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Some of them thought they were enrolling in a free government program to make their homes more energy-efficient. Others were promised the energy savings from their renovations would quickly offset the cost, only to end up with solar panels that didn’t work or were too few in number to make much of a difference. Some were signed up for projects that should never have been eligible for the financing to begin with, such as converting their garages to rental units. One answered a robocall about eliminating their electricity bill and wound up with an inoperable solar array and more than $20,000 of debt.
All of these homeowners were sold on a form of financing called property assessed clean energy, or PACE, which leverages the taxing authority of local governments to cover the high upfront cost of a climate-friendly home renovation.
PACE isn’t a mortgage, nor is it a conventional loan; rather, homeowners pay back their balance—plus interest—via a surcharge on their annual property taxes. Consumer attorneys and legal aid groups in large U.S. counties where homeowners have used PACE—including Broward, Miami-Dade, and Hillsborough counties in Florida and Los Angeles, Orange, and San Diego counties in California—say PACE has emerged as a serious problem for low-income homeowners. Those who can’t afford the steep interest rates on the financing may default on their property taxes or slip into mortgage foreclosure; attorneys have seen senior citizens take out new mortgages or sell their homes at a loss to get out from under the debt.