeowners to use PACE for septic-to-sewer conversions, improving Florida’s water quality and protecting springs and drinking water sources. According to a bill analysis by House staff, an estimated 2.6 million septic systems are in operation in Florida, many of which are at risk of leaching into the state’s water table and estuaries.
Further, the legislation encourages individual homeowners along the coast to improve their resiliency by allowing PACE financing to harden sea walls and cover other flood mitigation projects.
Overall, the legislation would increase PACE’s role in lowering insurance premiums. As Florida’s homeowners’ insurance crisis continues and has led to multiple special sessions and intense focus from Gov. Ron DeSantis, a University of South Florida study estimates that PACE home improvements have amounted to well over $1 billion in insurance premium savings.
“I’ve always thought this program was a great idea, and a good option for people to improve the value and safety of their property. Unfortunately, over the years some of the providers have taken advance of homeowners. This bill puts important protections in place so bad actors don’t take advantage of people. Good actors worked together on a solution that will benefit a lot of homeowners, and I’m really pleased with where we are,” Passidomo said.
The Legislature created PACE. Now, lawmakers have the opportunity to make a good program even better. Passing this legislation will help Florida homeowners, blue-collar workers and local governments harden Florida homes against storms and Florida’s environment.
And with hurricane season less than 100 days away, it will be just in time.
