This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0669.ECC
DATE: 3/6/2023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 669 Resiliency Energy Environment Florida Programs
SPONSOR(S): Fine
TIED BILLS: IDEN./SIM. BILLS: SB 950
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Energy, Communications & Cybersecurity
Subcommittee
Keating Keating
2) Local Administration, Federal Affairs & Special
Districts Subcommittee
3) Ways & Means Committee
4) Commerce Committee
SUMMARY ANALYSIS
In 2010, the Legislature provided specific authority for local governments to create Property Assessed Clean
Energy (PACE) programs to provide up-front financing for certain qualifying improvements. Under these
programs, property owners may apply to the local government for funding to finance a qualifying improvement
and voluntarily enter into a financing agreement with the local government. “Qualifying improvements” include
energy conservation and efficiency improvements, renewable energy improvements, and wind resistance
improvements to existing facilities. Property owners finance qualifying improvements through a non-ad valorem
assessment on their property. Local governments determine whether to offer a residential or commercial PACE
program, whether to administer the program directly or through a for-profit or not-for-profit administrator, or any
combination thereof.
The bill makes several changes to Florida’s PACE law, including:
Using the term “Resiliency Energy Environmental Florida (REEF) program” to refer to the programs
used in Florida to provide PACE financing for qualifying improvements;
Authorizing the use of PACE financing for refinancing and for improvements on new construction;
Modifying eligibility requirements;
Allowing the total of the mortgage-related debt and the amount of any PACE assessments on a
property to reach 100 percent of the property’s fair market value;
Requiring certain disclosures to be made to residential property owners prior to or at the time of signing
a PACE financing agreement;
Requiring certain disclosures to be made verbally, by telephone, prior to issuance of a notice to
proceed;
Establishing a maximum term for PACE assessments;
Prohibiting the use of certain financing tools through PACE;
Establishing provisions governing PACE program administrators’ enrollment and oversight of
contractors that install qualifying improvements on residential real property;
Prohibiting the use of certain terms in PACE marketing; and
Requiring an annual report from PACE program administrators.
The bill does not have a fiscal impact on state or local government.
The bill has an effective date of July 1, 2023.
STORAGE NAME: h0669.ECC PAGE: 2
DATE: 3/6/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Current Situation
Property Assessed Clean Energy (PACE) Programs
Generally, Property Assessed Clean Energy (PACE) laws enable local governments to establish
programs to provide financing for certain qualifying improvements on real property which reduce energy
consumption and increase energy efficiency. PACE allows individual property owners to contract
directly with qualified contractors for energy efficiency and renewable energy projects. The local
government issues revenue bonds and uses the proceeds to provide initial project funding, which
bonds are repaid by non-ad valorem assessments on participating property owners’ tax bills.
1
PACE
programs are active in 30 states plus Washington D.C., but only California, Florida, and Missouri offer
residential PACE programs.
2
PACE in Florida
In 2010, the Legislature provided specific authority for local governments to create PACE programs.
3
The law
4
provides supplemental authority to local governments
5
concerning qualified improvements to
residential and non-residential real property. The law provides that if a local government authorizes a
PACE program, property owners may apply to the local government for funding to finance a qualifying
improvement and voluntarily enter into a financing agreement with the local government.
6
“Qualifying
improvements” include energy conservation and efficiency improvements, renewable energy
improvements, and wind resistance improvements to existing facilities.
7
At least 30 days before entering into the financing agreement, the property owner must provide notice
to any mortgage holder or loan servicer of the intent to enter into the agreement, the maximum amount
to be financed, and the maximum annual assessment required to repay the amount.
8
The law provides
that an acceleration clause for “payment of the mortgage, note, or lien or other unilateral modification
solely as a result of entering into a financing agreement … is not enforceable.”
9
However, the mortgage
holder or loan servicer may increase the required monthly escrow by an amount necessary to pay
annually the qualifying improvement assessment.
The law authorizes a local government to provide and finance qualifying improvements, levy a non-ad
valorem assessment to fund a qualifying improvement, incur debt to provide financing for qualifying
improvements, and collect costs incurred from financing qualifying improvements through a non-ad
valorem assessment. These non-ad valorem assessments are senior to existing mortgage debt,
10
so if
the homeowner defaults on their mortgage or goes into foreclosure, the delinquent PACE assessment
payments may be recovered before the mortgage. Current law also specifies that a PACE program
may be administered by a for-profit entity or a not-for-profit organization on behalf of and at the
discretion of the local government.
1
For more information, see http://www.pacenation.org and http://floridapace.gov/ (last visited Mar. 5, 2023).
2
California offers residential PACE financing for improvements related to electric vehicle charging, infrastructure, energy efficiency,
renewable energy, seismic strengthening and water efficiency. Missouri offers PACE financing for improvements related to energy
efficiency and renewable energy. Additionally, Maine offers residential programs without holding a lien against properties. See PACE
Nation, PACE Programs https://www.pacenation.org/pace-programs/ (last visited Mar. 5, 2023).
3
Ch. 2010-139, Laws of Fla.
4
S. 163.08, F.S.
5
Section 163.08(2)(a), F.S., defines the term “local government” to mean a county, a municipality, a dependent special district as
defined in s. 189.012, or a separate legal entity created pursuant to s. 163.01(7) (the Florida Interlocal Cooperation Act).”
6
S. 163.08(4), F.S.
7
S. 163.08(2)(b), F.S.
8
S. 163.08(13), F.S.
9
S. 163.08(15), F.S.
10
See ss. 125.01(1)(r), 170.01 and 170.09, F.S. STORAGE NAME: h0669.ECC PAGE: 3
DATE: 3/6/2023
In 2012, the Legislature expanded the definition of “local government” to allow a partnership of local
governments formed pursuant to the Florida Interlocal Cooperation Act
11
to enter into a financing
agreement wherein the partnership, as a separate legal entity, imposes the PACE assessment.
12
Before entering into a financing agreement, the local government must reasonably determine that:
All property taxes and other assessments on the property are paid and have not been
delinquent for the preceding 3 years (or the property owner’s period of ownership, if less than 3
years);
There are no involuntary liens on the property, including, but not limited to, construction liens;
No notices of default or other evidence of property-based debt delinquency have been recorded
during the preceding 3 years (or the property owner’s period of ownership, if less than 3 years);
and
The property owner is current on all mortgage debt on the property.
13
The total assessment cannot be for an amount greater than 20 percent of the just value of the property
as determined by the county property appraiser, unless consent is obtained from the mortgage
holders.
14
Consideration of the property owner’s ability to repay the assessment is not required.
In Florida, local governments typically have multiple non-exclusive agreements with a number of PACE
providers. Generally, PACE providers are private companies that administer the local government’s
PACE program on behalf of the local government and provide funding from private sources. PACE
providers generally act as the program administrator for special districts created pursuant to an
interlocal agreement between two or more Florida local governments. Once the PACE district is
created, additional counties or municipalities may join the special district as members, authorizing the
PACE provider for the special district to administer PACE programs on behalf of the newly joined
members.
15
PACE providers generally maintain a list of approved contractors authorized to provide
qualifying improvements.
16
For example, Broward County authorizes the following PACE providers:
17
Counterpointe Energy Solutions administers a commercial PACE program for the Florida PACE
Funding District.
Berkadia administers a commercial PACE program the Florida Renewable Energy District.
CleanFund administers a commercial PACE program for the Florida Renewable Energy District.
Dividend Finance administers the “Dividend” Program for the Florida Renewable Energy
District.
FortiFi Financial administers a residential PACE program for the Florida PACE Funding Agency
District.
Greenworks Lending administers a commercial PACE program for the Florida Resiliency and
Energy District.
Lever Energy Capital administers a commercial PACE program for the Florida Resiliency and
Energy District.
Home Run Financing administers a residential PACE Program for the Florida PACE Funding
Agency District.
11
S. 163.01(7), F.S.
12
Ch. 2012-117, Laws of Fla.
13
S. 163.08(9), F.S.
14
S. 163.08(12)(a), F.S.
15
See, e.g., Green Corridor Property Assessed Clean Energy (PACE) District Town of Cutler Bay, Florida Financial Report for the
Fiscal Year Ended Sept. 30, 2020, at 13,
https://flauditor.gov/pages/specialdistricts_efile%20rpts/2020%20green%20corridor%20property%20assessment%20clean%20energy
%20(pace)%20district.pdf (last visited Mar. 5, 2023).
16
See, e.g., Sarasota County, PACE, https://www.scgov.net/government/uf-ifas-extension-and-sustainability/pace (last visited Mar.5,
2023).
17
Broward County, Property Assessed Clean Energy (PACE)
https://www.broward.org/Sustainability/Documents/PACEProviderList_2022.pdf (last visited Mar. 5, 2023). STORAGE NAME: h0669.ECC PAGE: 4
DATE: 3/6/2023
Rahill administers a commercial PACE program for the Florida Resiliency and Energy District.
Renew Financial administers PACE programs under the “RenewPACE” Program (residential
and commercial) for the Florida Green Finance Authority.
Structured Finance Associates administers a commercial PACE program for the Florida
Resiliency and Energy District.
Twain Financial Partners administers a commercial PACE program for the Florida Renewable
Energy District.
Local governments may choose whether to offer a residential or commercial PACE program, whether
to administer the program directly or through a third-party PACE provider, or any combination thereof.
PACE financing interest rates vary but are typically higher than traditional financing.
18
Interest rates and
fees for a project are set by the PACE provider when the agreement is finalized with the property
owner.
19
Federal Housing Finance Agency and Super-Priority Liens
In 2010, and again in 2014,
20
the Federal Housing Finance Agency (FHFA) directed mortgage
underwriters Fannie Mae and Freddie Mac not to purchase mortgages of homes encumbered by a first-
lien PACE loan due to its senior status above a mortgage. Under normal circumstances, real estate lien
priority is established by the order in which the liens are filed.
21
According to the FHFA, such super-priority liens increase the risk of losses to taxpayers. Fannie Mae
and Freddie Mac support the housing finance market by purchasing, guaranteeing, and securitizing
single-family mortgages. Therefore, mortgages supported by Fannie Mae and Freddie Mac must
remain in first-lien position, meaning they have first priority in receiving the proceeds from the sale of a
property in foreclosure. Although FHFA generally supports energy retrofit financing programs, FHFA
acknowledges that such programs should be structured to ensure protection of the core financing for
the home.
22
This restriction has two potential implications for borrowers. First, a homeowner with a first-lien PACE
loan may not refinance their existing mortgage with a Fannie Mae or Freddie Mac mortgage. Second,
anyone wanting to buy a home that already has a first-lien PACE loan cannot use a Fannie Mae or
Freddie Mac loan for the purchase. These restrictions may reduce the marketability of the house or
require the homeowner to pay off the PACE loan before selling the house.
23
18
The Balance, How PACE Loans Work, https://www.thebalancemoney.com/pace-loans-financing-for-upgrades-4124071 (last visited
Mar. 5, 2023).
19
See PACE Broward, Frequently Asked Questions,
https://www.broward.org/Climate/Documents/PACE%20Broward%20FAQ%20Sheet_Update6_09272021.pdf (last visited Mar. 5, 2023).
20
Federal Housing Finance Agency, FHFA Statement on Certain Energy Retrofit Loan Programs (July, 6, 2010),
http://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Statement-on-Certain-Energy-Retrofit-Loan-Programs.aspx (last visited Mar. 5,
2023). See also Federal Housing Financial Agency, Statement of the Federal Housing Finance Agency on Certain Super Priority Liens
(December 22, 2014)(“FHFA wants to make clear to homeowners, lenders, other financial institutions, state officials, and the public that
Fannie Mae and Freddie Mac’s policies prohibit the purchase of a mortgage where the property has a first-lien PACE loan attached to
it”) http://www.fhfa.gov/Media/PublicAffairs/Pages/Statement-of-the-Federal-Housing-Finance-Agency-on-Certain-Super-Priority-
Liens.aspx (last visited Mar. 5, 2023).
21
“Real estate liens generally are ordered so that prior liens are paid in foreclosure before liens filed later in time. For example, a
mortgage loan used to buy the property takes priority over a later mortgage loan used to remodel the home. The earliest and thus
highest priority mortgage loan is known as a first lien, while the subsequent mortgage loan is deemed a second lien. If the homeowner
defaults on the second lien loan, the first lien mortgage holder retains the lien even if the second lien mortgage holder forecloses;
however, the converse is not true. Tax assessments are an exception to this lien priority rule. Generally, unpaid property tax
assessments have priority over other liens, regardless of the date the prior liens were recorded or when the tax assessments became
delinquent. This makes the lien priority for PACE financing senior to liens for mortgage loans closed prior to the homeowner’s
acceptance of the PACE financing. In the case of default by the homeowner on the PACE assessment, local governments and
investors in PACE bonds can expect to collect the balance owed on a PACE assessment before any recovery by a mortgage lender.”
Prentiss Cox, Keeping PACE? The Case Against Property Assessed Clean Energy Financing Programs, 83 U. Colo. L. Rev. 83, 94
(2011), https://scholarship.law.umn.edu/faculty_articles/549 (last visited Mar. 5, 2023).
22
FHFA Statement on Certain Energy Retrofit Loan Programs, supra, note 20.
23
FHFA Statement on Certain Energy Retrofit Loan Programs, supra, note 20. STORAGE NAME: h0669.ECC PAGE: 5
DATE: 3/6/2023
Additionally, in December 2017, the United States Department of Housing and Urban Development
announced that the Federal Housing Administration will no longer insure new mortgages on properties
that include PACE assessments, citing concerns about the potential for increased losses to the Mutual
Mortgage Insurance Fund resulting from the priority lien status given to such assessments.
24
Some residential PACE programs are now operating with loan loss reserve funds, appropriate
disclosures, or other protections meant to address FHFA's concerns.
25
For example, in 2013, California
created a reserve fund to compensate first mortgage lenders in case of a foreclosure or a forced sale
attributable to a PACE loan. Additionally, Oklahoma and Vermont have passed legislation to
downgrade PACE from senior lien to junior lien, and there have been attempts by Congress to revise
residential PACE programs at the federal level, including the 2014 PACE Assessment Protection Act.
26
Consumer Protection
Consumer issues have surrounded the PACE programs from their inception.
27
These include the cost
of funding, contractor sales techniques (notably, responding to a limited homeowner problem and
marketing a full house retrofit), rolling the administrative fees for the local government into the PACE
loan amount, product sales at above market interest rates, workmanship issues, inadequate
disclosures, and indiscriminate lending regardless of ability to repay.
28
An administrator of residential
PACE programs in California and Florida recently settled with the Federal Trade Commission and
California to address complaints that the administrator recruited and authorized contractors, without
adequate training or oversight, to sell its financing, leading to many consumers being deceived during
the sales process and being unfairly subjected to liens on their homes without their express, informed
consent.
29
In response to these consumer issues, Congress amended the Truth in Lending Act in 2018 to direct
the Consumer Financial Protection Bureau to implement federal regulations which provide more
effective consumer protections relating to PACE loans, especially those related to the ability of a
homeowner to repay the loan.
30
The United States Department of Energy maintains “best practice guidelines” for residential PACE
financing programs, which includes measures relating to:
Establishing financial eligibility and verifying property ownership;
Confirming property-based debt, tax assessments, and property valuation;
Reviewing property owner income and debt obligations;
Establishing consumer and lender protections;
Establishing property owner education and disclosures;
Providing a right to cancel the purchase;
24
FHFA, Property Assessed Clean Energy (PACE) Program, 85 Fed. Reg. 11,2738 (Jan. 16, 2020).
25
Commercial PACE programs were not directly affected by FHFA’s actions because Fannie Mae and Freddie Mac do not underwrite
commercial mortgages.
26
NCSL, PACE Financing https://www.ncsl.org/research/energy/pace-financing.aspx (last visited Mar. 7, 2021).
27
“PACE loans, offered through home improvement contractors, often in door-to-door sales, and secured by a property tax lien, are
collected through a property tax assessment that takes priority over any existing mortgage. PACE programs must be authorized by
state and local governments, but are privately run with little or no government oversight. Over the last two years, there has been a
sharp increase in homeowners seeking assistance from legal services and other organizations in relation to PACE loans. The goal of
improving home energy efficiency is being overshadowed by the lack of adequate consumer protection for these loans. Weak PACE
loan regulation enables contractors to saddle homeowners with debt they cannot afford and puts their homes at risk for foreclosure.”
National Consumer Law Center, Advocates Applaud CFPB’s Intention to Deal with PACE Loan Program Abuses (Mar. 4, 2019),
https://www.nclc.org/media-center/advocates-applaud-cfpbs-intention-to-deal-with-pace-loan-program-abuses.html (last visited Mar. 5,
2023).
28
FHFA, Property Assessed Clean Energy (PACE) Program, 85 Fed. Reg. 11,2738 (Jan. 16, 2020).
29
Federal Trade Commission, FTC, California Act to Stop Ygrene Energy Fund from Deceiving Consumers About PACE Financing,
Placing Liens on Homes Without Consumers’ Consent, https://www.ftc.gov/news-events/news/press-releases/2022/10/ftc-california-act-
stop-ygrene-energy-fund-deceiving-consumers-about-pace-financing-placing-liens (last visited Mar. 5, 2023).
30
FHFA, Property Assessed Clean Energy (PACE) Program, 85 Fed. Reg. 11,2738 (Jan. 16, 2020). See also Public Law 115–174
(2018), section 307; codified at 15 U.S.C. 1639c(b)(3)(C). and Bureau of Consumer Financial Protection, Advance Notice of Proposed
Rulemaking on Residential Property Assessed Clean Energy Financing, 84 FR 8479 (Mar. 8, 2019). STORAGE NAME: h0669.ECC PAGE: 6
DATE: 3/6/2023
Determining appropriate minimum equity requirements and appropriate maximum
assessments;
Providing equipment specifications and energy assessments;
Defining the relationship between PACE assessments and mortgage financing;
Providing for non-acceleration upon property owner default;
Notifying mortgage holders of record; and
Addressing the needs and potential vulnerabilities of low-income and elderly households.
31
Some local governments in Florida have implemented more stringent consumer protections than those
required by Florida law.
32
Effect of the Bill
The bill makes several changes to Florida’s PACE law.
Definitions
The bill creates and uses the term “Resiliency Energy Environmental Florida (REEF) program” to refer
to the programs used in Florida to provide PACE financing for qualifying improvements and creates
definitions for additional terms related to PACE financing, as follows:
Resiliency Energy Environment Florida (REEF) program means a program established by a
local government, alone or in partnership with other local governments or a program
administrator, to finance qualifying improvements on nonresidential real property or residential
real property.
Assessment financing agreement means the financing agreement, under a REEF program,
between a local government and a property owner for the acquisition or installation of qualifying
improvements.
Non-ad valorem assessment or assessment has the same meaning as the term "non-ad
valorem assessment" as defined in s. 197.3632(1), F.S.
Residential real property means a residential real property composed of four or fewer dwelling
units which has been or will be improved by a qualifying improvement.
Nonresidential real property means any property not defined as residential real property and
which will be or has been improved by a qualifying improvement. The term includes multifamily
residential property composed of five or more dwelling units.
Program administrator means an entity, including, but not limited to, a for-profit or not-for-profit
entity, with which a local government may contract to administer a REEF program.
31
Department of Energy, Best Practice Guidelines for Residential PACE Financing Programs (Nov. 18, 2016),
https://www.energy.gov/sites/prod/files/2016/11/f34/best-practice-guidelines-RPACE.pdf (last visited Mar. 5, 2023).
32
See, e.g., Palm Beach County, Ord. No. 2017-012, Section 6. Disclosure Requirements
https://discover.pbcgov.org/resilience/PDF/PACE_ORDINANCE_2017-012%20-%20ADA%20Compliant.pdf (last visited Mar. 5, 2023). STORAGE NAME: h0669.ECC PAGE: 7
DATE: 3/6/2023
Uses for PACE Financing
The bill expands the authorized uses of PACE financing. First, the bill specifies that PACE financing
may be used as refinance tool. Second, the bill authorizes PACE financing to be used for all types of
qualifying improvements on residential and nonresidential real property under new construction.
Eligibility Requirements for PACE Financing
The bill softens existing eligibility requirements as follows:
Delinquency in payment of property taxes or other assessments on a property during the
preceding 3 years do not preclude the use of PACE financing if the delinquency was not longer
than 30 days.
Involuntary liens on a property do not preclude the use of PACE financing if not greater than
$1,000.
Recorded notices of default or other evidence of property-based debt delinquency during the
preceding 3 years do not preclude use of PACE financing if released during that time.
The bill requires that the local government or program administrator, before entering into a PACE
financing agreement, must:
Ask the property owner whether any other PACE assessments have already been recorded, or
funded but not yet recorded, on the property.
33
For a residential property, reasonably determine that the property is not subject to an existing
home equity conversion mortgage or reverse mortgage product.
For a residential property, reasonably determine that the property was not gifted to the
homeowner for free by a nonprofit entity “as may be disclosed by the property owner.”
Ability to Repay
The bill requires that, prior to final approval of a PACE assessment on residential property, the program
administrator must reasonably determine that the property owner has the ability to pay the estimated
annual assessment. To make this determination, the program administrator must determine that the
total estimated annual payment amount for all PACE assessments on the property does not exceed 10
percent of the property owner’s annual household income. The bill provides that income may be
confirmed using information from reputable third parties that provide reasonably reliable evidence of the
property owner’s household income and may not be confirmed solely by a property owner’s statement.
Debt-to-Value Limitations on PACE Assessments
Under current law, the total amount of any PACE assessment may not exceed 20 percent of a
property’s just value, without consent of the holder or servicer of a mortgage secured by a property.
The bill replaces the “just value” standard in current law
34
with a “fair market value” standard.
The bill provides that, for residential property, the combined mortgage-related debt and the total
amount of any PACE assessments on the property may not exceed 100 percent of the property’s fair
market value, as determined by reputable third parties. However, this limit can be exceeded if a
property owner fails to disclose whether other PACE assessments have already been recorded, or
funded but no yet recorded, on the property.
Disclosures
33
The bill provides that failure of a property owner to disclose this information does not invalidate a PACE financing agreement or any
obligation thereunder, even if the total financed amount of the qualifying improvements causes the property’s debt-to-value ratio to
exceed the limit of 100 percent specified in the bill.
34
Under current law, “just value” is the value of the property as determined by the county property appraiser. STORAGE NAME: h0669.ECC PAGE: 8
DATE: 3/6/2023
The bill requires that the program administrator, before or at the same time that a residential property
owner signs a PACE financing agreement, must provide a financing estimate and disclosure that
includes the following:
The total amount estimated to be funded, including the cost of the qualifying improvements,
program fees, and capitalized interest, if any.
The estimated annual assessment.
The term of the assessment.
The interest charged and estimated annual percentage rate.
A description of the qualifying improvement.
A disclosure that if the property owner sells or refinances the property, the property owner, as a
condition of the sale or the refinance, may be required by a mortgage lender to pay off the full
amount owed under each assessment financing agreement.
A disclosure that the assessment will be collected along with the property owner's property
taxes and will result in a lien on the property from the date the financing agreement is recorded.
A disclosure that failure to pay the assessment may result in penalties and fees, along with the
issuance of a tax certificate that could result in the property owner losing the property.
The bill provides that the program administrator, before a notice to proceed is issued on residential real
property, must conduct an oral, recorded telephone call with the property owner or an authorized
representative. The program administrator must ask the property owner if he or she would like to
communicate primarily in a language other than English. On the telephone call, the program
administrator must confirm all of the following with the property owner:
That at least one property owner has access to a copy of the PACE financing agreement and
financing estimates and disclosures.
The qualifying improvements being financed.
The total estimated annual costs that the property owner will have to pay under the financing
agreement, including applicable fees.
The total estimated average monthly equivalent amount of funds the residential real property
owner would have to save in order to pay the annual costs of the assessment, including
applicable fees.
The estimated due date for the property owner's first property tax payment that includes the
assessment.
The term of the financing agreement.
That payments for the financing agreement will cause the property owner's annual property tax
bill to increase, and that payments will be made through an additional annual assessment on
the property and either will be paid directly to the county tax collector's office as part of the total
annual secured property tax bill or may be paid through the property owner's mortgage escrow
account.
That the property owner has disclosed whether the property has received, or the owner is
seeking, additional assessments funded under this section and that the owner has disclosed all
other PACE assessments which are or are about to be placed on the property.
That the property will be subject to a lien during the term of the financing agreement and that
the obligations under the agreement may be required to be paid in full before the residential real
property owner sells or refinances the property.
That any potential utility or insurance savings are not guaranteed and will not reduce the
assessment or total assessment amount.
That the program administrator does not provide tax advice, and the property owner should
seek professional tax advice if he or she has questions regarding tax credits, tax deductibility, or
other tax impacts of the qualifying improvement or the financing agreement.
A program administrator may not leave a voicemail to satisfy this requirement.
Terms of PACE Financing Agreements
STORAGE NAME: h0669.ECC PAGE: 9
DATE: 3/6/2023
The bill limits the term of a PACE financing agreement to the lesser of: (1) 30 years; or (2) the greater
of either the weighted average estimated useful life of all qualifying improvements being financed or the
estimated useful life of the qualifying improvements to which the greatest portion of funds is disbursed.
The bill prohibits a PACE financing agreement from including a negative amortization schedule,
35
a
balloon payment, or prepayment fees other than nominal administrative costs.
PACE Contractors
The bill establishes terms for the enrollment and oversight of contractors by PACE program
administrators. These provisions apply only with respect to PACE financing for residential real property.
Before enrolling a contractor to install qualifying improvements, the bill provides that program
administrators must make a reasonable effort to review that the contractor maintains in good standing
an appropriate license from the state, if applicable, as well as any other permit, license, or registration
required for engaging in business in the jurisdiction in which he or she operates and that the contractor
maintains all state-required bond and insurance coverage. Program administrators must also obtain the
contractor's written agreement that the contractor will act in accordance with all applicable laws,
including applicable advertising and marketing laws and regulations.
The bill further provides that program administrators must maintain a process to enroll new contractors
which includes reasonable review of the following for each contractor: relevant work or project history;
financial and reputational background checks; a criminal background check; and status on the Better
Business Bureau online platform or another online platform that tracks contractor reviews.
The bill also provides that program administrators must maintain a process for monitoring enrolled
contractors with regard to performance and compliance with program policies and shall implement
policies for suspending and terminating enrolled contractors based on violations of program policies or
unscrupulous behavior. Program administrators must maintain a policy for determining the conditions
on which a contractor may reinstated to the program.
The bill authorizes program administrators to pay or reimburse contractors for any expense allowable
under applicable state law and not otherwise prohibited under Florida’s PACE law including, but not
limited to, marketing, training, and promotions.
Before disbursing funds to a contractor for a qualifying improvement on residential real property, a
program administrator must first confirm that the applicable work or service has been completed
through any of the following: a written certification from the property owner; a recorded telephone call
with the property owner; a review of geotagged and time-stamped photographs; a review of a final
permit; or a site inspection through third-party means.
The bill prohibits a program administrator from disclosing to a contractor or to a third party engaged in
soliciting a PACE financing agreement the maximum financing amount for which a residential property
owner is eligible. Program administrators are also prohibited from providing a contractor with any
payment, fee, or kickback in exchange for referring PACE financing business relating to a specific
PACE financing agreement on residential property.
The bill prohibits PACE contractors from presenting a higher price for a qualifying improvement
financed by a PACE assessment than the contractor would otherwise reasonably present if the
qualifying improvement was not being financed through a PACE assessment.
PACE Marketing
The bill prohibits program administrators from representing that PACE financing is a government
assistance program, that qualifying improvements are free or that PACE financing is a free program, or
35
The bill provides that capitalized interest included in the original balance of the assessment financing agreement does not constitute
negative amortization. STORAGE NAME: h0669.ECC PAGE: 10
DATE: 3/6/2023
that the financing of a qualifying improvement under PACE does not require the property owner to
repay the financial obligation. Program administrators are also prohibited from making any
representation as to the tax deductibility of a PACE assessment.
Annual Report
The bill requires each program administrator to provide, at a reasonable time following the end of the
prior calendar year, an annual report to the dependent special district as defined in s. 189.012 or a
separate legal entity created pursuant to s. 163.01(7) which it has contracted with to administer a
PACE program and shall include information and data related to the following:
The total number of property owner complaints received which are associated with project
funding in the report year.
Of the total number of property owner complaints received which are associated with project
funding in the report year:
o The number and percentage of complaints that relate to PACE financing.
o The number and percentage of complaints that relate to a contractor or the workmanship
of a contractor and are not related to PACE financing.
o The number and percentage of complaints that relate to both a contractor and the PACE
financing.
o The number and percentage of complaints received which were resolved and the
number and percentage of complaints received which were not resolved.
The percentage of property owner complaints received expressed as a total of all projects
funded in the report year.
Other Provisions
The bill provides that a residential real property owner may cancel a PACE financing agreement within
3 business days after signing the agreement without any financial penalty from the program
administrator for doing so.
The bill provides that a notice of lien for the full amount of the financing may be recorded in the public
records of the county where the property is located. The lien shall not be enforceable in a manner that
results in the acceleration of the remaining nondelinquent unpaid balance under the PACE financing
agreement.
The bill provides that program administrators must use appropriate methodologies or technologies to
identify and verify the identity of the residential real property owner who executes an assessment
financing agreement.
The bill requires program administrators to develop and implement policies and procedures for
responding to, tracking, and helping to resolve questions and property owner complaints as soon as
reasonably practicable.
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DATE: 3/6/2023
B. SECTION DIRECTORY:
Section 1. Amends s. 163.08, F.S., relating to supplemental authority for improvements to real
property.
Section 2. Provides an effective date of July 1, 2023.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
To the extent that a local government or program administrator does not already impose measures
similar to those in the bill, the bill may impose costs on PACE program administrators.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to require counties or municipalities to spend funds or take
action requiring the expenditures of funds; reduce the authority that counties or municipalities have
to raise revenues in the aggregate; or reduce the percentage of state tax shared with counties or
municipalities.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill does not require or authorize rulemaking.
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DATE: 3/6/2023
C. DRAFTING ISSUES OR OTHER COMMENTS:
Ability to Repay
To determine a property owner’s ability to repay a PACE assessment, the bill requires a determination
that the total annual payment for all PACE assessments on a property does not exceed 10 percent of
the property owner’s household income. This determination does not account for the property owner’s
household expenses and other debt obligations, thus may not provide an accurate evaluation of a
property owner’s ability to repay a PACE assessment while meeting those expenses and debt
obligations.
Debt-to-Value
The bill allows a residential property owner, through the addition of PACE assessments to existing
mortgage debt, to obligate the entire value of its property to secure debt, putting the property owner at
greater risk of being “upside down,” which would make refinancing or selling the property more difficult.
Disclosures
Under the bill, certain material disclosures may not occur until the time a PACE financing agreement is
being signed. The bill does not specify the form (e.g., written, oral, electronic) in which disclosures
required prior to or at the time of signing a PACE financing agreement must be provided and does not
require acknowledgment of these disclosures.
Certain disclosures are required to be made only verbally, by phone, after a PACE financing agreement
may have been signed. Some of these disclosures may be material to some property owners but may
not come before the end of the 3-day cancellation period provided in the bill, such as the following:
That any potential utility or insurance savings are not guaranteed and will not reduce the
assessment or total assessment amount.
That the program administrator does not provide tax advice, and the property owner should
seek professional tax advice if he or she has questions regarding tax credits, tax deductibility, or
other tax impacts of the qualifying improvement or the PACE financing agreement.
The total estimated average monthly equivalent amount of funds the residential real property
owner would have to save in order to pay the annual costs of the assessment, including
applicable fees.
PACE Contractors and Marketing
The bill requires PACE program administrators to maintain a process for monitoring enrolled
contractors with regard to performance and compliance with program policies and shall implement
policies for suspending and terminating enrolled contractors based on violations of program policies or
unscrupulous behavior. For this provision to be effective, local governments and/or PACE program
administrators will need to adopt sufficient program policies and behavioral standards for contractors.
The bill imposes certain marketing prohibitions on PACE program administrators, but these prohibitions
do not apply to contractors or other third-party marketers.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES