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‘People got screwed.’ Despite troubles, green energy lender seeks restart in Florida

Ray and Kelly Coulter display the paperwork from when they financed a new roof and impact windows on their West Palm Beach home through Green Solutions and Ygrene Energy Florida.
Miami Herald
Ray and Kelly Coulter display the paperwork from when they financed a new roof and impact windows on their West Palm Beach home through Green Solutions and Ygrene Energy Florida.

Their billboards used to plaster South Florida. Their contractors went door-to-door, offering expensive and much-needed upgrades to roofs, windows and air conditioning units — with no money down, no credit check needed.

Ygrene Energy was the biggest player in a novel and controversial industry that bankrolls home improvements and gets paid back by charges added to a homeowner’s tax bill. It was once lauded by politicians and environmentalists, even President Barack Obama, as a key solution to adapting to climate change and hurricanes.

But late last year, Ygrene, the state’s most high-profile green energy finance company, suddenly vanished from the Florida market — a move that left contractors in the middle of projects unpaid and homeowners scrambling to pay big unexpected bills. Now, despite an ongoing investigation into the company by Florida’s attorney general, over a hundred consumer complaints and dozens of lawsuits across the state, Ygrene may be poised to restart business in Florida, its largest and least-regulated market.

For Ray and Kelly Coulter, the company’s abrupt withdrawal came weeks after their brand-new roof and impact windows were installed on their West Palm Beach home.

The email — sent October 5 — said that Ygrene, the company responsible for paying the contractors, had canceled its financing. That left the Coulters with a $45,000 bill that was supposed to have been paid out through manageable and appealing annual payments attached to their tax bill.

“We were sold a bill of goods that’s no longer there,” said Ray, a 53-year-old facilities manager.

Coulter is one of more than a dozen homeowners and contractors across Florida the Miami Herald spoke to about the problems caused by Ygrene’s sudden withdrawal. Public forums, like the Better Business Bureau and Google reviews, are filled with recent posts from frustrated homeowners and contractors.

Jonathan Akl, a St. Lucie-based contractor, said he had 60 projects affected under his former employer, a Broward County-based roof and solar company. Construction ground to a halt, leaving some homeowners with unfinished roofs while the financial details were worked out.

“We had 60 open files with the company. They reneged on every single one of them,” he said. “Literally at midnight they dropped all contracts that weren’t closed. A lot of people got screwed.”

Exactly how many people is hard to pin down. Ygrene wouldn’t share numbers, although the company estimated at one time it signed around 2,000 new contracts a month. Based on conversations with others in his industry, Akl’s personal estimate is that the withdrawal disrupted thousands of contracts statewide.

Back in October, Akl said his former company’s lawyers pondered suing Ygrene but found contract language gave the company the legal right to pull out at any point until the homeowner actually started payments.

Ray Coulter, 53, and his wife, Kelly Coulter, 44, working on home improvement projects on Wednesday, Jan. 31, 2023, in West Palm Beach, Fla.
Miami Herald
Ray Coulter, 53, and his wife, Kelly Coulter, 44, working on home improvement projects on Wednesday, Jan. 31, 2023, in West Palm Beach, Fla.

That clause can leave a large window of time because Ygrene specializes in a unique type of financial agreement called the property-assessed clean energy program, or PACE.

Companies like Ygrene that provide money for “green” home improvement projects don’t refer to it as a “loan” but — just like banks and mortgage companies — they make money by charging fees and interest rates. But instead of writing a check to the company, homeowners pay only through their annual property tax bill, collected from a lien local governments allow to be placed on the property.

For tens of thousands of customers already paying for completed projects, Ygrene’s sudden exit had no impact. But homeowners and contractors with projects left in limbo told the Herald they had to race to find new funding, or in some cases drop the work altogether. Some homeowners said they paid off contractors with their credit cards, racking up tens of thousands in debt. Contractors expecting to be paid by the company right after the job also faced uncertain delays and potential battles to collect for their work.

Dr. Mohamed Hegazy said he had trouble applying for a traditional home equity loan to cover the costs instead because Ygrene had already placed a lien on his Miramar home when the project got started, even though it had not yet paid the solar and roofing company for its work.

“This company dropped funding without respect to the people or accountability to anyone,” he said. “They should pay for their mistake.”

Plenty of homeowners, including most of Akl’s clients, eventually switched to another PACE company like Renew Financial, which accepted many of the contracts but charged a slightly higher price.

But pulling out of the incomplete Florida projects was only one of the complaints about Ygrene’s practices.

In October, the Federal Trade Commission and the state of California came down hard on the California-based company over how it sold its financial agreements to sometimes-confused consumers. An FTC order said the company deceived consumers about the potential financial impact of its financing and unfairly placed liens on consumers’ homes without consent. As part of its agreement with the FTC, Ygrene agreed to create a $3 million fund to free “defrauded” customers from liens, as well as to step up its monitoring of contractors and to be honest with consumers.

“Today’s settlement holds Ygrene accountable for their misconduct and establishes guardrails to protect property owners from future deception. PACE financing was meant to help families make important home improvements, but the dishonesty of companies like Ygrene has left some homeowners at risk of losing their homes,” California Attorney General Rob Bonta said in a statement.

Florida’s Attorney General’s office also has received more than 100 complaints against Ygrene since January 2019, and a spokesperson confirmed there is an ongoing investigation into the company but didn’t provide further details.

Now, despite the complaints, probes and five-month-long exit from the market, Ygrene has told South Florida officials it’s ready to begin signing up new customers starting on Monday.

Ygrene declined to answer questions about its withdrawal but Mark Scheffel, vice president of government affairs, said in a statement to the Herald that the company believes the majority of property owners left without funding were able to find another way to pay for projects.

“We look forward to the restart of operations in Miami-Dade,” he wrote.

Kelly Coulter, 44, paints the trim on her newly installed impact windows on Wednesday, Jan. 31, 2023, in West Palm Beach, Fla. Coulter, and her husband, Ray, used Ygrene funding to finance a brand new roof and impact windows before Ygrene yanked the financing for everyone in Florida.
Miami Herald
Kelly Coulter, 44, paints the trim on her newly installed impact windows on Wednesday, Jan. 31, 2023, in West Palm Beach, Fla. Coulter, and her husband, Ray, used Ygrene funding to finance a brand new roof and impact windows before Ygrene yanked the financing for everyone in Florida.

There is no doubt that the company has found a large and receptive market in South Florida. At just over 21,000, Miami-Dade has more homes with PACE agreements than any other county in the state. And the vast majority of them — over 15,000 — are with Ygrene.

“For some people, PACE is particularly good because it’s not based on your income and it doesn’t necessarily count as debt on your debt sheet,” said Phil Stoddard, the former mayor of South Miami and chair of a South Florida board that oversees Ygrene contracts statewide.

While PACE is often incorrectly advertised as a “government program” by some contractors, it’s actually financed by private for-profit companies. PACE lenders make money off fees and interest collected through annual tax bills for five to 30 years, depending on the project. And because it’s a lien, it makes it a “first priority” payoff in the event of a foreclosure. That’s attractive on Wall Street, where PACE providers also bundle and sell their loans.

PACE is available for commercial projects in over a dozen states without generating much controversy. But only three states have changed their statutes to allow PACE residential projects: California, Missouri and Florida.

And in all three, according to federal and state agencies as well as media reports, Ygrene and other PACE companies have racked up allegations of shoddy workmanship by contractors and accusations that salespeople misled prospective customers or even outright lied to them. Previous reporting from the Miami Herald as far back as 2018 revealed problems with the program that left lower-income consumers in particular saddled with more debt than they could handle.

Many of the industry’s problems come from unscrupulous contractors, who often serve as the unofficial sales and marketing arm of the lending companies. Their at-times misleading pitches are such a persistent source of consumer complaints (and lawsuits) that it worries even contractors who are fans of PACE, like Akl.

“A lot of contractors have ruined the reputation of PACE as is, and now with this happening it’s a nail in the coffin,” he said.

In August, Ygrene announced it was suspending operations in Missouri following an investigation by ProPublica that sparked new state oversight and consumer protections. The news outlet found the high-interest loans disproportionately burdened borrowers in predominantly Black neighborhoods.

At the same time, Ygrene also stopped lending in California, where the program was born and Ygrene was founded. California was the first state to see the PACE program, hailed as an innovative solution to paying for pricey green energy projects, take off. And it was the first state to start seeing problems that came with that rapid growth.

Renovate America, at one point one of the biggest PACE lenders on the market, filed for bankruptcy in late 2020 amid allegations from California regulators that the company created a fake construction company to bilk customers, the San Diego Union Tribune reported.

The state started regulating the industry more strictly in 2016, after some customers who didn’t understand (or weren’t told) what they were agreeing to couldn’t afford their new, higher property taxes and lost their homes, according to reporting from KPIX, San Francisco’s CBS affiliate.

The growing list of complaints prompted a since-settled class action civil lawsuit against Ygrene featuring both Florida and California plaintiffs, which accused the company of not telling consumers that their liens would make it harder to sell their homes. For instance, the nation’s largest mortgage holders, Fannie Mae and Freddie Mac, refuse to buy mortgages of homes with PACE liens, which stay with a property until they’d paid in full.

Still, Ygrene and the PACE industry continued to do more business around the country, until the company admitted in summer 2022 it was done writing new financing in California and Missouri.

At the time, Ygrene was making some upbeat business comments, with press releases touting an “expansion beyond PACE” into traditional lending and new funding from venture capital firms. But the actual numbers did not look so good. In a public presentation given a week before the company called it quits, Ygrene said rising interest rates and investors’ desire for greater profits left the company “squeezed from both ends.”

“Revenue margins have declined over 60%,” Ygrene wrote.

Fewer Floridians were applying for Ygrene, too. In summer 2020, applications peaked at more than 4,000 a month, according to a chart included in the presentation. In 2021, those numbers were falling every month. By February 2022, fewer than 2,000 Floridians applied.

In response, Ygrene asked the only government board that oversees it, the little-known South Florida Green Corridor, for approval to raise fees and interest rates on consumers, from up to 7.99% to up to 9.99%.

“In order to stay competitive in the capital markets, Ygrene must increase rates accordingly,” it said. The board agreed to allow the company to charge more for its services.

But just days later, everything shut down.

Contractors and homeowners got emails that their financing was yanked, their phone calls went straight to voicemail and the website suddenly featured a message — “ATTN: All Ygrene PACE financing operations have been paused.” — directing customers to a traditional home loan service instead.

“I called the number Ygrene gave me and all I got was a script,” said Ray Coulter. “I asked for a copy of that script to be emailed to me, and it wasn’t.”

In a December letter, Ygrene’s CEO, Jim Reinhart, explained the move was due to money problems.

“Ygrene suspended operations in Florida due to the loss of our funding partner making it impossible to fund new projects,” he wrote. “It is Ygrene’s intent and plan to finalize agreements with new capital providers and restart operations in the first quarter of 2023.”

Reinhart wrote that letter to the Green Corridor board, which is staffed with seven South Florida mayors or their representatives.

Because the PACE program collects payments through annual property taxes collected by local governments, it needs an agreement with local governments to operate. For any Ygrene contract in the entire state, that agency is the Green Corridor, which approves rate hikes, new consumer protections and reviews recent complaints and lawsuits against the company.

Stoddard, who as mayor of South Miami has championed environmental causes and pushed to expand solar power, remains an advocate for the program, despite its troubles. He has been the chair of the Corridor’s board for most of the decade it’s been in existence, and he said Ygrene’s withdrawal from the market happened once before and lasted only a couple of months.

“It ran pretty smoothly for the next nine years until this happened,” he said.

Stoddard acknowledges, however, that there’s nothing his board can do to ensure that Ygrene, if it does return to the market, can’t drop out once more if there is business trouble. In fact, the latest contract between the Corridor and Ygrene explicitly allows Ygrene to pause financing for up to six months, or more if the Corridor allows it.

Miami-Dade’s Chief Resilience Officer, Jim Murley, also said he wasn’t sure if there was anything the county could do to protect residents from the same thing happening again. Still, he urged county residents with issues with Ygrene or other PACE companies to contact his office for help.

“We’re here to help any of our residents,” he said.

Phil Stoddard, chair of the Green Corridor, cleans the solar panels on his roof on Wednesday, Jan. 31, 2023, in South Miami, Fla.
Miami Herald
Phil Stoddard, chair of the Green Corridor, cleans the solar panels on his roof on Wednesday, Jan. 31, 2023, in South Miami, Fla.

And if more problems arise, Stoddard said he’s confident the Green Corridor board he leads can work with Ygrene to fix them.

“If we get complaints we can work with Ygrene to change the procedures,” he said. “And we’ve done that.”

Florida law offers very few consumer protections for homeowners financing improvements through any PACE company, although some counties have added additional protections. Miami-Dade, although it has more PACE customers than any other county, falls about in the middle of the pack for protections throughout the state. At the top of the spectrum are Palm Beach and Pasco Counties, which have hired staffers in the tax collector’s office to call up everyone who signs up for a PACE lien and walk them through the process.

Stoddard dismissed some of those efforts as ”over the top and redundant” and worries that more layers of bureaucracy will make the program harder to use and less attractive to customers.

“We provide consumer protections and we’re proud of it,” he said. “Nothing is ever perfect because consumers don’t always read the fine print on everything they sign.”

This story was produced in partnership with the Florida Climate Reporting Network, a multi-newsroom initiative formed to cover the impacts of climate change in the state.

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