As we mentioned early last week,San Francisco is launching a $150-million innovative loan program tohelp homeowners and businesses finance “sustainable buildingimprovements.” Improvements that are eligible will include insulationupgrades, the replacement of old windows, the installation of low-flowtoilets and (drumroll please….) the installation of solar electric panels and solar water heating systems!
For the benefit of you San Francisco-based readers,here’s a quick overview of the program, aptly named GreenFinanceSF. Younon-San Francisco folks, don’t worry: many other municipalities,counties and states are adopting a similar approach to encourageresidents and businesses to install solar, weatherize their property,etc.
How does it work?
Short answer: The city will loan cash to individuals and businesseswho agree to repay the funds through a special tax levied against theirproperty.
What types of properties will be eligible?
Residential and commercial buildings of all sizes. According to theprogram’s website, city officials are still finalizing projectqualification criteria. One consideration to keep an eye on: theproperty owner’s tax and mortgage payment history. It’s likely — andreasonable — that funding will be made available only to those who havepaid their property taxes on time for the past, say, three years.
Over how many years will the funds will be repaid?
The tax payment period will be indexed to the expected useful lifeof the improvements. In the case of photovoltaic (PV) systems, thatprobably means a period close to the program’s maximum payback windowof 20 years.
How is it “innovative”?
Solar energy systems — particularly solar PV systems — cost a lot upfront but deliver savings and other benefits over the long haul (we’retalking decades). By tying the loans to the property itself — ratherthan the owner — the program promises smoother transitions in the eventthe property is sold.
Also, consider that this is a lending program that arguably yieldssome broader benefits to the local community. Water-efficiencyimprovements, for instance, may reduce demand/stress on the local waterauthority. As such, it makes sense — at least at the intuitive level —that the funds should benefit the lending entity.
Where’d this idea come from?
The City of Berkeley, California in 2007 launched what was called the FIRST Solar Financing program,a pilot that financed the installation of solar energy systems. Theprogram centered on Property-Assessed Clean Energy (PACE) projectfinance, an idea that has since gained popularity among Californiacities and counties — and, as noted above, is now being adopted byother state and municipal governments across the country. (Read more from UC Berkeley’s Renewable and Appropriate Energy Laboratory.)
Any other major considerations?
To participate, property owners will have to get a whole home energyaudit, the cost of which may be included in the amount borrowed.
IMPORTANT NOTE FOR SOLAR BUYERS: “energy efficiency improvements are required prior to the financing of solar PV projects.” This is a best practice designed to maximize the performance of (and return on) your solar PV installation.
Can participants use any contractor?
Again, the city is still deliberating. According to the program’sWeb site, the program’s objective is “to establish a ready supply ofworkers skilled in the energy and water projects common to SanFrancisco building types, with linkages to workforce developmentprograms in an effort to grow our local green economy.”