WRCOG Issues Statement on Wall Street Journal PACE Article
Riverside, CA – August 23, 2017 – The Western Riverside Council of Governments (WRCOG) is the largest bond issuer for Property Assessed Clean Energy (PACE) financing, which provides financing to eligible property owners for energy efficiency, water conservation, and renewable energy upgrades. WRCOG serves as the government oversight agency for a series of PACE providers, including the nation’s largest, the HERO Program, as well as Samas Commercial, CaliforniaFIRST, and soon to launch PACE Funding and Spruce Finance. WRCOG’s PACE programs have helped thousands of property owners improve their homes, and have brought numerous economic and environmental benefits to Western Riverside County and the 371 jurisdictions that operate statewide under the California HERO Program.
On August 15 the Wall Street Journal published a story on PACE (“More Borrowers are Defaulting on their ‘Green’ PACE Loans”). WRCOG’s Executive Director, Rick Bishop, issued a statement in response to the article.
Letter to the Wall Street Journal
This article is based on a subset of data, yet-unverified by the State of California, from around two-thirds of California counties, which the story says “only offer a limited view of overall PACE loan performance.” The story then attempts to draw a conclusion which belies the facts we see in our program, which represents the majority of PACE financing in the state.
The article reports that the raw number of PACE defaults increased from 245 to 1,100 from 2015-16 to 2016-17, but doesn’t even mention that the number of people who participated in PACE increased by more than 53,000 over that period, as reported by the California Alternative Energy and Transportation Financing Authority. That’s an important piece of information to omit because it misleads the reader into concluding that the increase in delinquencies is based on a static number of properties, instead of a pool of properties that increased significantly. We have found that property tax delinquency rates for PACE homes are actually lower than the average – and like all tax payments, initial rates have ‘cured’ or improved in subsequent months as more homeowners get current on their payments.
Ironically, the story reports that tax collectors don’t know whether PACE liens are even responsible for property tax delinquencies. That statement alone dilutes the article’s entire premise. There are many unfortunate circumstances that can occur after a PACE assessment, or any financial obligation for that matter, is taken on (loss of job, sickness, etc.) that can cause property owners to be delinquent.
As a local government sponsor that oversees the majority of all PACE financing in California, we take our responsibility to local governments and property owners seriously. PACE improvements are projected to save millions of kilowatt hours of energy, reduce carbon dioxide emissions by over 2.5 million tons and save billions of gallons of water – all while creating jobs to boost local economies in California.
Rick Bishop, WRCOG Executive Director