Berkeley Solar Financing Plan Model for Other Cities To Help Residents Go Solar
By Dave Room
This article was originally posted on EcoLocalizer, part of the Green Options Media Blog Network. Visit EcoLocalizer for more news on local environmental action.
Cities can develop their own renewable energy and energy efficiency finance programs suited to their residential and commercial needs. For instance, in November 2007, the Berkeley City Council authorized staff to develop a plan to pay for the installation of solar panels and solar hot water systems for any homeowner or commercial building owner. Property owners retain ownership of the solar systems, paying back the cost over 20 years through an assessment on the annual property tax bill. This program entails little risk on the part of the city or the building owner, and overcomes a common obstacle of a costly up-front investment which may take more years to recoup savings than the owner intends to keep the building.
Once accepted into the program, a property owner would schedule an appointment for a solar installer to determine the appropriate solar system for the property. The city would pay the homeowner for the system and its installation, minus any applicable state and federal rebates, and would add a special tax to the property owner’s tax bill to pay for the system.
The building owner would immediately begin saving money on electricity bills without incurring the upfront cost of installing a solar system, and the interest portion of the assessment may be deductible on the owner’s federal income tax return. When the building is sold, the solar array and the tax assessment remain with the property, passing on to the new owner.
Berkeley is working out the legal and financial details and expects to start a pilot plan in 2008. The city is working with banks and credit unions to provide low interest rate financing. Since the property tax assessment will act as a lien, financiers would be first in line to collect in the event a property owner defaults. The current plan works best for owner occupied buildings or buildings where the owner pays utilities. It does not work well for buildings with renters – about 57% of Berkeley’s population, according to the 2000 Census – who pay their own electricity bill.
Another option is to work with redevelopment districts to help finance solar installations and energy efficiency measures. Redevelopment districts spend local taxes in the same neighborhood where they are collected to meet specific neighborhood goals. One of these goals is keeping the cost of living affordable for existing residents in the neighborhood. For instance, it can be challenging for low-income seniors who own their homes to pay higher property taxes if the value of property in the area increases. Decreasing the cost of utilities through energy efficiency audits, upgrades, and installing solar panels can help keep the cost of living affordable for low income residents. The Oakland City Council has already granted funds to the nonprofit Grid Alternatives to install solar PV panels on several homes – either owned by low income residents or a non-profit – in the one of the city’s redevelopment areas.
Tags: berkeley, california, financing, news, Solar and You
