The Flagler County Board of County Commissioners approved on Monday a subscription service between Flagler County and the Florida Property Assessed Clean Energy Funding Agency, making the program available to residents of the county.
PACE allows property owners — both commercial and residential — to make qualified investments into their properties, including those involving clean energy, renewable energy and wind-resistant improvements that would decrease damage incurred during a hurricane.
Rather than approaching a lender for a line of credit or mortgage funds for such projects, property owners can voluntarily enter into a special assessment against their property to fund these projects. They would be repaid over several years as a part of the property owners’ tax bills.
The board approved the program with a 3-2 vote.
County Commissioner Alan Peterson said he was “strongly opposed” to implementing PACE funding, saying he worried that since the program is open to anyone in the county who owns property, lenders might see mortgages as riskier, prompting higher interest rates. He said that such improvement projects would be better served by private lenders.
The PACE program is a government framework, but it is run by private companies who work in conjunction with the individuals who opt in to the program. The government’s role in the system is to facilitate repayment through tax bills.
County Commissioner Barbara Revels said not many Flagler County residents have the means to obtain second mortgages or other lines of credit for such improvements to their properties.
“In order to do something good for energy efficiency, there needs to be a tool in place,” she said. “That’s what (PACE) is: It’s a tool for a homeowner to improve their property at a time when there aren’t many other ways to do it.”
Commissioner Milissa Holland said the program would not only allow property owners to improve their assets, and by extension, the value of those assets, but it would create jobs in the area as well.
James Gariepy, program director for the Florida PACE Funding Agency, urged the commission during public comment to approve its subscription to the service.
PACE has been enacted in 28 states, he said, but it’s a particularly prudent program in Florida, because upgrades to protect properties from hurricane damage qualify for PACE assessments.
The program also has benefits other than its push toward renewable and clean energy, he said.
“This is the right thing to do,” Gariepy said. “You’re reducing costs for the homeowner, you’re increasing property values and you’re creating jobs.”
But Peterson insisted that the program could have negative consequences with lenders. Freddie Mac and Fannie Mae have both indicated that they do not wish to purchase mortgages with PACE assessments attached to them, he said.
Gariepy said the two federal mortgage agencies have said properties with PACE assessments on them are too risky to purchase. However, when a home closes, its owner can either pay off its remaining PACE assessment using money from the sale, or the owner can transfer the assessment to a new mortgage, if the lender agrees.
“But the lender could very well be Fannie Mae or Freddie Mac,” Peterson said, adding that opening this kind of financing option to all residents was a risk that could add to interest rates on mortgages.
“Your mortgage is already established and has already been sold on the market when you ask for a PACE assessment loan,” Revels said.
Issues with the agencies might only arise during the sale or refinancing of a property, but those could be circumvented by repaying the assessment if necessary, proponents said.
Professionals spoke during public comment about the impact the PACE program would have on property values and jobs in the area, including Jason Delorenzo, a member of the Palm Coast City Council, who endorsed the program on behalf of the Flagler Home Builders Association.
Gariepy called the program a “win-win situation," saying it would improve homes and spur economic development.
“In this economic environment, not everyone has the equity available where they can go out and borrow funds for these projects,” he said.