Miami-Dade Gets PACE Complaints, Rules Next?

MIAMI – Miami-Dade is considering cracking down on a heavily advertised home improvement funding program that has drawn hundreds of consumer complaints across the state and been the target of lawsuits and federal scrutiny.

The Property Assessed Clean Energy program, or PACE, offers property owners an opportunity to pay for big ticket housing items such as new roofs or impact windows without running a credit check or, in some cases, putting any money down. Instead, users put their homes up as collateral, for an annual fee that’s collected as part of their property tax bill.

PACE was originally pitched as a solution for “green” improvements like solar panels or energy efficiency upgrades, but in Florida its overwhelmingly used to replace roofs or install impact doors and windows.

The program has grown in Florida over the years as a popular option, particularly for homeowners looking to avoid, or who cannot qualify for, traditional bank loans. But while bank loans are heavily regulated, PACE is not.

That’s led to plenty of issues over the years, ranging from hundreds of complaints about unreliable contractors and bad business deals with some consumers saying they did not understand how the bills would be paid. The program also has sparked foreclosures in California, class action lawsuits and an ongoing state investigation into the largest PACE provider in Florida – Ygrene.

In February, the Miami Herald published an investigation into Ygrene that found the company temporarily dropped out of the state due to financial problems, leaving potentially thousands of homeowners and contractors with no money to pay for their projects. The investigation also found Florida lagged behind all other states in consumer protections for the program.

But now, Miami-Dade County, which has the lion’s share of PACE agreements in the state, could see stricter regulations for the controversial industry.

‘A clear message’

Commissioner Kevin Cabrera, citing Herald reporting, has introduced a slew of bills intended to increase consumer protections, ranging from requiring paperwork that spells out exactly how much consumers could owe to one that could kick Ygrene out of unincorporated Miami-Dade altogether.

That bill passed 3-2 in a committee hearing Tuesday, setting it up for a full commission vote in early October. It would dissolve the quasi-governmental organization that oversees all of Ygrene’s PACE agreements in the state, known as the Green Corridor.

Cabrera said the incident when Ygrene paused funding for Florida projects – and then resumed signing contracts and paying contractors several months later – deserved punishment. He called the current situation “government sanctioned exploitation.”

“We are not going to stand by and, to quote the Miami Herald, let you screw our residents,” he told the committee. “This sends a clear message.”

Commissioner Raquel Regalado, a no vote, acknowledged the history of problems with the PACE program, particularly with low income residents, but said she couldn’t support a bill that didn’t seek to improve the root of the problem but instead jettisoned the board designed to oversee a single company.

“I don’t think that eliminating a consumer protection group that has really been trying to get this right is the right move,” she said. “It is not forward looking, it’s just punitive.”

Other states have fixed consumer protection problems with PACE loans. Why not Florida?

Ygrene is one of four PACE programs that have permission to operate in Miami-Dade, but it’s the only one overseen by the Green Corridor, a group of seven mayors or political appointees throughout Miami-Dade. For every Ygrene contract signed in the state of Florida, the Green Corridor takes a small fee.

Over the years, that’s added up to about $3 million, which the Corridor primarily uses to fund a solar co-operative program called Solar United Neighbors.

The head of the Green Corridor, former South Miami Mayor Phil Stoddard, argued to commissioners that Ygrene fixed its funding issue and had taken steps to ensure it would never happen again. He also said the board, under his leadership, has pushed for consumer oversight for years, making Ygrene the best in the industry.

“Because Ygrene is the leading PACE program, it encountered all the problems first, but it also solved them first,” he said. “If you end your agreement with Ygrene, you’re left with residential PACE programs that don’t have direct consumer oversight.”

Stoddard told the Miami Herald he can only recall one person coming directly to his board with a PACE problem in the decade it’s been around, but said he proactively searches for people complaining about PACE problems – like in media articles – and works with them to resolve issues.

“Every time there’s a problem that’s come to our attention we’ve addressed it,” he said. “We try to understand what really happened and if we think a change is appropriate we will make it.”

A Herald review of several years of publicly available meeting minutes for the board reveal no registered attendees for public comment, although lawyers for the board do track the dozens of lawsuits filed against Ygrene and the Green Corridor for unsatisfactory work over the years.

Florida’s Attorney General also has an ongoing investigation into Ygrene, which has garnered more than 100 complaints to the state office since early 2019.

In Miami-Dade alone, the Office of Resilience told the Herald it has logged 34 PACE complaints since 2016, 22 of which were about Ygrene. Other agencies, like the tax collector, the building department and the property appraiser, also track complaints separately.

Miami-Dade’s building department found several contractors doing business for multiple PACE providers, Ygrene and Renew Financial, that illegally or improperly worked on about 40 homes.

“These contractors were not pulling or maintaining permits and/or were not obtaining final inspection approval, leaving the homeowners liable and having to rip out the home improvements and pay for them to be redone using legal permitting process,” Chief Resilience Officer Jim Murley wrote in an email.

Stoddard said he shares the commission’s desire for better consumer protections, but he disagrees that getting rid of his board is the way to fix it.

“I appreciate what they’re trying to accomplish, but I think it was based on incomplete information,” he said. “We have three weeks to scramble and put together correct information and try to educate the entire board as to what we have done in the past and what protections we have now.”

More consumer protections

For now, Miami-Dade is about middle of the pack in terms of PACE consumer protections.

Some counties, like Collier, kicked the program out entirely after too many complaints. And others, like Palm Beach, have strict requirements that PACE providers spell out terms of the agreement to homeowners. In Pasco, a staffer at the tax collector’s office calls each new PACE sign-up and explains the process to them before the state-mandated 3-day cancellation window closes.

At Tuesday’s meeting, no commissioner seemed interested in completely banning the program from the county, which has sent lobbyists to Tallahassee for several years in a row to push to expand the program to include things like septic to sewer conversions.

“It has, in many places, been predatory. But I represent a district where people use it. They’re educated consumers,” Regalado said. “I think that something needs to be done, but I hope that there’s a middle ground.”

Cabrera’s new disclosure legislation, which will get its first hearing next week, requires PACE providers to explain exactly how much the improvements will cost with interest rates that – for Ygrene, at least – can reach 9.9%. It also requires the county to run an educational campaign to explain PACE to residents.

He said Ygrene has indicated it’s interested in working with him on the bill, and his fellow commissioners all expressed interest in better protections for residents.

After the discussion Tuesday, Cabrera said he sent another piece of legislation to county attorneys that would make it harder for companies to leave and return, leaving customers on the hook, like Ygrene did.

“It’s not right to just leave and come back as you please, it’s too laissez faire,” he said. “I do understand there is some value in these programs, but I don’t want to enable bad actors.”

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