Review says PACE property foreclosure concern ‘may be overstated’ and sees ‘no significant difference’ in property-tax delinquency rates between PACE and non-PACE homes
SAN DIEGO, June 28 – Renovate America, the nation’s largest provider of Property Assessed Clean Energy (PACE) financing, today welcomed a new analysis by Kroll Bond Rating Agency that identifies several positive developments in the PACE industry and says concerns about foreclosures on properties with PACE assessments “may be overstated.”
Kroll, which has rated the senior tranches of all 22 public residential PACE asset-backed securitization transactions, said it reviewed property-tax performance data for homes with PACE assessments in California – the largest marketplace for PACE financing – that were provided in the state Department of Business Oversight’s annual report of PACE originators. After comparing those data with property-tax delinquency data for California provided by LERETA, a tax service vendor, Kroll concluded “there is no significant difference” between property-tax delinquency rates for PACE and non-PACE homes.
“This is a positive development from a data perspective,” Kroll said in the report, The PACE Evolution.
The Kroll report marks the second time this year that a credit rating agency has delivered a positive verdict on property-tax payment performance involving homes with PACE assessments. In February, DBRS released an analysis showing that homes with PACE assessments pay property taxes at rates that compare favorably to those of property owners in general.
Kroll said another positive development for PACE was the adoption of underwriting policies predicated on the homeowner’s ability to pay, as well as other consumer protections.
PACE is an innovative form of financing that empowers homeowners to make energy, efficiency and resiliency improvements to their homes and pay for them over terms of up to 30 years, at a competitive, fixed interest rate, through an additional, voluntary line item on their property taxes.
Since its introduction in California over a decade ago, PACE financing has empowered more than 220,000 homeowners to make investments to their homes aimed at saving energy and water. And by spurring demand for contracting services, PACE creates local jobs and stimulates the local economy. Importantly, because most PACE programs rely on private capital, these larger benefits can be achieved at no cost to local government budgets.
PACE enjoys bipartisan appeal because it offers a free-market approach to advancing public-policy objectives, and Kroll said it was telling that the three most active states for residential PACE activity – California, Florida and Missouri – could generally be viewed as covering the U.S. political spectrum.
“Politically, California is viewed by many as liberal, Florida is considered moderate and Missouri leans conservative,” the report said. “[Kroll] believes that despite these disparate political views, PACE has flourished due to its appeal as a market-based solution to the deployment of renewable energy and energy efficiency projects.”
To obtain a copy of the Kroll report, please visit this page.
About Renovate America
Renovate America offers a tech-enabled financing platform for home improvements that empowers communities to modernize and make their housing stock more efficient, while giving small businesses the tools they need to grow. In addition to financing home improvements through an unsecured lending product, Benji, Renovate America offers communities HERO financing. HERO is the leading residential Property Assessed Clean Energy (PACE) program in the U.S. and has been used by the owners of over 115,000 homes to make energy and efficiency improvements. It is estimated that HERO is on track to save billions of dollars in energy and water bills, and has created over 23,000 local trade jobs that cannot be offshored or automated. Renovate America has built the world’s largest green bond platform, with a volume of originations that enables securitization of HERO PACE bonds multiple times a year, attracting international investment to meet U.S. clean-energy objectives.