Project Home: Deceptive Energy-Saving Remodel Plans Hit Homeowners With Financing Gotchas
PETALUMA (KPIX) -- As KPIX first exposed last month, a state-approved program to help low-income homeowners make energy improvements to their property has had catastrophic and unintended consequences. The program has put huge burdens on people who truly can't afford it.
ALSO READ: Energy-Efficient Upgrade Program For Low-Income Residents Invites Abuses
Project Home took one unscientific survey of how the so-called Property Assessed Clean Energy (known as the PACE program) works.
KPIX went undercover to witness a pitch to an elderly Oakland homeowner. The contractor who showed up told the homeowner that windows are the biggest energy wasters in the house. But some pitches by other contractors have hurt instead of helped thousands of low-income Californians, like Theresa Bryson.
"He made it seem like, 'Okay, we're going to do all these good things for you and your house going to be so beautiful,'" Bryson said.
Bryson got a cold call from a different contractor who talked her into a long list of home improvements, many of which had nothing to do with energy efficiency.
"They remodeled the bathroom, they painted some of the rooms," Bryson said.
The man told her the improvements would be paid back through property taxes but never explained that a tax lien which goes into effect immediately upon signing is like a loan that Bryson would have to pay back.
In Bryson's case, a company called Ygrene placed two liens on her home, for a total of $135,000.
What happened to Bryson is part of a complex financing program known as PACE or Property Assessed Clean Energy. It starts with so-called "solicitor agents" or "solicitors" or "contractors" going into the community, targeting low income homeowners.
The more equity in the home, the more PACE financing is available. Once the homeowner is qualified, the contractors get paid through PACE fund program administrators. For homeowners, there's no upfront cost but the program is not free because the administrator immediately places a lien on the home that must be paid back through property taxes.
"My mortgage payment went from roughly, I would say, $1,500 to about $3,500-plus," Bryson said, adding that she still must keep working at age 69 just to cover the PACE lien.
"Change needs to happen a long time ago," said Claudia Polsky, assistant clinical professor of law at UC Berkeley and founder of Environmental Law Clinic. She says that when the PACE program was first conceived in Berkeley in 2008 she was a big fan.
"People would love a lower cost and greener energy," Polsky said. But, she says, not any more.
"The PACE program has a big green halo over it and the glare from that halo is such that it's very hard to see the program problems," Polsky said.
A newly-released report she authored with the Environmental Law Clinic finds the PACE program under-delivers on green benefits and harms low-income homeowners.
The report finds that, despite a new law that went into effect in 2018 to crack down on abuse, bad practices continue.
"Those practices include door-to-door sale as a primary means of reaching low-income residents of color, often monolingual Spanish speakers, often retired," Polsky explained.
In Theresa Bryson's case, the solicitors involved were not registered and, as such, were not allowed to offer a PACE financing deal through Ygrene, according to a class-action complaint she is named in filed by the Krashna Law firm.
Ygrene is one of five so-called program administrators that offer PACE loans in California. They told KPIX they can't comment on pending litigation but say they are a financing company and they do not pick contractors to do the PACE work. Consumers do.
Ron Dumas was curious about that and invited us along to listen to a pitch. Surprisingly the man who showed up was not on a list of six contractors recommended by Ygrene.
"I am with AAA. We're a general contractor, we do everything," the man told Dumas.
After taking measurements of all the doors and windows the man did the math and told Dumas he could replace all his windows with energy efficient ones for about $19,000.
"A PACE loan is pretty cool. As long as you can qualify for it, there's no down payment. There's no payments until November of this year," the man said.
After the visit we checked: AAA Remodeling and Development is not listed on the website of the Department of Financial Protection and Innovation as licensed to solicit for Ygrene.
KPIX left several messages on the cellphone of the contractor with AAA Remodeling but never heard back. Neither did the Dumas family. They said they were suspicious from the start:
"We did not pick the contractor. They picked one for us. They solicited us. They called me and they told me who they were going to send out, they didn't ask me," said Ron Dumas Jr. "He told me that we would have been pre-approved for $34,000 worth of work, without us giving him any information."
Their take on the $19,000 quote?
"I thought it was awfully high. I'm not used to paying that much money for some windows," said Ron Dumas Sr.
Because of KPIX's reporting, Ygrene told us they are now conducting an internal investigation to learn how AAA Remodeling received the contact information for the Dumas family. They say the company is, in fact, properly registered with the state and if it doesn't show up as such, that's the state's problem.
To file a complaint with the California Department of Financial Protection and Innovation which oversees the PACE program go to their website.
ADDITIONAL RELATED INFORMATION
Statement from Ygrene Energy Fund
Response from California Department of Financial Protection and Innovation
