Some Marin residents interested in financing solar panels for their house — or other energy efficiency or water conservation improvements — have a new option.
The Marin Board of Supervisors and councils in Larkspur, San Rafael, San Anselmo and Fairfax have recently given the green light to residents in their jurisdictions to participate in a property assessed clean energy program. Called PACE, this CaliforniaFirst program allows homeowners to pay the cost of installing solar panels, or making other energy efficiency and water conservation improvements, over a period of 20 years as part of their property tax assessments.
CaliforniaFirst is sponsored by California Communities, a joint powers authority of the League of California Cities and the California State Association of Counties. California Communities generates the capital for the program by issuing bonds.
Assembly Bill 811 made the PACE program possible in 2008.
Objections from Fannie Mae and Freddie Mac — the government controlled companies that purchase mortgages from banks and then resell them to investors, thus making it possible for banks to make more home loans — prevented implementation of the residential side of the program in most of California until now. The concern was that the PACE tax assessments would be equivalent to liens on properties, which would have to be paid first, before other mortgage lenders, if a property owner defaulted.
“It would have been nice in the depths of the Great Recession,” said Fairfax Mayor David Weinsoff, introducing discussion of the program at a Town Council meeting earlier this month.
Cisco DeVries, CEO of Renewable Funding, said much has changed since PACE got its start “right in the middle of the housing crisis.” California Communities has selected Renewable Funding to administer the PACE program.
“We are in a place now where housing prices are more stable or increasing; people are investing in their homes,” DeVries said. “The fear that had gripped a lot of us has abated.”
In addition, DeVries said last year the state of California funded an insurance reserve that will cover any losses to Fannie Mae and Freddie Mac, or any other mortgage lender, in the event that a PACE lien impairs their ability to recover what they are owed.
Because of opposition to the PACE program from the Federal Housing Finance Authority, which oversees Fannie Mae and Freddie Mac, the PACE program launched in 2010 providing financing only to non-residential properties. DeVries said there were, however, some exceptions. Sonoma and Riverside counties proceeded with residential PACE programs despite warnings from the Federal Housing Finance Authority, as did communities in Florida and Colorado.
Today, DeVries said, “PACE has been adopted in some form or fashion in 21 states.”
In Marin, Marin Clean Energy, which competes with Pacific Gas and Electric Co. as a retailer of electricity, is serving as the liaison between CaliforniaFirst and homeowners interested in the program. Beckie Menten, Marin Clean Energy’s energy efficiency director, said homeowners who participate in the PACE program will see some or all of their costs offset by the energy savings generated by their solar panels and energy efficiency improvements.
The interest rate on the PACE loan starts at 6.75 percent and increases to 8.75 percent by the end of the loan.
“Those interest rates are not inexpensive,” said Fairfax Councilwoman Barbara Coler. “But it’s a good way to spread out the pain of something like this.”
Anyone interested in installing solar panels has several financing options these days. In addition to purchasing the panels, homeowners can lease panels with an option to buy later or enter into power purchase agreements with an installer. DeVries said the PACE program can incorporate any of these approaches.
Kim Fink, CEO of Sun First Solar, a solar power installer based in San Rafael, said the requirements for qualifying for the PACE program are fairly lenient.
“It doesn’t count against your credit score, which is a huge benefit for people whose debt-to-income ratio is too high,” Fink said. “It brings in a different group of people who otherwise might not be able to get solar.”
DeVries said since California is gripped by a drought now is also a good time to use PACE to pay for a new irrigation or rain catchment system.
There are various rebates available to people who make energy and conservation improvements to their home now. The county of Marin offers a $300 rebate to homeowners who complete a home upgrade project. The state of California offers up to $4,500 in rebates for energy efficiency projects. And CaliforniaFirst is offering a $500 incentive to homeowners whose applications for the PACE program are approved by Oct. 15.
Although people seeking to do something about climate change usually think first of installing solar panels, Menten said improvements such as home insulation or heating and cooling upgrades can also make a significant contribution.
Menten said, “They can also be the more cost-effective measures, so it can help you pay off your solar panel system.”
Read the full story here.
By Richard Halstead, Marin Independent Journal
