Alachua County is considering whether to file suit against a state agency over a home energy loan program that critics say saddles consumers with unaffordable debt.
The issue stems from the property assessed clean energy (PACE) program, which the Legislature first approved in 2010. State lawmakers authorized the Florida PACE Funding Agency (FPFA) to run a federal program that finances new roofs, windows, HVAC units and other home efficiency improvements.
The home improvements are funded through private lenders, and the loans are paid back as part of a resident’s annual tax bill.
Alachua County entered into interlocal agreements with PACE providers in 2016, but the Board of County Commissioners (BOCC) decided to let the agreements expire on August 13, 2021, ending the program locally.
Alachua County says PACE providers have continued to solicit local residents, causing County Attorney Sylvia Torres to issue a cease and desist letter to FPFA on May 9.
She acknowledged in the letter that the FPFA and the county have different interpretations of a November 2022 ruling in Leon County. The FPFA says the ruling allows it to authorize these loans anywhere in the state—with or without county participation.
“Please be advised that Alachua County disagrees with any such interpretation of that order and maintains that FPFA does not possess the ability to operate independent of the County’s regulation or cooperation,” Torres wrote in her letter.
Alachua County spokesman Mark Sexton said the commission has made its position clear.
“We are maintaining an awareness of this as these things develop,” Sexton said in a phone interview. “We will decide at some point in the future whether or not litigation is going to be required in Alachua County.”
On Thursday, the Alachua County Tax Collector’s office told Mainstreet Daily News that it has not and will not collect on any loans made through the PACE program since the county’s interlocal agreement ended in 2021.
“The tax collector has no authority under general law to collect new Florida Pace Funding Agency assessments in 2023 as the Interlocal Agreement with Alachua County expired on August 13, 2021,” David Schwartz, tax collector general counsel, wrote in a letter Wednesday to FPFA.
Chief Deputy Jon Costabile said the office has not placed any PACE liens on the tax roll since the agreement ended, but 326 parcels remain on the tax roll that were placed prior to the expiration.
On June 2, the county issued a consumer warning that reiterated the county’s lack of participation in the PACE program.
“The Alachua County Commission has determined that PACE providers do not provide adequate consumer protections,” the advisory said.
Counties opposing PACE
Other Florida counties—including Columbia, Collier, Leon, Palm Beach and Pinellas—also oppose the FPFA’s actions since November. Both Palm Beach and Pinellas counties have already requested emergency injunctions to stop the agency from soliciting new loans.
Columbia County has had a similar experience as Alachua County since November, even though it never had an interlocal agreement for residential PACE programs. Columbia County Attorney Joel Foreman recently told the county commission that agencies have started knocking on doors and signing people up for the program.
“It appears they hit the ground running,” Foreman said. “They didn’t ask permission; they didn’t say anything to us about anything. By the time we discovered this issue had emerged, they already had six liens of record.”
The controversies over PACE programs are not limited to Florida.
Florida is one of three states—along with California and Missouri—that has a residential PACE program, according to PACENation, a group that advocates for PACE loans.
The FPFA highlights no money down, 100% financing and no minimum credit requirements, which help low-income families afford improvements that in turn lower their energy costs. But Florida counties oppose the program for signing homeowners up for complex loans that could end in foreclosure and harm chances of selling the property in the future.
Traditional loans have mandated protections for consumers—requiring companies to explain and disclose information and ensuring the customer understands the terms.
Nationally, the PACE program hasn’t had the same standards, so the federal government is now looking at national consumer protections.
California approved tougher consumer protections in 2017, trying to stifle the “fraudulent and abusive practices by a few bad actors.” Missouri also introduced new state-wide restrictions and consumer protections in 2021.
A ProPublica investigation found that the Missouri loan terms had an average of 10% interest with lengths of 20 years or more, leaving homeowners paying more than the project cost and sometimes more than the cost of the entire home.
The Federal Trade Commission and California sued one PACE provider in 2022 for deceptive practices and recording liens against properties without owner consent.
PACE programs also have a commercial side that provides financing for companies in 30 states, according to PACENation.
Prepping for court
The merits of PACE funding aside, both Florida counties and FPFA claim legal authority.
“Several local governments have tried to alter, amend and sometimes eliminate this financing option for Florida residents for years,” the FPFA website says. “In November of 2022, a court order was issued making it clear that the PACE mission is to be carried out independently of city and county authorities.”
FPFA called the situation unmanageable. In December 2022, FPFA created a uniform interlocal agreement that counties or cities “have the option of executing.”
In meeting backup documents, Columbia County’s Foreman said state law has generally been interpreted to mean local approval remains necessary to issue the loans.
Columbia County’s website displays a yellow warning notice on its homepage, advising residents that the commission unanimously opposes residential PACE loans and has not authorized the program.
On May 18, the Columbia County Commission passed a resolution that supports Tax Collector Kyle Keen’s decision to not collect the money on the tax roll. While Keen is required to collect assessments legally authorized by the county, Columbia County is relying on its decision not to participate in the PACE program.
The commission authorized Foreman to continue working with other counties to resolve the issue.
“We’re going to go back after them immediately and try to shut them down,” Foreman told the commission.
Palm Beach and Hillsborough counties’ tax collectors have also announced they will not collect the money on their tax rolls.
Palm Beach County still permits PACE loans but with expanded consumer protections, similar to those in California and Missouri, added to the interlocal agreements.
According to the Palm Coast Post, three PACE agencies have abided by those expanded protections, but FPFA has ended the interlocal agreement while continuing to operate with the Leon County court order as the basis for its legal authority.