LOS ANGELES — After six years of litigation, an LA County judge gave preliminary approval of a $12 million settlement over the county's PACE or Property Assessed Clean Energy program launched in 2015 on Monday. 

What You Need To Know

  • The Los Angeles County launched its Property Assessed Clean Energy (PACE) program in 2015 
  • The program allowed residents to use the equity in their homes to finance energy efficiency and water-saving improvements in the form of loans paid back through their property taxes 

  • Contractors that sold the home upgrades have been found to have misrepresented the program, saying it was a grant or approving homeowners who did not have the ability to pay for improvements

  • As a result, many homeowners who believed they were applying for a grant could not pay their property taxes and risked losing their home

The Los Angeles County and private lender partner, Renew America, will pay the settlement. 

A second private lender involved, Renovate America, has since filed for bankruptcy.

The program was intended to allow residents to use the equity in their homes to finance energy efficiency and water-saving improvements. However, twin lawsuits filed in 2018 by the co-counsel, Public Counsel Bet Tzedek and Hogan Lovells, alleged that private lender companies targeted the loans toward homeowners who could not afford them. 

It also alleged the county needed to have the proper safeguards in place to protect the homeowner. 

“The county’s PACE program complied with all state PACE requirements, but PACE programs throughout the state were subject to increasing criticism and concern because of contractors who misrepresented the program or failed to consider the homeowner’s ability to pay for the improvements. In response, new legislation required stronger consumer protections in 2018,” LA County Board of Supervisor Hilda Solis said in a statement. “The county discontinued its PACE program in 2020. The county remains committed to servicing existing PACE program participants and working with other PACE administrators and the state to enhance related consumer protections. The settlement demonstrates that commitment and our support for homeowners who sought to improve the energy and water efficiency of their homes under the program.” 

Of the $12 million settlement, half a million will be distributed equally among those eligible, $2 million will go toward attorney fees, and the remaining $9.5 million will be distributed based on tiers to those most impacted. 

“For example, individuals whose debt-to-income ratios were significantly high, individuals who were over 65 years old at the time of their pay, and individuals who negotiated their contracts in a language other than English but only received the contract in English. Those individuals will receive additional money,” said Ghirlandi Guidetti, a staff attorney at Public Counsel. 

He explained that while people are expected to get significant relief, this does not guarantee that they will have their loans completely covered. 

“It may not wipe out your lien, depending on which tier of the settlement you fall into. Money will go directly to pay down your lien. If you’re one of the lucky few who maybe there’s enough money to pay off your loan entirely, you will get the balance of your benefit in cash,” said Guidetti.

Linda Lee is one of the many Los Angeles residents who was impacted by a PACE loan and hopes to receive financial help. 

She entered the PACE program in 2016 when a contractor came knocking on her door offering what she understood was a grant to make clean energy upgrades to her home through the county’s PACE program. 

In reality, the projects are to be paid back through property taxes, but Lee says that’s not what she was told, as she understood it was a grant. 

“What I was told was that this is something the county is sponsoring. It is something that’s aimed at people who are, in my situation, older people,” said Lee. 

She says the contractor misrepresented how the PACE program would work and also never finished the work. 

“The doors and windows were replaced for energy efficiency, but they are not low-E glass,” said Lee.

She explained that the doors and updates to her kitchen had weathered away and pointed to some of the light outlets that were not finished. 

“I called. No one called me back. I called again, and nothing. I figured things out eventually,” said Lee. 

It wasn’t until she got her property tax bill she says it all sunk in. 

“$28,000 a year instead of $5,000 in taxes, it hurts. If I had been chewing gum, I would have swallowed it,” said Lee. 

She says during that time, she lost her husband to cancer and was still on the hook for the projects. She shared she tried applying for mortgage relief and applied for several jobs, and despite having three, she couldn’t keep up with the payments. It eventually caught up with her as her mortgage company foreclosed on her home last year. 

Attorney General Rob Bonta explains cases like these prompted additional state protections in 2018, as the program is ongoing in other parts of the state, 

“The fact that the payments are on your property taxes can make it harder for you to sell your home or refinance your home. If you can’t make the payments, your home could be foreclosed on. So it’s important to know what you’re getting into and make sure you can make the payments, make sure it’s what you want,” said Bonta. “The answer is to be educated, to be informed as consumers, and also for watchdogs like me and my office, make sure we’re going after the bad actors when they are deceptive, when they falsely advertise, when they misrepresent what the PACE program actually is,” said Bonta. 

That is why Lee urges people to look for red flags when people offer services. She says that by sharing her experience, she hopes others don’t ever have to go through her situation. 

The money would be too late for Lee to save her home, but it could help as she figures out her next move, which she says is likely renting. 

“I guess that’s going to have to be the best alternative,” said Lee.