NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6162
SPONSOR: Hunter TITLE OF BILL:
An act to amend the general municipal law, in relation to limiting the
municipal sustainable energy loan program to entities which are not
individuals
PURPOSE:
This legislation limits the municipal sustainable energy loan program to
entities which are not individuals in an effort to combat predatory
practices that target homeowners in vulnerable communities.
SUMMARY:
Section 1 and 2. Clarifies that the loan program is for commercial enti-
ties, not-for-profit organizations, or entities other than individuals.
Section 3. Sets the effective date.
JUSTIFICATION:
The Property Assessed Clean Energy program (PACE) is a government-spon-
sored financing option for commercial and residential property owners to
pay for energy upgrades. These permanent improvements include new roofs,
solar panels, water heaters, and many other energy-efficient or weather-
ization upgrades. The loan is repaid through a tax lien on the property.
This loan is a super-priority lien, meaning that if there is an
outstanding mortgage on a property, the PACE loan jumps ahead of the
mortgage lender to get their payment first. If taxes are bundled into
monthly mortgage payments, homeowners could see their payments increase
substantially. The PACE loan is secured using the house as collateral.
Defaulting on this loan could mean losing the house.
Though the PACE program is government-sponsored, private companies
provide the loans and outsource the work to PACE-approved contractors.
Many contractors will pitch the program while not adequately explaining
the details of the financing. Homeowners are pitched on the idea that
the upfront cost of these improvements is paid by the loans, and then
the savings on the homeowner's monthly energy bill will more than make
up for the yearly PACE payments.
Further, there is no guarantee of the quality of the work done. Many
PACE participants reported that the contracting process and construction
work is mismanaged, shoddy, overpriced, and in some cases less energy
efficient. This is because the company or person selling the PACE
program to a homeowner isn't the same person or company that will
complete the project.
There is no energy audit conducted to see if these energy-efficient
upgrades will provide the necessary savings to pay off the loan. There
are many examples of homeowner's seeing their tax bill drastically
increase while savings are minimal. For hotheowners on fixed incomes
this can be devastating. Many face the threat of foreclosure or must
sell to avoid foreclosure.
The residential PACE program started with good intentions, but it is
plagued with issues of predatory lending. This bill would protect home-
owners by preventing individuals from engaging in the loan program.
PRIOR LEGISLATIVE HISTORY:
New Bill
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
This act shall take effect immediately
