CLAYTON — Instead of ending a controversial residential clean-energy loan program, St. Louis County Council appears poised to expand it by allowing a second provider to do business in unincorporated parts County.
The about-face comes after several organizations, including local chapters of the NAACP and the Sierra Club, last week offered strong endorsement of the Property Assessed Clean Energy, or PACE, loan program which is designed to help homeowners fund the cost of making energy-saving improvements. Loan repayments are added to borrowers’ property tax bills.
Just last month, Councilor Kelli Dunaway, sponsor of the PACE legislation, recommended the council consider ending the residential scheme entirely, citing concerns that inadequate oversight was putting some borrowers at risk residential.
The 2nd District Democrat’s decision follows an April 2021 investigation by ProPublica, a nonprofit news organization, which found that some residential borrowers who used PACE had been hit with large tax bills they couldn’t pay after agreeing to expensive upgrades. The survey found more than 100 out of about 2,700 residential borrowers in the St. Louis and Kansas City areas were at risk of losing their homes. State law requires that PACE loans be issued only to people who can afford them, but local government entities overseeing the program had referred to private lenders and were unaware of the rates. high crime rates.
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The ProPublica report prompted Dunaway to delay action on legislation she had sponsored to join the Missouri Clean Energy District, or MCED, which already operates in 27 of the county’s 88 municipalities. Currently, the St. Louis County Clean Energy Development Board, created by county ordinance in 2015, administers PACE loans throughout the county. The board engages California-based private fund Ygrene Energy to administer the residential loans. Ygrene also operates in the city of Saint-Louis.
During hearings into ProPublica’s findings in May, county assessor Jake Zimmerman urged the council to “get out of this case” because it puts the county in the position of removing the homes of borrowers who had no failed to honor agreements with private lenders.
And in December, Dunaway wrote a letter asking the board to consider disbanding its PACE residential loan program entirely. County Executive Sam Page said at the time that he supported the idea. If the county had done so, PACE residential loans would only be available in the county in municipalities that have entered into their own agreements with MCED or another PACE administrator.
But on Friday, the bill’s sponsor, Dunaway, said she had backtracked and would ask the council to instead approve the bill joining MCED, allowing it to compete with the clean energy council. County. The move comes days after a council hearing in which city and county chapters of the NAACP and Sierra Club told the county council that they had recently signed a community benefits agreement with the lenders. PACE requiring quarterly reports and meetings to try to add more community oversight.
St. Louis County NAACP President John Bowman and St. Louis NAACP President Adolphus Pruitt said PACE loans are essential financing options for low-income homeowners in the city. and the predominantly black North County.
“We’ll always support it…as long as we’re able to fix it, calibrate it, and get it working,” Pruitt said.
Gretchen Waddell Barwick, director of the Greater St. Louis chapter of the Missouri Sierra Club, said PACE was “a great tool to help us fight climate change.”
“I’m here to ask you not to throw the baby out with the bathwater…If there are people in our community who are having trouble, let’s find ways to help them,” Barwick said. “Let’s find ways to provide that surveillance.”
Meanwhile, representatives from PACE private lenders reminded the board of new protections enacted in state law. The law, which took effect in June, requires the state’s finance division to audit PACE loans at least every two years, and it capped the amount homeowners can borrow based on the estimated value of the loan. the House.
And PACE lenders pointed to a more recent agreement that they must adhere to a list of 22 “consumer protection policies” that include price controls, stricter underwriting standards, a three-day penalty-free cancellation period. and mandatory home inspections before any borrower must start making payments.
Mark Devore, the county’s revenue collector, told the council there were 20 homes in the county with PACE assessments on them that had to be sold for taxes in August if they didn’t pay any part of the overdue taxes from 2019. Homes must be three years late to end up on tax sale. There were five homes with PACE valuations earmarked for tax sales in 2023 and 16 homes on the tax block for 2024 — if the homes made no payments, Devore said.
Crystal Crawford, Ygrene’s vice president of oversight and development, said the company has made loans for a total of 313 residences and 20 commercial properties since 2017, Crawford said. She said the company is reaching out to property owners close to delinquency to offer them credit financing or to extend the loan repayment period.
“No homeowner should lose their home because they participated in the PACE program, and we stand by that,” she said.
Meanwhile, Ygrene and MCED said they were happy to compete in the market – as long as the county kept the program alive. Ygrene previously sought to convince the council to reject the bill allowing MCED to operate in unincorporated areas.
“We appreciate that Ygrene is working hand in hand with us to kind of put our swords up and team up on this,” said David Jackson, an MCED lobbyist.
Council Chair Rita Heard Days, D-1st District, said during the hearing that she was pleased with the results.
“We have made significant changes and significant advances to ensure that we are doing what we are supposed to do for our constituents,” she said.
Not everyone was satisfied.
Zimmerman, the county assessor, warned that the current number of overdue properties with PACE assessments is “just the tip of the iceberg.” There would continue to be borrowers who would lose their homes if the program continued – and the county would find itself responsible for removing the homes of borrowers who were delinquent after taking out PACE loans.
“The power of government to take your house is a big and scary power, and whatever its legitimate use is, it’s not a legitimate use to help people get loans to buy air conditioners at bad rates,” Zimmerman said.
Dunaway said in an interview that she doesn’t disagree with Zimmerman. But testimony from the NAACP and the Sierra Club influenced her, she said.
“I want to make sure there’s access to capital in underrepresented neighborhoods,” Dunaway said. “There are so few opportunities for low-income neighborhoods and I don’t want to take away any of the few opportunities available.”
In addition to complying with state law, the county’s order would also require PACE lenders to meet their own consumer protection commitments.
Dunaway said it is also considering adding a requirement for PACE lenders to notify potential borrowers of alternative funding from Spire and Ameren, which include new “pay-as-you-go” loans that are added to bills from public services.
Councilor Mark Harder, R-7th District, a co-sponsor, said he would support the bill, arguing that a second lender would help secure more competitive loan rates.