Missouri Gov. Mike Parson on Tuesday signed legislation enacting new consumer protections for a clean energy loan program that has drawn criticism that it disproportionately harms borrowers in predominantly Black neighborhoods.
The legislation, sponsored by Republican Rep. Bruce DeGroot of Ellisville, targets the Property Assessed Clean Energy program, or PACE program.
Under the bill, the program will be reviewed by the state Division of Finance at least every other year.
It requires residential borrowers be provided with complete information about the potential impact of their loan, including a notice that their home could be sold in a tax sale if they fail to pay the loan. It also caps the amount that can be loaned through the program based on the assessed value of the home and existing debt.
PACE provides loans to cover the cost of energy efficiency or renewable energy improvements to a home, with homeowners repaying the loans through increased property taxes. The program’s boosters say it has helped people who otherwise would not have been able to qualify for loans make improvements to their homes.
But an investigation earlier this year by the nonprofit news organization ProPublica found that PACE programs in Missouri charged high interest rates over terms of up to 20 years, using the government’s taxing power to collect loan payments through tax bills and enforce debts through liens.
By marketing their programs to people who need urgent repairs but have few options for credit, critics contend they have disproportionately burdened some of the state’s most vulnerable homeowners.
ProPublica found that 28% of borrowers in predominantly Black neighborhoods were at least one year behind in repaying their PACE loans, compared with 4% in mostly white areas. Borrowers in predominantly Black neighborhoods also paid a larger share of their home value toward interest and fees, sometimes more than county appraisers said their homes were worth.