Sacramento, CA – Assembly Bill 2063, by Assemblymember Cecilia Aguiar-Curry (D-Winters), was signed by Governor Brown. The bill will require a consumer’s ability to pay for home improvements to be determined prior to the signing of a financing agreement to fund those improvements, and before any construction work can start. The bill also makes other consumer protection improvements to the “property assessed clean energy” (PACE) program to ensure that the program can continue without putting homeowners at risk.
California is nearing the 10th year of residential “PACE” programs that assist homeowners in making energy and water efficiency improvements to their homes. PACE assessments are among the fastest growing types of property-secured financing in California, with cumulative assessments growing from at least $350 million in 2014 to over $2.6 billion by the end of 2016.
PACE provides homeowners with an alternate method of financing green home improvements via an assessment on their property tax bill. Unlike other traditional financing methods, like home improvement loans or credit cards, the PACE financing model can bring lower interest rates and the ability for homeowners to repay the costs over a longer period of time.
A PACE loan is attached by lien to the property, and is paid on the property tax bill for up to 30 years. The average PACE project is $28,000. Depending on the terms of the assessment contract, property tax payments can significantly increase (sometimes even double the total property tax payment). If the financial stability of the consumer is not assured before a financial obligation is signed, their home and financial standing could be at risk.
“PACE is a program with good intentions. We must continue to do everything we can to reduce energy and water consumption in California,” said Aguiar-Curry. “However, a situation where consumers could sign a multi-thousand dollar contract without first finding out if they can afford it is simply irresponsible. AB 2036 will protect California consumers’ biggest investment – their home. I’m proud the Governor agreed to fix that flawed approach.”
Consumer groups, state associations of county assessors and tax collectors, realtors, mortgage bankers, banks, and credit unions supported AB 2063 because the new rules proposed in the bill will prevent the risk of future property tax defaults. The law will take effect on January 1, 2019.
Aguiar-Curry represents the 4th Assembly District, which includes all of Lake and Napa Counties, all of Yolo County except West Sacramento, and parts of Colusa County, Solano County, and Sonoma County. www.asm.ca.gov/aguiar-curry