OurGreenJourney, May 20, 2009
Sonoma County has funded its first clean energy loan secured by a lien on property taxes. As we have posted before, the Sonoma County Energy Independence Program is California’s first county wide energy efficiency financing district, authorized by AB 811.
The loan of $25,500 went to homeowners and paid for a 5 kilowatt photovoltaic system, net of an $8,200 California Solar Initiative rebate, and 30% tax credit on the remaining system cost. And it’s reported that there is already $6 million worth of applications for more loans from the programs.
During the Urban Land Institute’s Developing Green Conference last week, the participants talked seriously about the critical milestones that would affect the success of this funding mechanism:
The additional property tax liens created by these loans might disturb some commercial real estate lenders who might see them as a threat to the priority of their loan.
Several folks felt that lenders might become more relaxed about this when they compared the actual loan size to their own mortgage loans (very small), as well as the fact that the loan might accomplish energy efficiency retrofits which upgrade the property – and possibly even its cash flow and value. Note that Sonoma County’s program tells commercial property owners to get the approval of their lenders before applying for their loans.
We’re all still waiting to see that the bond markets will buy paper based on these types of loans, their terms, pricing and conditions. That acceptance is needed to bring increased secondary market liquidity to these funding mechanisms. Without it, these size programs will remain too limited to have much environmental impact and potentially just wither on the vine.
Homebuilders and homeowners should think for a second –> what does it mean for home prices in those areas where homeowners have direct access to easy credit for clean energy systems, energy efficiency retrofits, not to mention some pretty good rebates and tax credits?
Do you think that easy access to this type of green financing (and the benefits of the retrofits that it enables) makes it harder for other property owners to sell their unretrofitted properties at market rates? Will more homebuilders have to build green homes to compete?
Yes, AB 811’s gonna keep things interesting — and good — for a while.