A bad decision regarding the selecting and financing of energy programs can cost you a lot of money, make selling your home more difficult and, under certain circumstances, it might even lead you to default on your tax bill, and that’s an expensive proposition.
Many energy saving programs are worthwhile under the right circumstances, but they are also complex and often non-competitive, which makes them fertile ground for unscrupulous operators. The programs also fail to explain, simply and in detail, the options, true costs and risks associated with the tax-based financing arrangements.
It is doubtful that the average consumer is equipped to determine a fair price for these products or services or even whether certain programs are in their best financial interest. There are many ways to reduce your energy bills and finance improvements; picking the right one is not simple, because there are scores of things to consider and calculate.
California’s HERO Program, which provides financing for energy-efficient, water-efficient and renewable energy products to home and business owners, falls under the PACE (Property Assessed Clean Energy) program. These are catchy titles, but what it means is that the financing of the improvements are repaid through annual property tax payments, which are delivered and collected by the county and usually over a long period, perhaps 20 years.
In other words, you are taking a loan against your property in the form of a tax lien. There is no free lunch and it is imperative that you understand the options you have for energy efficiency, the cost, and the best program for your situation based on realistic estimates and many individual factors.
Prior to supporting any of these tax-based programs, the county should set up clear guidelines for full disclosure and even work with local lenders, companies and community organizations to provide consumer education to ensure that the government does not become the legal debt collector on bad deals. Having the county accept the tax lien gives the impression that the entire transaction has the government seal of approval. It’s not true, but that is what people believe.
