A resolution before the Miami-Dade County Commission would sever the county’s long-standing relationship with the Green Corridor, an interlocal group of nine municipalities that oversees the leading program providing Property-Assessed Clean Energy, or PACE.
PACE financing has helped tens of thousands of Floridians pay for home improvements to enhance energy efficiency and storm-hardening, reducing their energy and insurance costs.
At issue are a relatively small number of consumer complaints, which have been addressed, and a recent shutdown because of the Fed’s series of rapid rate hikes, which resulted in temporary problems for customers and contractors in the pipeline.
The Green Corridor board, on which I have served since 2011, sees the County Commission’s attention as a call to enhance cooperation with our partners in the county and strengthen protections for all consumers who seek PACE financing.
The Green Corridor contracts with Ygrene to offer PACE financing for improvements needed to reduce storm insurance premiums, including solar panels to lower electric bills, and battery-backup for storm outages. PACE costs less than 1% more than a home equity line of credit (HELOC), and is simpler to obtain. PACE is available to many homeowners even if they are ineligible for a home equity loan, such as retirees with retirement investments and with Social Security, but no salary. Still, customers must take the time to learn how PACE billing works and what to expect when property taxes come due, since payments are added to a homeowner’s annual property tax bill.
Ygrene and the Green Corridor worked together as the first players in Florida’s PACE market and, therefore, were the first to experience the growing pains of a new industry. Bad contractors tarnished the company’s reputation, overzealous advertising annoyed everyone and impatient consumers zipped through the financing documents then forgot the terms they agreed to, complaining later when payments came due.
This year, the Fed’s rapid interest rate hikes forced Ygrene’s short-term financier to pull out, leaving no funds to cover a thousand contracts in progress. Customers scrambled to sign up with other providers, with Ygrene’s assistance. During the next four months, Ygrene developed a more-reliable mechanism to cover in advance the short-term financing needed before underlying bonds are sold, and Ygrene paid every remaining debt.
The Green Corridor board has worked with Ygrene to terminate bad contractors, tone down the advertising and better inform consumers what they were signing up for. Financial experts employed by the Green Corridor board are evaluating Ygrene’s new financing mechanisms to assure they can withstand future upsets in the financial markets. The Green Corridor drafted it statewide PACE agreement text incorporating consumer-protection language requested by Miami-Dade and Broward counties. We wish to extend this partnership to further improve these protections.
The Green Corridor needs the county’s cooperation to improve education and consumer protections. We previously found that if we require Ygrene’s potential customers to undergo more stringent education, many sign up with a competitor that lacks these requirements. Thus, our well-intentioned requirements don’t help consumers and skew the competitive field against the company we oversee.
Working together, however, the Green Corridor and Miami-Dade County can draft improved protections that the county can apply to all PACE providers, improving protections for residents seeking PACE financing from any company. Three examples are: requiring consumers to demonstrate their understanding of the financial terms before signing a PACE contract; requiring contractors to close out construction permits before they are paid in full by a PACE provider; and requiring all PACE providers to demonstrate funding is in place exceeding the balance of their in-progress construction contracts and the costs of administering them.
The resolution before the County Commission would sever relations with the Green Corridor over past problems that already have been resolved. It would eliminate the most experienced oversight team as well as other programs that the Green Corridor offers residents. The Green Corridor also sponsors the county’s solar co-ops, and we have a new program to insulate dwellings of low-income renters and homeowners at no cost to them.
The pending resolution instead should be replaced with one strengthening our ties and formalizing cooperation going forward, to combine the Green Corridor’s institutional knowledge with the County’s economic clout. We look forward to continuing this work with the county at our side, making sure that homeowners considering PACE financing better understand the repayment terms and are better protected from contractor problems and unforeseen glitches in the financial markets.
Philip Stoddard has worked as educator and scientist at FIU since 1992. He served on the Green Corridor’s board as South Miami mayor from its inception in 2011 through 2020 and has been the at-large board chair since 2021.