PACE financing updates: California to create uniform disclosures, Renovate America completes $320M securitization

Property Assessed Clean Energy (PACE) enables local governments to give property owners, who may be unable to afford the up-front costs of energy improvements such as solar panels and rainwater catchment systems, an alternative to short-term, high interest rate loans. More and more states are adopting this program as a financing vehicle for boosting sustainability initiatives, like solar. Here is the latest PACE news around the country.

PACE solar financing

California to establish uniform disclosures — why it matters

California Gov. Jerry Brown signed legislation establishing uniform disclosures for consumers of the PACE program. The governor’s action is expected to increase adoption of PACE at a time when his administration is encouraging more Californians to conserve water and become more energy efficient in response to climate change. The action completes months of negotiations between Ygrene and other PACE industry providers, the California Association of Realtors, the California Mortgage Bankers Association and other stakeholder groups.

AB 2693, authored by Assemblymember Matt Dababneh (D-Encino), identifies important consumer issues with the program and prescribes on-point solutions that preserve PACE’s unique structure and benefits, while improving consumer disclosures and safeguards.

Among its provisions, the new law will prevent homeowners from taking out more financing than they can afford. It will require that PACE administrators provide consumers with important disclosures such as notice of a special tax lien, the total amount of interest charged, and notification that some lenders may require the homeowner to pay off the total amount of the assessment if refinancing or selling. Homeowners will also be guaranteed new contract safeguards such as a three-day right to cancel.

“Consumers will now be able to evaluate the terms and conditions of PACE financing in a similar fashion as they can with other lending products,” said Mike Lemyre, senior vice president of government affairs at Ygrene Energy Fund. “This new consumer protection policy is consistent with the Consumer Financial Protection Bureau’s ‘Know Before You Owe’ form.”

PACE has helped over 100,000 California property owners save money on their energy and utility bills while contributing to the state’s reduction of greenhouse gas emissions and water usage. The program accounts for 2.5 million tons of reduced emissions and for the creation of over 13,000 local jobs.

Renovate AmericaRenovate America completes $320 million PACE securitization

Renovate America, one of the leading providers of residential PACE financing, announced the closing of its eighth securitization of PACE bonds – the largest such deal completed by any issuer and a designated green bond.

The securitization, HERO Funding 2016-3, includes $320.2 million of class A1 and A2 notes rated AA (sf) by Kroll and AA (sf) by DBRS. Moody’s Investor Service also assigned the notes a Green Bond Assessment of GB1 – its highest GBA grade.

The notes are initially secured by 12,394 PACE assessments levied on residential properties in 34 California counties as part of Renovate America’s HERO Program. The initial PACE assessments have an average balance of approximately $21,310, a weighted annual interest rate of 7.93 percent and a weighted average original term of 14.56 years. The initial PACE assessments were originated between May 3 and Aug. 12.

HERO green bonds have received significant interest, in part, because they do not fund aspirational or speculative projects; the proceeds have already been invested in home energy and efficiency improvements projects whose environmental impact is verified.

“As investor appetite for green bonds increases worldwide, we’re proud to offer a product that not only meets buyers’ discerning standards, but that also provides tangible benefits to society and the planet,” said Renovate America CEO J.P. McNeill. “The platform we’ve created is bringing private money from around the world to invest in critical infrastructure improvements that reduce water and energy consumption, avoid greenhouse gases, boost the local economy and create clean energy jobs.”

The HERO Bond platform is the first asset-backed securities (ABS) platform to solely produce green bonds, with each of the company’s eight securitizations having been designated as green by Sustainalytics, an investment research firm specializing in environmental, social and governance (ESG) research and analysis. HERO bonds also adhere to the Green Bond Principles, a set of commonly agreed-upon standards in the capital markets on what constitutes a green bond.

 

— Solar Builder magazine

[source: http://solarbuildermag.com/financing/pace-financing-updates-california-to-create-uniform-disclosures-renovate-america-completes-320m-securitization/]

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