The Los Angeles County Residential Property Assessed Clean Energy (PACE) Program enables homeowners to install energy efficiency, renewable energy and water-saving improvements to their properties without putting any money down! Under PACE, homeowners may work with one of two County-approved program administrators, CaliforniaFirst and HERO, to finance these home improvements.
A unique financing tool, PACE allows LA County to issue a bond to a lender, which secures funding for the installation of energy and water efficiency, and renewable energy projects that are permanently fixed to the property. Homeowners then repay financing annually through an assessment on their property tax bill.
PACE financing enhances home values, lowers homeowners’ energy bills, reduces greenhouse gas emissions and creates green jobs.
Find out if your property is eligible for Residential PACE
Frequently Asked Questions
Why should I participate in Los Angeles County’s ( “LA County”) Residential Property Assessed Clean Energy (PACE) Program?
- Stricter underwriting criteria
- Better consumer protections
- Additional foreclosure support
- Lower interest rates and fees
- Access to LA County HERO and CaliforniaFIRST
1. What is the LA County Residential PACE Program and who are HERO and CaliforniaFIRST?
The LA County Residential Property Assessed Clean Energy (PACE) Program is a financing program sponsored by Los Angeles County for homeowners who want to install energy efficiency, renewable energy and water-saving improvements to their properties. PACE financing enhances home values, lowers homeowners’ energy bills, reduces greenhouse gas emissions and creates green jobs stimulating the economy.
A unique financing tool, PACE allows LA County to issue a bond to a lender, which secures funding for the installation of energy projects that are permanently fixed to the property. Homeowners then repay financing annually through an assessment on their property tax bill.
Through a competitive solicitation, Los Angeles County chose two program administrators to operate its Residential PACE Program—HERO and CaliforniaFIRST. Choosing two administrators creates competition and gives homeowners more choices as detailed in Question 3.
Examples of qualifying projects include high efficiency air conditioners and heating systems, windows, cool roofs, insulation, rooftop solar panels and smart irrigation systems, to name a few. For additional information on specific energy measures visit LA County HERO and CaliforniaFIRST program websites.
2. Are all 88 cities within LA County part of the LA County Residential PACE program?
To participate in the LA County Residential PACE Program with HERO and CaliforniaFIRST, a city must pass a resolution to opt in. To date, 87 of 88 cities in Los Angeles County have passed resolutions opting into the LA County PACE Program. A list of participating cities may be found at pace.lacounty.gov. Three other cities are in progress of passing a resolution to participate.
Some LA County cities have opted into additional residential PACE Programs sponsored by entities other than LA County. For those cities that have opted into other programs, such as those run by FigTree and Ygrene, there will be no administrative support provided by the County.
3. What are the benefits of a LA County-sponsored Residential PACE program as opposed to one that is not sponsored by LA County?
Since LA County is sponsoring this program, it has the ability to require the following consumer-friendly measures: stricter underwriting criteria; additional quality assurance/quality control measures; better consumer protections; additional disclosures; services for elderly and non-English speakers; and additional foreclosure support through a reserve fund as described more fully in Question 9. Residential PACE programs offered by others may not have such stringent consumer protections built into them.
4. Why did LA County choose two companies to administer the LA County Residential PACE Program?
LA County chose two Residential PACE program administrators to create competition that will ultimately benefit its residents. If two administrators are competing for LA County residents’ business, then they will be driven to offer the best possible product for consumers.
5. How are the LA County HERO and CaliforniaFIRST programs different and how are they the same?
LA County HERO and CaliforniaFIRST Residential PACE programs are different in that they may choose to: market their programs differently; offer different interest rates, fees and financing terms; require more stringent underwriting criteria; provide different timelines for payout; and/or provide different levels and methods of customer service. These are a few of the things that will differentiate the administrators and give consumers the power to make an informed choice about with whom to work to obtain Residential PACE financing. The programs are the same in that LA County will require/provide the following for both administrators: minimum underwriting criteria; the same or very similar contractual document templates; and certain fixed fees. LA County will also issue PACE bonds—the financial mechanism that facilitates completion of a PACE financing transaction—for both program administrators.
6. Where can I find out more information about LA County’s Residential PACE Program?
To find out more information on LA County’s Residential PACE program (as well as its Commercial PACE program), please visit pace.lacounty.gov. Amongst other things, this website will provide links to both administrator’s external websites (HERO and CaliforniaFIRST).
7. Can a homeowner use any contractor to install products financed through LA County’s Residential PACE program, or does a contractor have to be affiliated with the program administrators?
No. Contractors must be registered with either the LA County HERO or CaliforniaFIRST programs in order to install products eligible for PACE financing. Both LA County HERO and CaliforniaFIRST have many participating contractors. Their contractors are specially trained to help the homeowner through the PACE financing process. To find a participating contractor, visit the HERO and CaliforniaFIRST program websites.
8. I completed an application for energy upgrades through one of the two Program Administrators (HERO, CaliforniaFIRST) and I want to complain about the Program Administrators. With whom do I file a complaint regarding the Program Administrators?
The homeowner can file a complaint with our Energy Network Call Center by contacting us at our hotline (877) 785-2237, or by email at email@example.com.
9. I completed an application for energy upgrades through one of the two Program Administrators (HERO, CaliforniaFIRST) and I want to complain about the Contractor(s). With whom do I file a complaint regarding the Contractor(s)?
A homeowner can contact the Program Administrators to file a complaint about the contractor(s).
HERO: Phone (855) 437-6411, email firstname.lastname@example.org
CaliforniaFIRST: Phone (844) 589-7953, email email@example.com
10. Where exactly does my PACE assessment appear on the Annual Secured Property Tax Bill?
If you have been approved for PACE financing and have executed an assessment contract, the annual assessment payments will appear under the Direct Assessment Section of your property tax bill. Some examples of how the assessment will appear are WRCOG Hero, LACEP RES PACE, LACEP RES 2016, LACEP COMM or California Hero to name a few. You can find an example of an annual secured property tax bill at http://lacountypropertytax.com/portal/bills/annualbill.aspx and Direct Assessments are number 7 on the bill. If you have a specific question in regards to your direct assessment, please refer to the telephone number found on your Annual Secured Property Tax Bill.
11. I am interested in financing energy upgrades through PACE. Do I need to finance the total value through PACE, or can I pay some of that in cash?
The PACE program allows participants to pay any portion of their energy upgrades using either cash or a separate financing vehicle, so long as the PACE financing component is equal to at least $5,000. Participants should keep in mind the increase in annual property taxes that will result from a PACE assessment, and use this figure in determining the amount of energy upgrades that can reasonably be afforded.
12. My mortgage lender pays my annual secured property tax bill, through an impound account. Do I need to inform the mortgage lender of the dollar value of upgrades financed through PACE so they can increase the monthly amount I pay to them?
Yes. Property owners should consult with their lender(s) or mortgage servicer(s) prior to entering into an assessment contract. Entering into an assessment contract without the consent of an existing lender(s) or mortgage servicer(s) may constitute an event of default under such agreements or security instruments. Defaulting under an existing mortgage agreement or security instrument could have serious consequences to property owners, which could include demand for payment in full or foreclosure.
Additionally, we recommend that property owners share contractual documents with lender(s) or mortgage servicer(s) to determine the appropriate increase for the escrow impound account to render payment for property taxes.
13. Can a lender foreclose on my property if I miss just one installment payment for my annual secured property tax bill?
While assessment bonds in California typically allow for judicial foreclosure following a single missed payment, the County’s residential PACE program provides significantly greater protections for its participants. Judicial foreclosure can be initiated by bondholders in the County program only if: 1) a participating homeowner is delinquent for seven months following the second installment due date of February 1st; 2) the homeowner fails to resolve this delinquency within a subsequent 60-day cure period; 3) the cash reserve fund for the County’s residential PACE program has been depleted; and 4) the Program Administrator’s reserve fund “backstop” has been exhausted. As a result of these conditions, it is unlikely that one missed PACE assessment will trigger a judicial foreclosure and threaten the participant with the loss of their home.
14. What is the Los Angeles County Energy Program and how does it relate to LA County’s Residential PACE program?
The Los Angeles County Energy Program (LACEP) is the name used in LA County’s legal documents to describe both its Residential PACE program and its Commercial PACE program. Cities that have passed resolutions to participate in LA County’s PACE program have probably noticed this term on their resolutions. Consequently, all cities that have passed resolutions opting into LACEP are participating in both LA County’s Residential and Commercial PACE Programs. For additional information and a list of participating cities, please visit pace.lacounty.gov.
15. What can a city do to promote Residential PACE?
Cities can promote Residential PACE by providing information to their constituents orally when fielding inquiries, through their respective websites by linking to pace.lacounty.gov, and through programmatic marketing material offered at city-sponsored events such as public meetings, conferences and entertainment venues like summer concert series. Other, more creative methods of supporting PACE include offering expedited permit processing for Residential PACE projects and creating additional incentives that support specific Residential PACE projects. If your city is interested in exploring these more creative approaches, contact LA County’s Residential PACE Providers, LA County HERO and CaliforniaFIRST to receive guidance and support.
16. Other Residential PACE providers have approached our city. Should we join their programs too? Also, other PACE providers have claimed that they are included within LA County’s program. Is this true?
Each city has the discretion to determine how many Residential PACE providers it will allow to operate in its city. The availability of multiple PACE providers in your city may create confusion in the marketplace. Through participation in LA County’s Residential PACE program, cities already have access to two residential PACE providers, LA County HERO and CaliforniaFIRST, which provides numerous benefits to resident homeowners as described in Question 4. At this time, only HERO and CaliforniaFIRST are providers for the LA County Residential PACE Program.
17. Will the LA County Residential PACE program promote itself through a single marketing “brand ”?
No. Although LA County’s serves as Residential PACE’s Program Sponsor, and ensures that certain components are the same for both program administrators (see Question 5 for more information), it has opted to let HERO and CaliforniaFIRST market their own brands to consumers such that consumers can decide for themselves with whom they should work to obtain PACE financing. As discussed above, LA County will provide links to both program adminstrator’s external websites on its website, pace.lacounty.gov.
18. In July 2010, launch of LA County’s Residential PACE program was put on hold due to concerns raised by the Federal Housing Finance Authority. Now that LA County is launching Residential PACE, do these FHFA concerns still pose an issue?
In July 2010, the Federal Housing Finance Agency (FHFA) issued a statement that PACE programs present safety and soundness concerns to the mortgage portfolios held by Fannie Mae and Freddie Mac. The concerns were related directly to the priority lien status of the PACE assessments and the associated right of a PACE bondholder to initiate a foreclosure proceeding for non-payment of the PACE assessment and be first in line to receive any payment resulting from the foreclosure process. Despite these objections, several PACE programs continued to operate throughout the country and have not encountered problems with the FHFA. In response to the FHFA objections, the County has developed the County-wide, County-managed, consumer and lender-friendly residential PACE Program that includes a number of measures to mitigate the potential risks associated with FHFA objections, including a substantial amount of disclosures to property owners on the risks associated with entering into a PACE assessment contract. More information can be found at the following LA County website in the August 12, 2014 and March 3, 2015 Board of Supervisors meetings.
19. What is the history of PACE in California?
In California, the first commercial and residential PACE programs were established in 2008. The residential programs soon encountered a significant hurdle. The Federal Housing Finance Agency (FHFA) was concerned that residential PACE assessments had a lien status superior to that of existing mortgages underwritten by Fannie Mae and Freddie Mac.
Despite these objections, several residential PACE Programs continued to operate, including the Sonoma County Energy Independence Program (SCEIP), the City of Palm Desert’s PACE Program and California HERO. None of these programs have met any repercussions from the FHFA, Fannie Mae or Freddie Mac to date.
In an effort to keep residential PACE alive in California, the State, its governor, several residential PACE Program administrators and local governments tried a number of methods to engage the FHFA in a conversation to agree to a solution. Since 2010, a number of developments have been made towards mitigating FHFA’s concerns. This includes the implementation a statewide reserve fund created by Governor Jerry Brown, statewide legal validation of several residential PACE programs, additional disclosures to consumers and a variety of consumer protection measures.
As a result of the above measures taken to address FHFA’s concern, the positive involvement of the State and Governor Jerry Brown, and the lack of action from FHFA, many cities and counties now have operating residential PACE Programs. To date, thousands of residential PACE assessments have been completed in California indicating millions of dollars of investment by California homeowners in energy efficiency, water efficiency and renewable energy projects saving them money on their utility bills and creating jobs.