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Posted on: April 11, 2018

HERO Financing Program Reveals 99% Compliance in External Review

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RIVERSIDE, CA. – April 11, 2018 – In a first-of-its-kind external review for the PACE (Property Assessed Clean Energy) industry, the HERO PACE financing program and its administrator, Renovate America, received top marks for their adherence to the Western Riverside Council of Governments’ (WRCOG) administrative guidelines and consumer protection policies.

PACE is an innovative form of financing that empowers homeowners to make renewable energy, energy efficiency and water conservation improvements to their homes and pay for them over time at a fixed interest rate through an additional, voluntary assessment on their property taxes. Since launching in 2011, WRCOG’s HERO financing has become the largest residential PACE program in the country.

As part of the consumer protection policies for PACE financing that WRCOG initially adopted in December 2015, WRCOG hired internationally-recognized accounting and advisory firm Baker Tilly in June 2016 to conduct an operational analysis of HERO. The review, which covered July 1, 2015 to June 30, 2016, was the first of its kind to be conducted of any WRCOG PACE program.

As part of this analysis, Baker Tilly looked at how a sample of HERO assessments originated during the review period performed against 114 individual program requirements derived from WRCOG’s administrative guidelines and its consumer protection policies. These included requirements that home-improvement contractors be licensed and in good standing with the California Contractor State Licensing Board, that Renovate America followed the specified underwriting criteria, and disclosed financing terms and conditions in the documents it provided to homeowners as well as in confirmation of terms phone calls with homeowners.

Baker Tilly performed a statistically significant sampling of 5,274 individual transaction tests across the various requirements. Based on Baker Tilly’s testing of the sample assessments, 5,235 out of 5,274 – over 99 percent – met the applicable administrative guidelines and consumer protection policy requirements.  Some of WRCOG’s consumer protections include a quality assurance call with every property owner, thorough review of projects before they are funded and a requirement that the property owner must sign off on the improvements prior to contractors receiving payment.

“We are certainly pleased with the results of this initial analysis,” said WRCOG Executive Director Rick Bishop. “That being said, our consumer protections are not static; we will continue to work with our partners and interested parties to review and strengthen our protections to make the PACE experience the best that it can be.”  The release of the findings comes as PACE becomes a regulated financial product in California, its largest marketplace. Beginning January 1, 2018, two new State laws took effect that create a strengthened consumer-protection framework for PACE. Under those laws, PACE approvals will be conditioned on an ability-to-pay analysis beginning April 1, 2018. And starting in 2019, all PACE providers will have to be licensed by the California Department of Business Oversight.

The owners of more than 73,500 homes have used WRCOG’s HERO financing to implement a range of energy saving, renewable energy, and water conserving measures to their homes and businesses. It is projected that the improvements financed by WRCOG’s HERO program will save homeowners over $2.3 billion on their utility bills over the expected lifetime of the products installed, while lowering greenhouse-gas emissions by over 3 million tons – equivalent to taking more than 600,000 cars off the road for a year.


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