Governor signs bill to re-oversee Missouri’s clean energy loan program • Missouri Independent

Representative Bruce DeGroot, R-Ellisville, speaks upstairs in the House. (Photo by Tim Bommel / House Communications)

Missouri Governor Mike Parson signed a law on Tuesday adopt new consumer protections for a clean energy loan program which has sparked criticism that it disproportionately harms borrowers in predominantly black neighborhoods.

The legislation, sponsored by Republican Representative 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 Finance Division at least every two years.

It requires residential borrowers to receive full information about the potential impact of their loan, including a notice that their home could be sold as part of a tax sale if they don’t pay off the loan. It also caps the amount that can be loaned under the program based on the estimated value of the home and existing debt.

PACE provides loans to cover the cost of improving a home’s energy efficiency or renewable energy, with homeowners repaying the loans by raising property taxes. The promoters of the program say it has helped people who otherwise might not have qualified for loans to make improvements to their homes.

But an investigation earlier this year by nonprofit news organization ProPublica found that PACE programs in Missouri charged high interest rates for terms of up to 20 years, using the power of government taxation 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 credit options, critics say they have weighed disproportionately on some of the state’s most vulnerable homeowners.

ProPublica found that 28% of borrowers in predominantly black neighborhoods were at least one year late in repaying their PACE loans, compared to 4% in predominantly white neighborhoods. Borrowers in predominantly black neighborhoods also paid a larger share of their home’s value in interest and fees, sometimes more than county appraisers said their home was worth.

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