Property Assessed Clean Energy or “PACE” is a financing option that allows property owners to make improvements to their property pertaining to energy conservation, energy efficiency and wind-hardening and make the payment on their tax bill. In 2010, the Florida Legislature created Chapter 163.08 in the Florida Statutes to allow property owners to place a voluntary non-ad valorem special assessment on their property. PACE allows a property owner to utilize the equity or value built-up over time from their original ownership date to serve as the main basis for the extension of credit. It is important that property owners fully understand all of their financing options (i.e. Cash, Credit Cards, Home Equity Lines, Loans, etc.) to determine and their ability to handle the increase on their annual tax bill to see if PACE financing is the right option.
FDFC PACE Program and Role
Per Section 163.08(7), the FDFC was given the ability to issue revenue bonds on a state-wide basis. In January 2014, the FDFC Board approved moving forward with a PACE program with multiple, third-party PACE Providers to provide a higher level of competition and serve as much of the state as possible. The FDFC’s role expands outside the normal parameters of simply the conduit issuer to include all due-diligence on PACE Providers, structuring and creating of the bonds and associated bond documents, oversight of the PACE Providers, consumer protections for the residential PACE program (R-PACE) and reporting. Commercial PACE (C-PACE) is the second phase of the FDFC PACE program and slated for approval by the FDFC Board in 4Q17.
All PACE Providers must go through a multi-step process before actually providing service to a community through the FDFC PACE program. These steps include:
1. Initial due diligence to review corporate, financial, IT, contractor management and other parameters.
2. FDFC Board presentation and approval as a PACE Provider.
3. Execution of a Program Administration Agreement.
4. “Build the Box” – Creation of program parameters and elements
a. Coordination for marketing of FDFC PACE program
b. Bond and other document creation
c. Data collection
d. Consumer protection
e. Financing and Assessment requirements
5. Launch date: Ability to serve communities
Currently, the only R-PACE Program Administrator with the ability to serve communities is Renovate America, Inc. (https://www.heroprogram.com/). FAQ or eligible products list are available (https://www.renovateamerica.com/support/faq#tab5).
PACE Funding Group, LLC has executed a Program Administration Agreement and is in the process of Step 4 above, but is not ready for launch at this time.
Per the FDFC PACE Procedures / Florida Statues and specific to interactions with property owners, all Program Administrators are expected to:
1. Vet, train and manage contractors to properly market and discuss PACE financing;
2. Underwrite applications for financing;
3. Verify eligible product;
4. Check for exorbitant pricing;
5. Provide disclosures associated with PACE financings in a clear and concise manner;
6. 100% call verification for property owners;
7. 100% lender notification of PACE assessments;
8. Verify all required permits are pulled;
9. Assist property owners will questions or concerns regarding financing and contractors;
10. Allow property owners the right to rescind using PACE financing if other financing is used prior to the sign-off on installation;
11. Require property owner sign-off on installation prior to contractor’s receiving payment;
12. Assist property owners with prepayments with no penalties;
13. Assist property owners with questions regarding their annual assessment on the tax roll.
The FDFC, in its oversight capacity with Program Administrators, is expected to:
1. Perform due diligence on capacity of PACE Providers
2. Establish eligible products lists
3. Establish parameters for exorbitant pricing;
4. Review documents and data associated with the financing agreements
5. Ensure all steps are completed for FRED membership and community eligibility for PACE financing;
6. Work with FRED to place special assessments on annual tax bill;
7. Perform period compliance and auditing on Program Administrators
The Florida Resiliency and Energy District (FRED) is a Chapter 163.01 entity created by Interlocal Agreement between Fernandina Beach and Lake Clarke Shores to levy and collect the voluntary, non-ad valorem special assessment through the local Tax Collector’s office. The FDFC provides all administrative services and their PACE program to FRED, which allows local communities to have a turnkey platform for providing PACE to their constituents. Communities can join FRED through a Limited Participation Partner Membership Agreement (LPPMA). Once FRED has the approval of the local community to join and service agreements in place with the Tax Collector and Property Appraiser, the local community can be eligible for PACE. On June 29, 2017, the FDFC will begin an initial launch of the R-PACE program on a limited basis with full launch starting by the end of July.