A novel program, to make it easier for property owners to finance renewable energy and efficiency has been launched in Yolo County. Improvements can be financed with loans that are paid pay back as part of property taxes over as much as 20 years. The program, now going nation-wide, is called PACE (Property Assessed Clean Energy.)
The local portal is http://www.cleanenergyyolo.com Both of City of Davis and Yolo County have agreements with Ygrene Energy Fund to operate the program here. Other organization, such as Home Energy Renovation Opportunity, or HERO, and CaliforniaFIRST, may enter the field.
Property owners may install solar panels, double-pane windows and other other upgrades, such as replacing heating and cooling equipment. Like property taxes, the payments are deductible. Ygrene also connects the property owners with a network of contractors, vetted by Ygrene, to perform the retrofit work.
“We are excited to partner with Ygrene to bring the Ygrene Works PACE financing program to additional cities and counties across the state of California,” said Greg Norton, executive director of the Golden State authority, in a prepared statement.
“We look forward to continuing to lead the efficiency revolution with communities across the state ” said Stacey Lawson, president and chief executive of Ygrene.
Since it was approved by the Sacramento City Council, the program has already spread to Sacramento County, as well as Yolo and Butte counties.
According to Ygrene, the program has financed $57 million worth of retrofit projects in the region. For instance, the Metro Center office park on Gateway Oaks Drive in Natomas undertook $3 million worth of improvements, including a new chiller, cooling tower and water treatment system. The result: $140,000 a year in savings, or 27 percent, according to Ygrene.
The program also has been used by homeowners in Sacramento and Davis, according to Ygrene.
Sonoma County is redoubling its effort to offer financing to property owners who want to upgrade their homes and businesses with energy- and water-saving retrofits. The county and the city of Sebastopol have signed off on a new plan allowing private companies to join the local market for the first time.
Sonoma County created the nation’s first countywide initiative, known as the Sonoma County Energy Independence Program, in 2009. It allows property owners to borrow money based on the assessed value of their property, and repay it over time on their property tax bills.
Now, two new companies will join the county in offering financing to pay for home and business retrofits, such as installation of solar panels, energy-efficient appliances and gray water systems. To date, the county has loaned more than $45 million to property owners for nearly 4,000 upgrades — a sliver of what Sonoma County officials say is needed to fund ambitious greenhouse gas reduction goals.
With only $15 million remaining in county lending coffers, the Board of Supervisors has launched a new financing marketplace that invites for-profit companies to begin offering money to property owners within county boundaries. Referred to as Property Assessed Clean Energy, the programs have skyrocketed in California amid growing consumer demand for energy-efficient products and increased concern about the impacts of climate change.
The county’s program will remain in place, with the total borrowing in the county treasury fund capped at $60 million. County officials said the new companies joining the local market — called Home Energy Renovation Opportunity, or HERO, and CaliforniaFIRST — will help the county meet its goal of retrofitting 80 percent of the roughly 180,000 existing buildings in the county with a 30 percent efficiency improvement.
“This county has taken a leadership role in developing PACE programs, and we’re being looked at by the rest of California and the nation,” said Supervisor Shirlee Zane, who has been at the forefront of implementing the county’s effort. “Now, we’re shifting our role to be more of a conduit for these programs, and working with other companies will allow us to meet our climate change goals.”
Sonoma County has set a goal of reducing greenhouse gas emissions to 25 percent below 1990 levels by 2015 — further than state greenhouse gas emission targets set in 2008 under the Global Warming Solutions Act, which calls for the state to reach 1990 emissions levels by 2020.
The Obama administration recently recognized Sonoma County for its climate change goals and greenhouse gas reduction targets, along with 16 other jurisdictions throughout the country, from Boston to Minneapolis to San Francisco.
The county is home to Santa Rosa’s Ygrene Energy Fund, a national residential and commercial PACE provider, but the firm does not operate locally.
Financing companies have been eying the growth in PACE programs across the state and throughout the country. Representatives for HERO said momentum is building, particularly in California, for market-based solutions to rising energy costs.
“We’re seeing a lot of this growth in Northern California,” said Blair McNeill, vice president of community development for Renovate America, HERO’s parent corporation. “It’s great that we’ll get to come into Sonoma County — it’s really seen as the godmother of PACE programs.”
The Board of Supervisors approved agreements, required to allow HERO and CaliforniaFIRST to operate in the county, in October. The Sebastopol City Council followed shortly after, signing off last month. The Sonoma City Council is expected to take up the matter Wednesday.
“This is a new game,” said Supervisor Susan Gorin, who takes over as board chairwoman Tuesday. “I think there’s a synergy in the marketplace for these programs, and we’re excited to provide a platform for strategy and information.”
McNeill said HERO, which is based in San Diego and already operates in neighboring Bay Area counties, is vying to expand throughout Sonoma County.
“We’ve been active in talking to local officials from other cities,” McNeill said. “We want to let cities know that this comes at no cost to them. It’s really about providing consumers with options to choose more efficient products, whether that’s renewable energy products like solar or wind, or something as simple as new windows.”
County officials said increased competition, with three PACE providers in the county, will benefit consumers by driving down interest rates for the energy retrofits, which function as liens placed on properties. To date, Sonoma County has funded 60 commercial projects with $10.8 million in county financing, and nearly 2,000 residential programs with more than $53 million.
“We were the first to do this, and now we’re hoping we can get more financing availability and more choices for consumers,” said Jane Elias, program manager for the county’s Energy Independence Program. “We’d have a limit of $60 million, and we need $2 billion to do all the retrofits we need to make in order to meet our climate change goals.”
In addition to more choices and more competitive interest rates, Elias said more companies doing business in Sonoma County will create more local construction-type jobs.
Officials have already calculated the trickle-down effect of the county’s Energy Independence Program. Since 2009, when SCEIP was rolled out, companies that contract with the county, while carrying out the retrofits, have hired more than 81 new employees. And the local economy was boosted with nearly 1,500 more jobs from economic activity, according to county figures.
Jeff Mathias, co-owner and CFO of Sebastopol-based Synergy Solar and Electrical Systems, Inc., said since its inception, SCEIP retrofits have increased the company’s sales and allowed him to add staff while providing increased work stability.
“We’re having the best year we’ve ever had,” Mathias said. “I’d say on average, we do $300,000 more in sales each year because of SCEIP.”
Mathias said SCIEP, and the two other PACE providers that entered the market this year, also benefit property owners because energy- and water-efficient upgrades lower energy bills and increase tax incentives. He said upgrades allow people to write off the interest when filing taxes and give property owners other federal tax breaks for solar installation projects.
“It’s like a piggy bank,” he said. “Energy costs are more fixed, and you get the federal tax credits. Plus, it has the added benefit of helping lenders reduce their carbon footprint.”
While local contracting companies welcomed PACE programs because the programs help them create jobs and retain work, the lending practice has not always been met with praise. Critics have argued the practice would chip away at the amount of money borrowers would qualify for when taking out a home loan.
In 2010, the Federal Housing Finance Agency expressed concern that in the event of a foreclosure or sale, PACE lenders would have priority over Fannie Mae or Freddie Mac, which own or guarantee more than half of the $13.3 trillion mortgage market in the United States.
As a result of such concerns, FHFA, which oversees Fannie Mae and Freddie Mac, directed the lenders not to underwrite mortgages for PACE customers, largely freezing residential programs until a compromise last year.
Synergy Solar and other companies in Sonoma County, many of which have worked with SCEIP, already are seeking work under new contracts with HERO and CaliforniaFIRST.
Jon Diamond, co-owner of Santa Rosa-based Moore Heating and Air Conditioning, is readying for the expansion. Diamond said he’s already been working with both programs in Marin and Napa counties and has hired dozens more employees to keep up with demand.
“We’re very excited about working in our backyard — we’re local boys,” Diamond said. “We see it as a huge opportunity to create jobs in our community.”