A Financing Option That Helps Homeowners, Communities and the Environment

The Property Assessed Clean Energy loan program has come under attack, but its benefits are clear.
July 23, 2018
Solar panels on a home by the ocean.
(Shutterstock)
By Mike Thompson  |  Contributor
A member of the U.S. House of Representatives from California

More and more, the clean energy economy is powering communities all across our country. Elected leaders from dozens of states, including my home state of California, see the economic benefits that clean energy industries bring to local economies. That's why I've championed efforts in Congress to strengthen Property Assessed Clean Energy financing, which makes critical energy efficiency, water conservation and resilience upgrades more accessible for the owners of homes and businesses.

PACE is built on the principle that property owners should be able to access affordable long-term financing to make these upgrades, even when they don't have the upfront capital those projects often require, and provides a convenient way for borrowers to repay their loans through their property-tax bills. PACE financing is voluntary, costs nothing to taxpayers and has been overwhelmingly successful for nearly 200,000 American homeowners.

Last summer, however, PACE financing in California encountered one of its few roadblocks when some local real-estate brokers and mortgage lenders, raising unwarranted concerns about mortgage delinquencies and defaults and alleging widespread consumer abuses, mounted an effort to roll back PACE financing. These efforts came despite the clear benefits for the vast majority of residents who've used PACE to affordably install solar panels, LED lighting, insulation and other energy-efficiency upgrades. Hundreds of local governments have continued to adopt PACE financing programs, a clear sign that they understand the economic and energy saving value it brings to our communities.

PACE continues to evolve, particularly to the benefit of working-class families. The California legislature recently passed comprehensive consumer-protection legislation that strengthened PACE financing for homeowners. Two bills signed into law by Gov. Jerry Brown came after a year of working closely with consumer advocates, real-estate professionals, banks and other stakeholders. But while California's new regulatory framework serves as a model for other states, we must be cautious of advancing any efforts that would threaten the very foundation for why PACE was created: convenience, choice and affordability for everyday Americans.

Considering that more than half of our nation's housing stock was built before 1980, the growth of PACE comes at an opportune time. Homeowners who have taken advantage of the program will collectively save nearly $1 billion on their utility bills during the lifetime of their completed PACE projects. California is set to save more than 10 billion gallons of water and reduce carbon dioxide emissions by more than four million metric tons because of PACE.

As an added bonus, PACE has created more than 40,000 jobs, reinvigorating many local economies. What's more, recent studies have decisively rebutted claims of PACE-induced mortgage delinquencies and defaults. Independent research by the credit-rating agency DBRS, for example, shows a healthy multi-state residential PACE market, stating that "PACE delinquency metrics are lower than general aggregate property tax and single-family residential only property tax delinquency levels."

The opportunity to help homeowners live in stronger homes that are more energy-efficient, comfortable and secure for their families is an exciting prospect for communities across our country. It's equally important to ensure the consumers are protected so they can effectively choose financing tools that work for them.

The real story of PACE is that it is an economic powerhouse. Its benefits can now be felt in more than 500 U.S. cities and counties. The outlook for state and local leaders who wish to unlock private capital to create local jobs, protect our environment and help property owners strengthen their homes has never looked brighter.

Mike Thompson | Contributor