Leon County is taking legal steps against the Florida PACE Funding Agency over its refusal to comply with regulations on home improvement loans designed to protect consumers from high tax bills and foreclosures.
County commissioners voted unanimously July 11 to declare FPFA “a danger to the public’s health, safety or welfare” and repeal a resolution allowing the entity to operate its financing program locally. Last month, they voted to give County Attorney Chasity O’Steen the authority to take all steps up to and including litigation against the agency.
The votes were in response to a letter from FPFA earlier this year saying it wasn’t bound by county restrictions because of a Leon Circuit Court ruling in a bond validation proceeding. That assertion prompted Palm Beach and Pinellas counties to sue FPFA in April. Alachua County signaled last month it may file a lawsuit as well.
In other developments, Leon County Tax Collector Doris Maloy informed FPFA on July 11 that it can’t collect assessments that appear on tax bills of FPFA loan customers because of a lack of an interlocal agreement between the agency and the county.
FPFA is one of a handful of special districts in Florida offering PACE (Property Assessed Clean Energy) financing for new doors and windows, roofs, solar panels and other energy-efficient or storm-hardening improvements. The loans have low up-front costs but must be paid back through long-term special assessments tied to liens.
O’Steen told commissioners during their July 11 meeting that FPFA was charging at least 8.9% interest and placing liens on properties for between 15 and 30 years.
“The practical effect of this is it is increasing these people’s tax bills by at least 50% — but in a number of cases at least doubling their tax bills,” she said. “And they are going to be responsible for paying for these as long as that lien is outstanding … for a heat pump or a roof or an air conditioner that may meet its useful life before they pay off that assessment.”
FPFA created in 2011 and operating in a number of Florida counties, issued a statement defending the program, though it didn’t specifically mention the dispute with Leon County.
“Floridians rely on PACE to finance needed home improvements,” FPFA said in a Monday email. “Without question, consumer complaints are driven by contractors not the financing. While we provide for industry-standard homeowner protections, we will consider what improvements can be made to the contractor’s system.”
Leon County commissioners approved a resolution in 2021 allowing FPFA to administer home and business loans as one of its PACE providers. Included in the measure were consumer protections and financial disclosures that went beyond state law.
The resolution required the FPFA to “reasonably determine” whether a property owner had the ability to pay the money back before executing a financing agreement. It also required loan purchasers to be notified of the total amount of debt they would face and that failure to pay it back could result in them losing their property.
However, the county and FPFA never formalized an interlocal agreement authorized by the resolution. In January, Mike Moran, executive director of FPFA, wrote the county saying that the recent circuit court decision “further clarified” that the agency has “independent authority” to operate statewide without county permission.
Moran, a Sarasota County commissioner, attached a proposed new interlocal agreement saying FPFA derives all its authority from the state, not by ordinance or resolution of the county.
“While the agency intends to continue to cooperate collegially with your team, our program is currently independently operational in the county,” Moran wrote. “This means that PACE financing remains available to property owners in your county, and every county in the state, with industry-standard homeowner protections.”
That did not go over well with county officials. Last month, O’Steen told commissioners that FPFA wanted to function with “no oversight” from any city or county following a court ruling in its favor as part of a bond validation proceeding in Leon Circuit Court.
With approval from commissioners, O’Steen sent a strongly worded cease-and-desist letter June 16 to FPFA’s legal counsel, James Dinkins. She accused FPFA of operating in “bad faith” and violating terms of the county resolution.
Related:Palm Beach County sues PACE provider after it refuses to abide by consumer protection rules
“The county does not agree with or recognize any authority of FPFA to operate in the county without entering into the interlocal agreement contemplated in (the resolution),” O’Steen wrote.
Dinkins, in a June 30 reply, denied that FPFA had acted in bad faith, saying it has “consistently and publicly” held the view that it has authority to operate independent of county regulation. He said FPFA would not “accede to the unreasonable demands” of the county.
The Florida Legislature passed a law in 2010 authorizing PACE financing in the state. In 2017, Leon became one of the first counties to launch a residential PACE program, working with the Florida Development Finance Corporation and its vendor for home financing, Renovate America. As of last year, some 150 homes had been improved with PACE loans for a total value of $1.85 million, according to county materials.
Renovate America went bankrupt in 2020, prompting the county to partner with FPFA in 2021. County Commissioner Rick Minor said at the time that he had heard concerns that Renovate America, which operated in Florida and elsewhere, had targeted “disadvantaged populations” that couldn’t pay back the loans ― and expressed support for the “ability to pay” provision in the new agreement with FPFA.
“What happened,” Minor said, “was that you had a lot of families that were, apparently, engaging in these loans that would then go into default for their home and foreclose on their home because of those unfavorable financial situations.”
O’Steen mentioned during the July 11 commission meeting that 14 liens had been filed on properties Leon County as part improvement financing for FPFA customers. Official records show that since May, six liens have been recorded in the county for projects including new roofs, solar panels and air conditioning. Principal amounts ranged from under $8,000 to more than $43,000, with all but one property owner paying an interest rate of 9.99%.
Contact Jeff Burlew at [email protected] and follow @JeffBurlew on Twitter.
