Thought Leadership

California Legislation Shores Up PACE Consumer Protection


By Center for Sustainable Energy

October 30, 2017

Actions can serve as model for other PACE loan programs nationwide

Since the launch of property assessed clean energy (PACE) loans in 2008, some 150,000 California homeowners have used them to finance energy and water efficiency improvements and install solar electric systems, making payments through their property tax bills.

For the most part, PACE financing in California has been a success story. However, as the PACE industry rapidly expanded, consumer advocates identified instances of borrowers who believed the program was misrepresented to them. That’s why two companion pieces of legislation recently signed into law by Governor Jerry Brown that improve and regulate the PACE process are so significant.

Senate Bill 242 by Senator Nancy Skinner (Berkeley) enhances consumer protections to ensure borrowers are fully aware of loan terms and payments and bars kickbacks or other marketing incentives given to contractors by lenders. It mandates PACE providers have calls with all homeowners before they take out the loan to ensure they understand the terms of the product.

Assembly Bill 1284 by Assembly Member Matthew M. Dababneh (Encino) relates to California financing laws and requires lenders to make a “reasonable good faith effort” to ensure borrowers can repay their loans based on income, assets and current debt obligations. It sets new standards for how contractors are trained about PACE, how they can market it and establishes a three-day right to cancel.

Dababneh’s bill also establishes the California Department of Business Oversight to have regulatory authority over PACE providers and serve as a watchdog for consumers.

California is spearheading innovative methods of achieving renewable energy and energy efficiency goals, and PACE is another example of how it leads the nation. Currently, PACE operates in more than 44 cities and counties across California, as well as in 34 other states.

By taking major steps to increase protections for consumers in the 2017 legislative session, California has renewed the promise of PACE and enabled it to continue to expand responsibly. PACE states across the country can and should act similarly.