California Financing Law: PACE program administrators.

(1) Existing law, known commonly as the Property Assessed Clean Energy (PACE) program, authorizes a public agency, by making specified findings, to authorize public agency officials and property owners to enter into voluntary contractual assessments to finance the installation of distributed generation renewable energy sources or energy or water efficiency improvements that are permanently fixed to real property. Existing law, the California Financing Law (CFL) , requires a program administrator who administers a PACE program on behalf of, and with the written consent of, a public agency to comply with specified requirements relating to the PACE program, including requiring, commencing on January 1, 2019, a program administrator to be licensed by the Commissioner of Business Oversight under the California Financing Law. The CFL, commencing on January 1, 2019, requires a program administrator to establish and maintain a process for the enrollment, and for the cancellation of that enrollment, of a PACE solicitor and a PACE solicitor agent. The CFL defines the term "PACE solicitor" and "PACE solicitor agent" to not include specified persons. This bill would clarify that the term "PACE solicitor" and "PACE solicitor agent" does not include a person who only solicits a property owner to enter into an assessment contract with a person who is not considered a program administrator within the meaning of the CFL. The bill would prohibit a person from engaging in the business of a PACE solicitor unless that person is enrolled with a program administrator. The bill would also require the program administrator to maintain the processes described above in a manner that is acceptable to the commissioner. (2) The CFL requires a program administrator who administers a PACE program on behalf of, and with the written consent of, a public agency to comply with specified requirements relating to the PACE program, including requiring a program administrator to ensure criteria related to the assessment contract are satisfied before the contract is approved for recordation, including ensuring that the property owner has not been a party to any bankruptcy proceedings within the last 7 years and that the property owner is current on all mortgage debt on the subject property and has had no more than one late payment during the 12 months immediately preceding the application date, as provided. This bill would, instead, prohibit a program administrator from executing an assessment contract, and would prohibit any work from commencing under a home improvement contract that is financed by that assessment contract and would prohibit that home improvement contract from being executed, unless the program administrator ensures that certain criteria related to that assessment contract are satisfied. The bill would revise the two criteria described above to require the program administrator to ensure that the property owner has not been a party to any bankruptcy proceeding within the last 4 years and to require the program administrator to ensure that the property owner is current on all mortgage debt on the subject property and has had no more than one late payment during the 6 months immediately preceding the application date. (3) The CFL prohibits a program administrator from approving an assessment contract for funding and recording by a public agency unless the program administrator makes a reasonable good faith determination that the property owner has a reasonable ability to pay the PACE assessment, and requires that determination to include specified factors, including household income. Existing law requires a public agency that administers a voluntary contractual assessment program under the PACE program to, with respect to each real property subject to an assessment, record a document that contains specified information related to the assessment, including, the names of all current owners of the real property subject to the assessment. This bill would, instead, prohibit a program administrator from executing an assessment contract, and would prohibit any work from commencing under a home improvement contract that is financed by that assessment contract and would prohibit that home improvement contract from being executed, unless the program administrator makes a reasonable good faith determination that the property owner has a reasonable ability to pay the PACE assessment. The bill would authorize a program administrator when conducting this determination to utilize the income of a property owner's legal spouse through marriage or domestic partnership who is not on title to the property, provided that person consents, in writing, to that effect. The bill would also provide that if the property owner's legal spouse through marriage or domestic partner is used to determine the property owner's income in that manner, then the public agency that administers the PACE assessment is required to include that person's name in the document recorded related to that assessment described above. (4) The CFL requires the program administrator to be responsible for the difference between the determination of the property owner, who is obligated on the underlying home improvement contract, ability to pay the annual PACE obligations and the actual amount financed for the property owner, provided certain requirements are met. This bill would require the program administrator in that instance to provide to the property owner a written disclosure of the methodology that the program administrator used to determine whether there was a difference between the property owner's ability to pay the annual PACE obligation and the actual amount financed for the property owner. The bill would also provide that this requirement only applies to an assessment contract executed between April 1, 2018, and January 1, 2019. (5) The CFL requires a program administrator to submit to the commissioner information beneficial to evaluating various aspects of the PACE program to be included in a specified annual report, and requires the commissioner to file an annual report with the department as a public record that is a composite of the annual reports and any comments on that report that the commissioner determines to be in the public interest. The CFL requires a program administrator to report annually to the commissioner all PACE assessments that were funded and recorded. This bill would require the commissioner to include information on all PACE assessments that were funded and recorded into the annual composite report described above. (6) This bill would make other clarifying changes to the provisions of the CFL relating to program administrators, PACE solicitors, and PACE solicitor agents. (7) Existing law requires a program administrator to provide an oral confirmation of the key terms of an assessment contract with the property owner on the call, or his or her authorized representative, and to retain a copy of a recording of that confirmation for a period of 5 years after the recording is made. Existing law requires that oral confirmation to contain specified information. This bill would also require the program administrator to include in the oral conformation that it is the responsibility of the property owner to contact the property owner's home insurance provider to determine whether the efficiency improvement to be financed by the PACE assessment is covered by the property owner's insurance plan.