Many Florida homeowners want new roofs, solar panels or storm-resistant windows, but they can’t afford it.
So they turned to a state-sponsored borrowing program, Florida PACE Funding Agency (PACE stands for Property Assessed Clean Energy), marketed to homeowners with weak credit who have to borrow money. Since 2015, PACE says it has financed $574 million in home improvements. Its splashy website features testimonials from satisfied customers.
More than a decade after the Legislature created Florida’s program, PACE has been a financial success, but it is mired in controversy, legal battles, even allegations of predatory lending. The program may have been well-intended, but has become another profit center for businesses with far too few consumer safeguards.
In Jacksonville, city officials call PACE a threat to the public. In Polk County, Tax Collector Joe Tedder cites PACE’s “abusive lending practices.” In Palm Beach, officials sent PACE a “cease and desist” letter in March, to no avail.
In Broward, aggressive contractors knock on doors in poor neighborhoods with promises of “zero money down, no credit needed.” Their flyers bear Broward’s official logo, falsely implying it’s a government program. (PACE says it doesn’t hire contractors; homeowners do.)
Hundreds of thousands of homeowners are getting roofs and windows, but at a steep price: They are saddled with loans that will take decades to repay, and some people may lose their homes.
A loan that’s a lien
A PACE loan appears on a homeowner’s property tax bill. It’s really a lien, with the house as collateral. Collecting those assessments is the critical part of the PACE model. That’s what makes the program so attractive to bondholders.
In Broward, officials report about 23,000 PACE liens, many in struggling areas such as Lauderhill, Margate and North Lauderdale. Tax records provided to the Sun Sentinel Editorial Board show some homeowners annually pay three times as much money to PACE as they pay in property taxes to all local governments combined.
On top of the crushing cost of property insurance, this is another housing crisis in the making, yet local officials have said almost nothing about it.
Even rural Gadsden County in North Florida is a breeding ground for shady contractors. In one case, an elderly widow lives in a mobile home assessed so low that with exemptions, her property tax bill next year is $49.66, county tax records show. But when she hired PACE for a new roof at 8.99% interest, she must pay $2,752 a year every year for 30 years, totaling more than $82,000, three times what her mobile home is worth.
“People are in jeopardy of losing their homes,” says Gadsden County Tax Collector W. Dale Summerford. “We have a duty to fight back on this.”
He’s right — and many are doing just that.
Counties refuse to collect
Many of Florida’s elected tax collectors refuse to collect the assessments as a result of a hotly disputed decision a year ago in state court. PACE contends that Circuit Judge J. Lee Marsh in Tallahassee, who validated $5 billion in PACE bonds, normally a formality, also ruled that PACE can operate anywhere in Florida without signing contracts with counties known as interlocal agreements.
That decision blindsided counties, who received no notice of the hearing, and if PACE is right, it means the agency is not subject to local consumer protections, as in Palm Beach County.
Palm Beach Tax Collector Anne Gannon, a leader in holding PACE accountable, has sued PACE and asked to be removed from the case, claiming her rights were violated because she never received any notice. Statewide, PACE says at least 35 counties refuse to collect its assessments, including Lake, Seminole, Volusia, Duval, Hillsborough and Pinellas.
PACE needs more rigorous government oversight. When the legislative session begins in January, lawmakers should bring the statewide program under control, rein in renegade contractors and protect homeowners by giving them time to change their minds before taking on decades of debt.
It’s wrong that contractors in Broward can circulate flyers that say “immediate action required” with “no payments until November 2024.” Broward is belatedly drafting an ordinance to make those come-ons illegal.
A clash at the Supreme Court
PACE’s $185,000-a-year executive director, Mike Moran, is a Sarasota County commissioner who’s running for county tax collector. PACE wrote an op-ed that said tax collectors have “gone rogue,” accusing them of breaking the law by refusing to accept his group’s assessments. The two sides appear headed for a clash at the Florida Supreme Court, with nervous bondholders said to be backing away from the program because of legal and financial uncertainty.
“We’ve had these government bureaucrats taking away this option from the homeowners,” Moran said.
A homeowner with a PACE assessment makes a “voluntary choice,” Moran said, and in-house PACE surveys show 92% of customers are satisfied.
Moran defends PACE’s financing model as a bargain, saying if homeowners paid for expensive repairs with a credit card, they could pay up to 29% interest.
In an interview with the editorial board, Moran says that tax collectors have a constitutional duty to collect assessments from PACE, the same as any other special district for hospitals or water management.
When the Legislature created Florida PACE Funding Agency, the votes were overwhelming and bipartisan. Only four senators, all Republicans, cast “no” votes. One of them was Mike Fasano, Pasco County’s long-time tax collector, who knew from the outset that PACE would be trouble.
“I have been fighting them since Day One,” he said.
The Orlando Sentinel Editorial Board includes Editor-in-Chief Julie Anderson, Opinion Editor Krys Fluker and Viewpoints Editor Jay Reddick. The Sun Sentinel Editorial Board consists of Editorial Page Editor Steve Bousquet, Deputy Editorial Page Editor Dan Sweeney, editorial writer Martin Dyckman and Anderson. Send letters to insight@orlandosentinel.com.
