Copyright © 2019 Albuquerque Journal
LAS CRUCES – Depending on whom you ask, a proposed loan program to be voted on by Doña Ana County Commissioners would either help low-income residents cut their electric bills with energy-efficient home upgrades or put them at risk of losing their homes.
County commissioners will vote Tuesday on an ordinance to allow financing to be collected as a special assessment on property tax bills for those who take out Property Accessed Clean Energy, or PACE, loans.
PACE loans provide financing to homeowners who otherwise would not qualify for renewable energy infrastructure to take advantage of solar, wind or other “green” options. The loans are collected as a special assessment on tax bills and are secured by placing a lien on the homes.
“They can’t purchase any more clean energy than what their current electric bill covers, so I don’t think we’re overburdening them,” said Doña Ana County District 4 Commissioner Shannon Reynolds who is the leading proponent of PACE loans.
Reynolds and other supporters say homeowners will be able to use the savings on their electric bills to pay off their loans but opponents worry about the risk for the low-income residents PACE loans are supposed to help.
“It’s very questionable and it concerns me. It’s for my constituents,” said Ramon Gonzalez, Doña Ana County commissioner for District 1.
Gonzalez doubts homeowners struggling to make ends meet who have monthly savings on their electric bills will be prepared to make one annual payment when it appears on their property tax bills.
“I don’t think they’ll be putting that away for the property tax. They’ll be using it for other things,” Gonzalez said. “Then they’re at risk of losing their house.”
Doña Ana County Treasurer Eric Rodriguez in a letter to county commissioners warned that homeowners with PACE loans would see their property tax bills “double.” He said he will recommend against approving the PACE assessment.
“As an elected county treasurer, our duties are to collect and distribute for public services. This one we’re distributing to a private financing company,” Rodriguez said. “The way I describe it, it’s a title loan to get renewable energy for your house.”
But Rocky Bacchus, owner of Yellow Bird Services and a staunch supporter of PACE loans, said, “That’s a misrepresentation. You can’t borrow the money to buy something else.”
Bacchus owns a Las Cruces company that sells and installs solar panels and balks at any comparison of the PACE program to predatory lending.
“5.99% interest is not predatory lending in anybody’s book that I ever talked to,” Bacchus said.
Some local lenders and the Las Cruces Chamber of Commerce have raised concerns about consumer protections and warn that because PACE loans are the primary lien on a property, it will affect the mortgage market.
“The way this is drafted, the lien to secure this system would go in front of the home mortgage lien,” said Jed Fanning, president and CEO of Citizens Bank in Las Cruces.
Fannie Mae and Freddie Mac policies state they will not purchase mortgage loans on properties with an outstanding PACE loan as the primary lien.
“Think of the ripple effect,” Fanning said.
He and other lenders say the loans will harm local lenders’ ability in the secondary mortgage market and make it harder for first-time homeowners in Doña Ana County to get financing.
Bacchus said that goes for all liens.
“If a mortgage lender says secondary mortgage won’t buy a property with a PACE lien on it, that’s a half-truth. The full truth would be to say it won’t buy a property that has any lien on it that’s in front of them,” he said.
Several critics of PACE loans also raised questions about campaign contributions to Reynolds totaling $15,000 made by Bacchus, his wife and other relatives last year when the commissioner was running for office.
“This is no different to other people I’ve made campaign contributions to, because I believe in what they’re doing and what they say,” Bacchus said.
Reynolds said he has supported PACE for two years after doing extensive research on the program. He declined to comment on the campaign contributions from the Bacchus family but said, “I will make a statement about that on Tuesday.”
Reynolds said he is convinced the program offers an affordable way for Doña Ana County residents to borrow the money they need to access energy-efficient renewable energy.
“I’m not trying to create risk; I’m trying to create opportunity, opportunity for people to get what they need without overburdening them and within the budget they currently have,” Reynolds said.