Not as advertised

When Ernest Hunley talks about going green, he has a hard time not seeing red.

He and his wife, Kathryn, own a house in Honcut, the community in south Butte County where they retired 12 years ago. After a decade relying on PG&E for electricity, they started considering alternatives.

Well, technically, one of the Hunleys did.

“My wife was all excited about solar,” Ernest said. “Me, not so much.”

Kathryn’s goal was to save money on energy bills. Her interest attracted solar companies’ interest; soon enough, a salesperson visited their home.

The Hunleys live on a fixed, limited income from Social Security benefits. As such, they qualify for PACE: the Property Assessed Clean Energy program. Stemming from 2008 state legislation, but only rolled out for Butte County residences in 2015, PACE allows people with poor credit and/or low earnings to finance efficiency improvements via a loan that gets repaid along with property taxes. (See “Tight households,” Greenways, May 5, 2015.)

That may sound good on principle, but as with any program, the devil is in the details. Homeowners such as the Hunleys certainly have found the details devilish—and devilishly hard to find.

Over the course of their evening with the salesperson, Ernest recalled, “we made more small talk than we did about the system.” The salesperson subsequently returned with her husband/partner, who spoke with Ernest at one end of the dinner table while she handled business with Kathryn.

The salespeople told the Hunleys that only Kathryn could complete the contract because PACE has an age limit of 65; he’s 74, while she’s 64. (the Hunleys subsequently learned there’s no such restriction.)

No paperwork exchanged hands. Kathryn reviewed all the legally binding documentation on a computer tablet and signed electronically. They didn’t see everything printed out until Ernest asked and Kathryn received documents via email.

“They told us about all this money we were going to save,” Ernest said. “We do save on the electric bill; thing is, we’re paying three times as much [with] this solar system as what our electric bill was!”

Ernest said his household power costs $88 a month on average through PG&E; his monthly payments for the solar system are $268. Additionally, a 30 percent tax credit touted by the salespeople doesn’t apply to the Hunleys.

“If they’d have offered a hard copy of the contract and I’d have had time to sit down and read it,” he added, “there’s no way I’d ever have agreed to it.”

As it stands, the couple have a 20-year obligation on a system Ernest—a retired heating and air-conditioning technician—estimates will have a 20-year lifespan. He will be 94 at that point, should his health remain strong; if not, he worries what will happen to Kathryn, as the PACE loan has been recorded as a tax lien on the house.

“She may wind up losing the place over this thing,” he said.

Government agencies also have concerns. Federal lenders Fannie Mae and Freddie Mac will not issue mortgages on houses containing PACE liens, which are classified as “super-priority” because they take precedence and remain on the property until discharged. In December, the Trump administration decided that the Federal Housing Authority would stop insuring mortgages with PACE loans involved.

Complaints such as the Hunleys’ have spurred action on the state level. California legislators have passed a series of laws designed to protect consumers from deceptive business practices stemming from an industry that blossomed quickly amid high demand yet few regulations.

Peggy Moak, Butte County’s treasurer-tax collector, has been a point person both for grievances and reform. She’s chair of the PACE committee for the California Association of County Treasurers and Tax Collectors; her and colleagues’ offices have fielded calls since the money flows through tax bills. Moak’s group has pushed for the new laws that, among other things, increase disclosures and oversight.

“It’s generally more advantageous for people to go out and get their own financing if they can afford it,” she said, “but if they have credit issues or not enough equity in their home to meet the lending standards for banks or finance companies, then PACE becomes an alternative available to them….

“Whether that’s good or bad depends, of course, on the person’s understanding of what they’re signing up for and their ability to make those payments—and whether the energy-efficiency component offsets the cost of repayment is totally situational.”

Robert Bendorf IV—formerly with a solar contractor serving Butte County and now with a firm that administers PACE loans—says the new measures are making a difference. Last year alone, California removed over 130 contractors from the program. PACE administrators now must make a “peace of mind” phone call to customers, reviewing contract terms and disclosures; customers also have a three-day “cooling off” period in which they can cancel the contract.

“People for a long time have been signing financing contracts and been put in tough situations, but it’s very rare that the government ever heard of them,” said Bendorf, senior director of governmental relations at Petaluma-based Ygrene. “Now that we’re so closely tied to these municipal officials, they’re hearing about a lot of these bad stories, and they’re bringing them to our attention, which is allowing us to respond accordingly.”

The reforms, he concluded, yield “a great level of protection that was definitely necessary in the industry of home-improvement financing.”