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Arkansas CU Association Defeats PACE Loan Bill
Wednesday, March 22, 2017 6:55 AM

Vicky Salkeld, president of the Arkansas Credit Union Association (ARCUA), reported a notable success at the Arkansas State Capitol Monday regarding HB2026, a bill to amend the Property Assessed Clean Energy Act, which was introduced and referred to the Joint Energy Committee on March 6.

The bill, sponsored by Rep. Warwick Sabin (D-District 33) affects PACE loans, which have been successful in commercial and agricultural areas. The amendment would have expanded the scope of PACE loans to include residences.

The bill was pushed by the Little Rock, Pulaski County, and Fayetteville governments who wanted to establish an improvement district in each city and/or county in Arkansas.

Salkeld said they had several concerns with the bill. "First, it allowed loans to be made based on the equity in a home, with no regard to normal loan decision factors such as debt to income or creditworthiness," she said. "Then, in case of default, PACE loans would have been entitled to preference and priority over all prior mortgages, judgments, and liens, which could create major problems for the financial institutions that currently hold first mortgages on one of these properties."

ARCUA Lobbyist Ron Harrod has been working with Credit Union National Association and other groups, including the Arkansas Bankers Association, to gather information that would improve the bill.

When Sabin added an additional amendment to the original bill in an attempt to win support, ARCUA launched into action. On March 15, ARCUA sent an email to Arkansas credit unions asking them to contact committee members to oppose the bill.

"Our credit unions’ calls got the attention of legislators," Salkeld said. "Our voices were heard."

Then at Monday's hearing of the Joint Energy Committee, ARCUA's Harrod and 13 others signed up to testify against the bill. Those signed up to testify included Arkansas Employees FCU President/CEO Windy Campbell, Electric Cooperatives FCU President/CEO Betty Chandler, individuals from the Arkansas Bankers Association, Farm Credit, mortgage bankers, and mobile home manufacturers.

The only testimony the committee heard came from Campbell and Harrod, but when it came time to vote, the PACE bill died for lack of a motion. In the end, Sabin's amendment failed to win the support he'd hoped for, and credit unions could count a win in the Arkansas legislature.

For more information, please contact ARCUA President Vicky Salkeld at vsalkeld@arcua.coop or 501-683-8313.