Clean-up legislation introduced to address last session’s hurried bill that made PACE info secret

In the first legislative session to commence after the passage of Proposition 54, the Capitol community expected to see an end to last-minute amendment chicanery that was frequent at the end of legislative sessions.

But after the clock struck 5 o’clock on the final day of the 2017 session, AB 1284 forged a new way to avoid true scrutiny in the legislative process. AB 1284, authored by then-Assemblyman Matt Dababneh (D-Woodland Hills), was heard for the very first time in the final hours of session and passed through both houses in just a few hours. Due to Prop. 54, the language could not be amended if it was going to pass before the session ended.

AB 1284 sought to regulate Property Assessed Clean Energy or “PACE” financing programs, which are established by governments to help homeowners pay for energy-efficient appliances and projects through loans that are paid back as line items on their property tax bills. The bill was touted as a consumer protection measure, but advocates testified at the hearing that consumer and transparency groups never reviewed the language and were troubled by certain provisions.

In fact, the bill was a sweetheart deal, struck by the regulated and the regulator. Its attempted quick and quiet passage was interrupted by CNPA’s sole opposition in the Senate Insurance and Banking and Financial Institutions Committee. CNPA objected to provisions in the bill (now law) that allow the agency that oversees these programs, the Department of Business Oversight, to keep documents used in settlements involving misconduct or bad behavior confidential.

Senators at the hearing in the Banking Committee expressed concerns about the issues CNPA raised, including Senator Richard Roth (D-Riverside) whose district has some of the highest PACE default rates in the country, according to the Wall Street Journal.

As a result, CNPA secured promises from Assemblyman Dababneh that the secrecy provisions in the bill-which would allow PACE solicitors to secretly settle misconduct claims with the Department of Business Oversight-would be removed from the law in 2018. This promise was solidified when Dababneh submitted a letter to the Legislative Journal that the intent was to eliminate the secrecy provisions in future legislation.

Since his resignation, Assemblyman Dababneh is unable to follow through with this promise, underscoring the risks when the legislature passes a bill with later promises to fix.

Due to his interest in the issue, CNPA has been working with Senator Roth to determine how to address this issue. In February, he introduced SB 1087 to remove those secrecy provisions and mandate disclosures when PACE solicitors settle claims with the state.

The Los Angeles Times has reported on the program, which it noted “can be a moneymaker for governments.” But this new industry of loans has hidden risks as claims are raised that homeowners are being enticed to enter loans they don’t understand and possibly can’t afford. This is particularly worrisome because a borrower can face foreclosure if the loan isn’t paid on time.

CNPA is strongly supporting this measure to undo the harm that AB 1284 wrought on the public’s right to know.

SB 1087 will be eligible to be heard by the Senate Insurance, Banking and Financial Institutions Committee in March.