The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Fiscal Policy
BILL: CS/CS/SB 950
INTRODUCER: Fiscal Policy Committee; Community Affairs Committee and Senator Rodriguez
SUBJECT: Improvements to Real Property
DATE: April 27, 2023 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Hackett Ryon CA Fav/CS
2. Hackett Yeatman FP Fav/CS
3.
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/CS/SB 950 substantially amends a program authorized in current law, commonly known as
the “Property Assessed Clean Energy” or “PACE” program, which allows property owners to
make qualifying improvements to real property and finance the cost through annual non-ad
valorem tax assessments. Qualifying improvements are those that enhance energy efficiency,
renewable energy, wind resistance, and newly added by the bill wastewater treatment, flood and
water damage mitigation, and sustainable building improvements.
The bill enhances certain protections for consumers entering into PACE contracts, and oversight
for contractors that install improvements. The bill updates the legislative intent of the PACE
statute to reflect the expanded scope of the program, and introduces definitions used to clarify
the language of the statute.
The bill does not affect state or local revenues.
The bill takes effect January 1, 2024.
BILL: CS/CS/SB 950 Page 2
II. Present Situation:
PACE in Florida
In 2010, the Legislature authorized local governments1 to fund property owners making
qualifying improvements and to establish a financing agreement for the repayment of such costs
through annual non-ad valorem property tax assessments. Although Florida’s law does not use
the terms “PACE” or “Property Accessed Clean Energy,” it is generally understood that s.
163.08, F.S., is Florida’s PACE program.2
Through a PACE program, a property owner3 may apply to a local government for funding to
enhance energy conservation and efficiency improvements, such as energy-efficient HVAC
systems, replacement of windows, electric vehicle charging equipment, and efficient lighting
equipment; renewable energy improvements utilizing hydrogen, solar, geothermal, and wind
energy; and wind resistance improvements such as wind-resistant shingles, gable-end bracing,
storm shutters, and opening protections.4
PACE programs in Florida are formed by local governments and operate typically in partnership
with several localities pursuant to an interlocal agreement. Additionally, PACE programs in
Florida can be operated by a third-party PACE administrator, which is either a for-profit or not-
for-profit entity acting on behalf of the local government.5 However, it is the local government
that enters into a financing agreement directly with the property owner.6 In 2012, the Legislature
expanded the definition of “local government” to allow a partnership of local governments
formed pursuant to the Florida Interlocal Cooperation Act7 to enter into a financing agreement
wherein the partnership, as a separate legal entity, imposes the PACE assessment.8
At least 30 days before entering into the financing agreement, the property owner must provide
notice to any mortgage holder or loan servicer of the intent to enter into the agreement, the
maximum amount to be financed, and the maximum annual assessment.9 The law provides that
an acceleration clause for “payment of the mortgage, note, or lien or other unilateral modification
solely as a result of entering into a financing agreement … is not enforceable.” However, the
mortgage holder or loan servicer may increase the required monthly escrow by an amount
necessary to pay for the qualifying improvement. 10
1
“Local government” means a county, municipality, a dependent special district as defined in s. 189.012, F.S., or a separate
legal entity created pursuant to s. 163.01(7), F.S.
2
See generally Erin Deady, Property Assessed Clean Energy: Is There Finally a Clear Path to Success? Florida Bar Journal
Vol. 90, No. 6, June 2016, pg. 114, available at https://www.floridabar.org/the-florida-bar-journal/property-assessed-clean-
energy-is-there-finally-a-clear-path-to-success/ (last accessed Mar. 16, 2023).
3
While nationally it is common to separate PACE programs into residential and commercial programs, Florida Statutes do
not differentiate based on the nature of the property. See United States Office of State and Community Energy Programs,
Property Assessed Clean Energy Programs, available at https://www.energy.gov/scep/slsc/property-assessed-clean-energy-
programs (last visited Mar. 19, 2023).
4
Section 163.08(2)(b), F.S.
5
Section 163.08(6), F.S.
6
Section 163.08(8), F.S.
7
Section 163.01(7), F.S.
8
Chapter 2012-117, L.O.F.
9
Section 163.08(13), F.S.
10
Section 163.08(15), F.S.
BILL: CS/CS/SB 950 Page 3
Qualifying Improvements
The types of projects PACE financing may fund are referred to as “qualifying improvements.” A
local government may not offer PACE financing for any project not included in the statutory
definition of qualifying improvements. As provided in current law, qualifying improvements
include the following:
Energy conservation and efficiency improvements,11 to include:
o Air sealing;
o Installation of insulation;
o Installation of energy efficient HVAC systems;
o Building modifications which increase the use of daylight;
o Replacement of windows;
o Installation of energy controls or energy recovery systems;
o Installation of electric vehicle charging equipment; and
o Installation of efficient lighting equipment.
Renewable energy improvements,12 which means installation of any system in which the
electrical, mechanical, or thermal energy is produced from a method utilizing hydrogen, solar
energy, geothermal energy, bioenergy, or wind energy.
Wind resistance improvements,13 to include
o Improving the strength of the roof deck attachment;
o Creating a secondary water barrier to prevent water intrusion;
o Installing wind-resistant shingles;
o Installing gable-end bracing;
o Reinforcing roof-to-wall connections;
o Installing storm shutters; and
o Installing opening protections.
Wind resistance improvements applied to buildings under new construction do not qualify for
PACE financing.14
Florida PACE Consumer Protections
Current law provides that, before entering into a financing agreement, the local government must
reasonably determine that:
All property taxes and other assessments are current and have been paid for the preceding 3
years;
There are no involuntary liens including construction liens;
There are no notices of default or other evidence of property-based debt delinquency
recorded and not released in the preceding 3 years; and
The property owner is current on all mortgage debt on the property.15
11
Section 163.08(2)(b)1., F.S.
12
Section 163.08(2)(b)2., F.S.
13
Section 163.08(2)(b)3., F.S.
14
Section 163.08(10), F.S.
15
Section 163.08(9), F.S.
BILL: CS/CS/SB 950 Page 4
Further, any work requiring a license to make a qualifying improvement must be performed by a
properly certified or registered contractor.16 The total amount of PACE assessments for any
property may not exceed 20 percent of the property’s market value, unless an energy audit
determines that the savings from the qualifying improvement equals or exceeds the repayment
amount of the non-ad valorem assessment.17
Consumer Protections for Residential PACE Financing Generally
Concerns have arisen about issues consumers may face regarding residential PACE financing.
Because the PACE financing is structured as a tax assessment instead of a loan, PACE programs
historically have not been required to provide homeowners with the same disclosures about the
financing costs that traditional lenders must provide.
Additionally, the tax liens for PACE financing take priority over other lien-holders, including the
property’s mortgage holder.18 Such priority has influenced Fannie Mae and Freddie Mac to
refuse the purchase of loans with existing PACE-based tax assessments,19 and properties
encumbered with PACE obligations are not eligible for Federal Housing Administration insured
financing.20 However, priority lien position protects local governments, who are authorized to
take on debt for the financing they provide.21 Advocates also state that the priority lien position
enables local governments to offer competitive interest rates, ranging from approximately 6 to 9
percent.22
Consumer Financial Protection Bureau Steps
In 2018, the United States Congress directed the Consumer Financial Protection Bureau (CFPB)
to promulgate regulations regarding PACE financing.23 The CFPB has issued advance notices of
proposed rulemaking in order to apply the Truth in Lending Act’s ability-to-repay requirements,
currently in place for residential mortgage loans, to PACE financing.24
The existing federal ability-to-repay requirements prohibit creditors from making a residential
mortgage loan unless the creditor makes a reasonable and good faith determination based on
verified and documented information that, at the time the loan is consummated, the consumer has
a reasonable ability to repay the loan according to its terms, and all applicable taxes, insurance,
and assessments.25 In making such a determination, the creditor must verify and consider specific
16
Section 163.08(11), F.S.
17
Section 163.08(12), F.S.
18
Debra Gruszecki, INLAND: Realtors Offer Word of Warning About Solar Financing Program,” Jan. 19, 2015, The Press-
Enterprise, available at https://www.pe.com/2015/01/19/inland-realtors-offer-word-of-warning-about-solar-financing-
program/ (last accessed Mar. 16, 2023).
19
FHFA, Statement of the Federal Housing Finance Agency on Certain Super-Priority Liens (Dec. 22, 2014) (last visited
Oct. 27, 2021).
20
“ML 2017-18: Property Assessed Clean Energy (PACE)," December 7, 2017, U.S. Department of Housing and Urban
Development, available at https://www.hud.gov/sites/dfiles/OCHCO/documents/17-18ml.pdf (last accessed Mar. 16, 2023).
21
Section 163.08(7), F.S.
22
AboutPACE, Florida PACE Funding Agency, available at https://floridapace.gov/about-pace/ (last visited Mar. 16, 2023).
23
Section 307, Economic Growth, Regulatory Relief, and Consumer Protection Act, Public Law No 115-174 (May 24, 2018).
24
Advance Notice of Proposed Rulemaking on Residential Property Assessed Clean Energy Financing, Docket No. CFPB-
2019-0011, available at https://files.consumerfinance.gov/f/documents/cfpb_anpr_residential-property-assessed-clean-
energy-financing.pdf (last accessed Mar. 16, 2023).
25
Id., citing TILA section 129C(a), 15 U.S.C. 1639c(a).
BILL: CS/CS/SB 950 Page 5
factors including the consumer’s income, assets, and existing debt obligations.26 The Truth in
Lending Act’s stated purpose is “to assure that consumers are offered and receive residential
mortgage loans on terms that reasonably reflect their ability to repay the loans and that are
understandable and not unfair, deceptive, or abusive.”27
The CFPB’s regulations on residential PACE financing are still in development and have not
been finalized at this time.
California’s Consumer Protection Measures
California, one of the three states currently offering residential PACE financing,28 has taken
measures to protect consumers independent of federal regulation. In 2016, California’s law
changed to require PACE programs to provide mortgage-level disclosures and to conduct live
recorded calls with homeowners to confirm financing terms and obligations.29
In 2017, California legislation required that PACE program administrators be licensed by the
California Department of Financial Protection and Innovation, provided oversight for contractors
and third party solicitors, and authorized the same department to bring enforcement actions
against PACE administrators and contractors. The law also required that a PACE administrator
thoroughly determine the property owner’s ability to repay the loan before approving a financing
contract.30 In 2021 California took further action specifically to protect senior citizens being
solicited at home, criminalizing transactions that are part of a pattern in violation of specific
PACE consumer protections.31
III. Effect of Proposed Changes:
The bill substantially amends Florida’s PACE program in s. 163.08, F.S. It defines key terms,
expands the types of qualifying improvements, imposes new consumer protections, extends
participation in the program to lessees of government property, and enacts new PACE contractor
oversight and accountability provisions.
Definitions
The bill defines the following terms:
“Commercial property” means real property not defined as residential, including multifamily
residential, commercial, industrial, agricultural, nonprofit-owned, long-term care facilities,
and government commercial property.
“Facility” means a portion of a building, structure, or site improvement.
26
Id.
27
7 TILA section 129B(a)(2), 15 U.S.C. 1639b(a)(2).
28
California, Florida, and Missouri are the only three states offering PACE financing on residential property.
29
James Reed, “Consumer Protections for PACE Now Written into State Law,” Orange County Register, October 7, 2016,
available at https://www.ocregister.com/2016/10/07/consumer-protections-for-pace-now-written-into-state-law/ (last visited
Mar. 16, 2023).
30
Assembly Bill 1284 (Dababneh, Chap 475, Stats. 2017) – California Financing Law: Property Assessed Clean Energy
program: program administrators.
31
Assembly Bill 790 (Quirk-Silva, Chap 589, Stats. 2021) – Consumer Legal Remedies Act.
BILL: CS/CS/SB 950 Page 6
“Government commercial property” means property owned by a local government and leased
to a nongovernmental lessee for commercial usage.
“Program administrator” means an entity, including, but not limited to, for-profit or-not-for-
profit entities, with whom a local government contracts to administer a PACE program.
“Qualifying improvement contractor” means an independent contractor enrolled in a program
to install or otherwise work on qualifying improvements.
“Qualifying improvement program” is a program established by a local government or local
governments to finance PACE improvements.
“Residential real property” means a residential property of four or fewer dwelling units
which is or will be improved by a qualifying improvement.
Expansion of Qualified Improvements
The bill amends the definition of “qualifying improvements” to expand the universe of the types
of projects a local government’s PACE program may finance. Significantly, the bill adds the
following three new categories of qualifying improvements:
Wastewater treatment improvements.
Flood and water damage mitigation.
Resiliency improvements.
The “wastewater treatment improvement” category includes the replacement or improvement of
an onsite sewage treatment and disposal system with an advanced system of the same type, or
replacement with a central sewage system. The term includes repairs or modifications made to an
onsite sewage treatment and disposal system regulated by the Department of Health under ss.
381.0065 and 381.00651, F.S. This expansion applies only to residential properties.
The “flood and water damage mitigation” category, applying only to residential properties,
includes projects and installations:
Raising a structure above the base flood elevation to reduce flood damage;
Building or repairing a flood diversion apparatus;
Utilizing flood damage resistant building materials;
Mitigating or eliminating the potential for microbial growth;
Using electrical, mechanical, plumbing, or other system improvements to reduce flood
damage; and
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