Public Finance Alert
On January 1, 2017, certain amendments to California's current statutory schemes for authorizing Property Assessed Clean Energy (PACE) financing programs will become effective. The amendments primarily prescribe additional statutory requirements that must be met in order for PACE financing to be provided to the owners of residential properties with four or fewer units (Residential Properties). The additional statutory requirements enacted through the amendments apply whether or not the PACE financing is undertaken under the voluntary contractual assessment provisions of the California Streets and Highways Code (commonly referred to as Chapter 29 or the AB 811 version of PACE) or the special provisions of the Mello-Roos Community Facilities Act of 1982 (commonly referred to as SB 555 version of PACE).
With respect to Residential Properties, the additional statutory requirements enacted by the amendments consist of the following:
In addition, the amendments generally prohibit the making of monetary or percentage representations to property owners regarding the effect that the PACE financed improvements will have on the value of the property unless the estimate of value is derived through the use of an automated valuation model, a broker's price opinion from a state licensed real estate broker or an appraisal conducted by a state licensed real estate appraiser.
The full text of the amendments is contained in Assembly Bill No. 2693, which was approved by the Governor and filed with the Secretary of State on September 25, 2016, and Assembly Bill No. 2618, which was approved by the Governor and filed with the Secretary of State on September 29, 2016.