President Trump signs financial services bill; includes clarification on PACE

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President Trump signs financial services bill; includes clarification on PACE program. NACo supported PACE program included in financial services bill signed by President Trump.

On May 24, President Donald Trump signed into law the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155). The bipartisan legislation includes a provision on the Property Assessed Clean Energy (PACE) program, clarifying the financial structure of the program and directing the Consumer Financial Protection Bureau (CFPB) to develop rules that ensure consumers are able to pay their residential PACE financing obligation.

PACE is a financing mechanism issued by state and local governments to incentivize renewable energy and energy efficiency improvements – such as energy efficient boilers, upgraded insulation, new windows, and solar installations – to homes and businesses. Structured as a traditional tax assessment, local governments participating in PACE obtain startup funding through bonds or third-party entities. Once financing is secured, counties make PACE loans to residents and businesses for energy efficient improvements. These loans are paid back on an annual or biannual basis through a special property tax assessment on the property.  Currently, 33 states allow PACE programs and 19 states have operational PACE programs within their state.

The approved legislation addresses many of the concerns raised by critics of the PACE program. First, the provision defines PACE as a special form of financing and refers to the program as a tax assessment. Additionally, it directs the CFPB to “account for the unique nature” of PACE financing in developing rules to ensure that consumers have the financial ability to pay their residential PACE financing obligations. The provision goes further by directing CFPB to consult with impacted state and local governments on pending rules and bond-issuing authorities.

NACo supports PACE programs and also supports their treatment by federal regulators as a traditional tax assessment program with priority lien status.

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