Settlement Reached Over CA HERO Solar Financing Program: Napa DA

NAPA, CA — A settlement has been reached in a consumer protection lawsuit against a California company that administers a financing program for homeowners installing solar panels and other energy efficient projects, the Napa County District Attorney's Office announced this week.

Under the terms of the judgment, which was entered without admission of liability, San Diego-based Renovate America, Inc., will pay $2.79 million to provide funding for legal assistance for consumers with PACE-related legal and financing issues.

Renovate America must also pay $1.21 million in civil penalties and investigative costs, according to Napa County District Attorney Allison Haley, whose office was joined by DA's offices in Kern, Monterey, Riverside, San Diego and Santa Cruz, as well as the San Diego City Attorney's Office, in prosecuting the case.

The settlement resolves claims that the company violated state consumer protection laws in its role as the designated administrator of the "Home Energy Renovation Opportunity" — HERO — program for several California public agencies.

Under the program, California property owners have the option of financing the installation of energy efficiency projects, such as solar panels, by placing liens on their properties and paying off the liens along with their property tax assessments.

Renovate America has trained a large number of local contractors who enroll with Renovate America and offer these energy projects to the public.

"PACE financing can be a solution to help consumers finance the purchase of energy efficient home improvements," said Napa County Deputy District Attorney Patrick Collins, who handled the case. "But consumers need to know exactly what they’re getting into. Under this judgment, Renovate America and its affiliated contractors have to clearly disclose the true financing costs and other important details of the transaction so that consumers can make an informed decision."

The complaint filed against Renovate America alleges its advertising and promotion of HERO misrepresented the program or failed to make adequate disclosures to avoid misleading consumers, including:

• that the HERO financing program was government affiliated or subsidized;
• the nature of the tax deductibility of HERO assessments;
• key facts about the transferability of HERO assessments to subsequent property owners in the sale of properties subject to HERO liens;
• the costs of financing under the program; and
• the nature of its policy of “verifying” contractors to work on HERO-related projects.

According to prosecutors:

"Many property owners throughout California may have been influenced by these misrepresentations or inadequate disclosures when they chose to finance energy efficiency projects with Renovate America, learning the full facts about these lien obligations only later when attempting to sell or refinance their homes.

"This caused unanticipated budget problems and delayed or disrupted home sales for a number of those consumers. Elderly and non-English speaking homeowners were particularly vulnerable to these representations.

"The court-approved settlement prohibits Renovate America from making these misrepresentations or inadequate disclosures of important consumer facts. For example, Renovate America must establish a strict compliance program to ensure that customers, particularly elderly customers, understand the terms of the HERO program and the potential impact of these lien obligations on their budgets and home plans."

It was noted that Renovate America and its counsel worked cooperatively with the prosecuting agencies to reach the settlement, which marks the culmination of nearly three years of investigation and negotiations.

The Napa County DA's Office said during that time, Renovate America enacted numerous consumer protection measures to meet the business practice standards sought by prosecutors, spending millions to implement those new policies and to resolve problems with fees and lien subordination.

Prosecutors also noted that the practices in question occurred at Renovate America under previous management.

As part of the terms of the judgment against the company, Napa County encourages consumers seeking legal advice about HERO to contact their local district attorney's office. In Napa County, consumers can call 707-253-4059 or send an email to daconsumer@countyofnapa.org.