AB 811 energy project loans to property owners

AB 811 provides all California cities and counties with the ability to offer low-cost loans to property owners for Energy Efficiency (EE) projects and solar panels, similar to loans from commercial banks. The intent of the legislation is to not only reduce the cost of energy to the individual consumer, but also reduce the overall consumption of electricity, to reduce the amount of Greenhouse Gas Emissions, as mandated by AB 32 and SB 375.

Basically, if adopted by a city, AB 811:

  1. provides low interest rate loan (so far at 7% amortized over 20 years) from the City attached to your property that resides within that city’s limits and to be paid every six months through / along with your County property tax payment;
  2. is earmarked ONLY for and covers MOST energy efficiencies and renewable energies available to the public;
  3. Requires NO credit check and can pass to new owners of property without future credit checks through title transfer at escrow.

In addition to various rebates, the high up-front costs of installation are reduced for the property owner, who then pays back the loan with the presumed savings achieved through energy efficiency or a solar system. The loan is repaid over a fixed period of time (generally over a 20 year period) via an assessment on the property tax bill.  The loan in not a personal loan, but is a lien on the property, which remains with the property if the property  owner sells the property.  While this financing has often been characterized as “solar financing” it is in fact available for energy efficiency projects such as insulation, double-paned windows, efficient HVAC systems, water heating systems, swimming pool pump systems, “cool” roofs, i.e. projects that are permanent fixtures of the real property.

The City of Berkeley initiated its “Berkeley FIRST” program in 2008 with up to $1.5M in bonds purchased by a financial institution, which also acts as the third party administrator for the program.  It has limited its initial program to 40 applicants and provides loans only for solar projects.

The City and County of San Francisco adopted an identical special tax financing code using its charter powers. Under the special tax financing model, property owners pay for authorized improvements through a special tax levy on their property tax bills.  Participation in the program is voluntary.

The Sonoma County Energy Independence Program (the first county to develop an AB 811 program) has funded its first clean energy loan.  The loan of $25,500 went to homeowners to pay for a 5 kilowatt photovoltaic system; net of an $8,200  California Solar Initiative rebate and 30% tax credit on the remaining system cost.  All Sonoma County cities and towns will be eligible to join the program.

The City of Novato is in the initial stages of considering an AB 811 loan program.

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