Clearing the air on Property Assessed Clean Energy (PACE)
Mary Leslie
By Signal Contributor
Friday, January 19th, 2018

Property Assessed Clean Energy (PACE) financing is one of the fastest growing types of financing in California – and for good reason. Since 2007, PACE has helped more than 150,000 California homeowners make much-needed improvements to their homes that conserve energy and water, increase property values and lead to overall happier homeowners. Homeowners don’t pay anything upfront. Rather, PACE program administrators use private capital to cover 100 percent of the costs for projects like efficient air conditioning, solar panels, new roofs or other property upgrades. Homeowners repay the cost of the improvements on their property tax bill with fixed interest rates that can be paid over an extended period of up to 30 years.

As the President of the Los Angeles Business Council (LABC) representing over 450 businesses focused on energy, economic development, housing and transportation, I’ve seen firsthand how PACE financing is powering our local and state economies while improving the lives of California homeowners.

PACE financing has been an overwhelming success for Californians, which is why I’d like to clear up some misconceptions in The Signal column, “Real Estate Talk: FHA bars solar PACE loans,” published on Jan. 3. The column was written as a response to a recent Federal Housing Administration (FHA) decision to decline to insure future mortgages on homes with PACE assessments. It is worth noting that this decision will affect only a very small fraction of the PACE market.

Real Estate Talk: FHA bars solar PACE loans

The first misconception I’d like to address relates to mortgage lenders. Despite claims made by the FHA and others, PACE financing does not put mortgage lenders or government-backed mortgage insurers at risk. In fact, California (by far the largest PACE market) established a $10 million loss-reserve fund to protect mortgage lenders (such as FHA) from losses related to home mortgage defaults on properties with PACE liens. No claims have ever been filed against the reserve. PACE’s success in California should lay to rest the concerns of mortgage originators and insurers.

Second, consumer protection. The good (and under-reported) news is that PACE contains newly enhanced consumer protection measures that make it better than ever. Signed into law by Governor Brown last October, these include ability-to-pay standards, income verification, 3-day right to cancel, clear consumer disclosures, state licensing and regulatory oversight and contractor marketing standards. Plus, PACE has unique protections that no other financing product offers, like the fact that home improvement professionals are not paid until the homeowner signs off on the job.

Here’s the real, positive story of PACE.

Real estate professionals should embrace PACE, which has been instrumental in refreshing our aging housing stock. Nearly 40 percent of all owner-occupied homes in the country were built in 1969 or prior. PACE is bringing these aging homes up to current efficiency standards, raising property values and improving local real estate markets. According to a study by the Journal of Structured Finance, PACE improvements “increase home value by at least as much as their costs.” Larger property values mean larger commissions for real estate professionals and larger resale values for homeowners during transactions.

Homeowners with PACE financing also benefit from energy and water savings that generate significant cost-savings over time. The water and greenhouse gas emission savings from PACE financing in Los Angeles have been a huge benefit to our region: PACE has decreased water consumption in LA County by more than 13 million gallons annually. Fossil fuel usage has been cut by more than 105 million kilowatt-hours annually, the equivalent of taking more than 10,000 cars off our roads.

Finally, PACE creates jobs. To date, PACE financing has created 4,800 jobs in Los Angeles County and generated nearly $500 million in economic activity. Throughout California, more than 30,000 jobs have been created because of PACE and more than $4 billion in economic investment has been injected into the state economy. These are steady jobs that cannot be outsourced overseas, since they involve working on local homes.

PACE’s many benefits have earned rare bipartisan support in Congress and continued endorsement from local elected officials and businesses across the country. PACE is one of the most innovative financing tools of the last decade that benefits homeowners, businesses, our economy and the environment. PACE truly works for the people of California.

Mary Leslie is president of the Los Angeles Business Council, dedicated to uniting the power of business with the power of government for education and advocacy to promote environmental and economic sustainability.

About the author

Signal Contributor

Signal Contributor

Mary Leslie

Clearing the air on Property Assessed Clean Energy (PACE)

Property Assessed Clean Energy (PACE) financing is one of the fastest growing types of financing in California – and for good reason. Since 2007, PACE has helped more than 150,000 California homeowners make much-needed improvements to their homes that conserve energy and water, increase property values and lead to overall happier homeowners. Homeowners don’t pay anything upfront. Rather, PACE program administrators use private capital to cover 100 percent of the costs for projects like efficient air conditioning, solar panels, new roofs or other property upgrades. Homeowners repay the cost of the improvements on their property tax bill with fixed interest rates that can be paid over an extended period of up to 30 years.

As the President of the Los Angeles Business Council (LABC) representing over 450 businesses focused on energy, economic development, housing and transportation, I’ve seen firsthand how PACE financing is powering our local and state economies while improving the lives of California homeowners.

PACE financing has been an overwhelming success for Californians, which is why I’d like to clear up some misconceptions in The Signal column, “Real Estate Talk: FHA bars solar PACE loans,” published on Jan. 3. The column was written as a response to a recent Federal Housing Administration (FHA) decision to decline to insure future mortgages on homes with PACE assessments. It is worth noting that this decision will affect only a very small fraction of the PACE market.

Real Estate Talk: FHA bars solar PACE loans

The first misconception I’d like to address relates to mortgage lenders. Despite claims made by the FHA and others, PACE financing does not put mortgage lenders or government-backed mortgage insurers at risk. In fact, California (by far the largest PACE market) established a $10 million loss-reserve fund to protect mortgage lenders (such as FHA) from losses related to home mortgage defaults on properties with PACE liens. No claims have ever been filed against the reserve. PACE’s success in California should lay to rest the concerns of mortgage originators and insurers.

Second, consumer protection. The good (and under-reported) news is that PACE contains newly enhanced consumer protection measures that make it better than ever. Signed into law by Governor Brown last October, these include ability-to-pay standards, income verification, 3-day right to cancel, clear consumer disclosures, state licensing and regulatory oversight and contractor marketing standards. Plus, PACE has unique protections that no other financing product offers, like the fact that home improvement professionals are not paid until the homeowner signs off on the job.

Here’s the real, positive story of PACE.

Real estate professionals should embrace PACE, which has been instrumental in refreshing our aging housing stock. Nearly 40 percent of all owner-occupied homes in the country were built in 1969 or prior. PACE is bringing these aging homes up to current efficiency standards, raising property values and improving local real estate markets. According to a study by the Journal of Structured Finance, PACE improvements “increase home value by at least as much as their costs.” Larger property values mean larger commissions for real estate professionals and larger resale values for homeowners during transactions.

Homeowners with PACE financing also benefit from energy and water savings that generate significant cost-savings over time. The water and greenhouse gas emission savings from PACE financing in Los Angeles have been a huge benefit to our region: PACE has decreased water consumption in LA County by more than 13 million gallons annually. Fossil fuel usage has been cut by more than 105 million kilowatt-hours annually, the equivalent of taking more than 10,000 cars off our roads.

Finally, PACE creates jobs. To date, PACE financing has created 4,800 jobs in Los Angeles County and generated nearly $500 million in economic activity. Throughout California, more than 30,000 jobs have been created because of PACE and more than $4 billion in economic investment has been injected into the state economy. These are steady jobs that cannot be outsourced overseas, since they involve working on local homes.

PACE’s many benefits have earned rare bipartisan support in Congress and continued endorsement from local elected officials and businesses across the country. PACE is one of the most innovative financing tools of the last decade that benefits homeowners, businesses, our economy and the environment. PACE truly works for the people of California.

Mary Leslie is president of the Los Angeles Business Council, dedicated to uniting the power of business with the power of government for education and advocacy to promote environmental and economic sustainability.

Upcoming Events

Jan
12
Fri
all-day Domes – Art Exhibit @ Old Town Newhall Library
Domes – Art Exhibit @ Old Town Newhall Library
Jan 12 – May 11 all-day
Domes - Art Exhibit @ Old Town Newhall Library | Santa Clarita | California | United States
Local resident Naomi Young, is the artist featured in the latest exhibit at the Old Town Newhall Library. The exhibit features original paintings and multimedia by Young, an artist born and raised in Jerusalem, Israel,[...]
Feb
1
Thu
all-day “The Golden Oaks of Santa Clarit... @ Valencia Library
“The Golden Oaks of Santa Clarit... @ Valencia Library
Feb 1 – Jun 1 all-day
“The Golden Oaks of Santa Clarita,” Art Exhibit @ Valencia Library  | Santa Clarita | California | United States
“THE GOLDEN OAKS OF SANTA CLARITA” ART EXHIBIT BY BRAD SERGI ON DISPLAY AT THE VALENCIA LIBRARY Library hours: Mon-Thu 10 a.m. – 9 p.m., Fri 10 a.m. – 6 p.m., Sat 10 a.m. – 5[...]
Feb
14
Wed
all-day Tickets Available Now for 41st A... @ Dodger Stadium
Tickets Available Now for 41st A... @ Dodger Stadium
Feb 14 – May 12 all-day
Tickets Available Now for 41st Annual SCV Dodger Day @ Dodger Stadium | Los Angeles | California | United States
SANTA CLARITA DODGER DAY TICKETS ON SALE NOW! Tickets Start at $25 and Benefit Local Schools and Non-Profits It’s time to step up to the plate! The Santa Clarita City Council invites residents to purchase[...]
Apr
19
Thu
all-day Santa Clarita Cowboy Festival Co... @ Event Locations Vary
Santa Clarita Cowboy Festival Co... @ Event Locations Vary
Apr 19 – Apr 22 all-day
BUY YOUR TICKETS NOW FOR COWBOY FESTIVAL CONCERTS – Locations, Times & Prices Vary 25th Annual Santa Clarita Cowboy Festival offers ticketed performances and special events Get ready for some toe-tapping, two-stepping, guitar-picking musical performances![...]
Apr
20
Fri
all-day Santa Clarita Cowboy Festival Co... @ Event Locations Vary
Santa Clarita Cowboy Festival Co... @ Event Locations Vary
Apr 20 – Apr 23 all-day
BUY YOUR TICKETS NOW FOR COWBOY FESTIVAL CONCERTS – Locations, Times & Prices Vary 25th Annual Santa Clarita Cowboy Festival offers ticketed performances and special events Get ready for some toe-tapping, two-stepping, guitar-picking musical performances![...]
7:00 pm Hart High School Presents ‘Bye, ... @ Hart High school Auditorium
Hart High School Presents ‘Bye, ... @ Hart High school Auditorium
Apr 20 @ 7:00 pm
Hart High School Presents 'Bye, Bye Birdie' @ Hart High school Auditorium | Santa Clarita | California | United States
Spring Musical Coming April 2018! Hart High Theatre is proud to present Bye Bye Birdie! April 19, 20, 27 & 28 @ 7pm April 28 & 29 @ 1pm When the draft selects rock star[...]
Apr
21
Sat
all-day Santa Clarita Cowboy Festival Co... @ Event Locations Vary
Santa Clarita Cowboy Festival Co... @ Event Locations Vary
Apr 21 – Apr 24 all-day
BUY YOUR TICKETS NOW FOR COWBOY FESTIVAL CONCERTS – Locations, Times & Prices Vary 25th Annual Santa Clarita Cowboy Festival offers ticketed performances and special events Get ready for some toe-tapping, two-stepping, guitar-picking musical performances![...]
10:00 am Astronomy Day @ Valencia Library
Astronomy Day @ Valencia Library
Apr 21 @ 10:00 am – 10:00 pm
The Local Group Astronomy Club and The Santa Clarita Public Library present our free annual Astronomy Day Celebration. We will be at the Valencia branch of the Santa Clarita Public Library from 10am to 3pm.[...]
10:00 am Resource Parents Needed to Foste... @ College of the Canyons, Dr. Dianne G. Van Hook University Center, Room 222
Resource Parents Needed to Foste... @ College of the Canyons, Dr. Dianne G. Van Hook University Center, Room 222
Apr 21 @ 10:00 am – 12:00 pm
Resource Parents Needed to Foster or Foster-Adopt a Child @ College of the Canyons, Dr. Dianne G. Van Hook University Center, Room 222 | Santa Clarita | California | United States
Adoption is a meaningful way for individuals and couples to fulfill their dream of parenting.  There are approximately 64,000 children in foster care in California.  Los Angeles County’s foster care population exceeds 21,000 children with[...]
10:00 am The City of Lancaster’s 27th Ann... @ Sgt. Steve Owen Memorial Park
The City of Lancaster’s 27th Ann... @ Sgt. Steve Owen Memorial Park
Apr 21 @ 10:00 am – 6:00 pm
The City of Lancaster’s 27th Annual California Poppy Festival, Sat & Sun @ Sgt. Steve Owen Memorial Park | Lancaster | California | United States
On April 21 and 22, the City of Lancaster will host the 27th annual California Poppy Festival™ at Sgt. Steve Owen Memorial Park (43063 10th Street West). Drawing more than 40,000 attendees and spanning 35[...]