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Nearly two years after it launched amid national media attention, Santa Rosa's Ygrene Energy Fund has financed its first projects for making older buildings green.

The company, which fashioned its business after a program pioneered by the County of Sonoma, is providing financing and administration to retrofit homes and commercial buildings in Sacramento and Miami. The public/private programs allow property owners to install solar electric systems and other energy- and water-saving improvements, with borrowers repaying the debt on their property tax bills.

Ygrene officials have set an ambitious goal. The company hopes to retrofit 100,000 homes and commercial properties in the next five years.

Such an accomplishment would amount to more than $2 billion in projects, said Ygrene CEO Stacey Lawson. She said it would create 45,000 jobs and reduce greenhouse emissions by 360,000 tons — equivalent to taking more than 75,000 cars off the road a year.

"I feel like this is an enormous opportunity to have a big social benefit," said Lawson, a 2012 North Coast congressional candidate who has 20 years experience in manufacturing, technology and clean energy. "And we are creating thousands of jobs."

Ygrene made headlines in 2011 when The New York Times highlighted the company's collaboration with such high-powered allies as Lockheed Martin and its endorsement by the Carbon War Room, the nonprofit environmental group co-founded by British billionaire Richard Branson. Supporters said Ygrene's approach offers an innovative way to make billions of dollars worth of green improvements with no up-front costs to property owners.

But even then, the idea of linking property taxes to home retrofits had a dark cloud hanging overhead. And the outlook became even more uncertain this year after federal housing officials won a legal battle against Sonoma County that strengthened their opposition to such financing — an approach, they claim, that saddles mortgage lenders with added risks.

Amid the uncertainty, climate change activists and government officials already are exploring other ways to finance retrofit projects. One approach, now under consideration by both Marin County and the state Public Utilities Commission, would use utility bills, rather than property taxes, as the means for repaying the privately financed debt used to finance to the improvements.

Which method proves the more successful remains to be seen.

The financing approach used by both Ygrene and Sonoma County is known as "property assessed clean energy," or PACE.

The Sonoma County Energy Independence Program in 2009 became the first countywide PACE program in the nation. It since has financed $63.6 million worth of improvements to nearly 1,900 county homes and 60 commercial properties.

Ygrene has two direct connections to the county program. First, Rod Dole, the company's co-chairman, is the retired county auditor, treasurer and tax collector who led the team that developed the local PACE program.

Second, Ygrene founder and chairman Dennis Hunter previously co-founded a green energy financing program in Sonoma County with the participation of four banks. That work led, in part, to the inception of the county's Energy Independence Program, according to Ygrene materials presented this year to Mendocino County officials. After the county program began, Hunter put together a team to create a scaled-up national PACE program.

Ygrene works with cities and counties to form special districts that provide the means for borrowers to repay the cost of green retrofits on their property tax bills.

Ygrene proposes a "turnkey" operation with no cost to government. It offers to manage the program, oversee the private contractors making the improvements and even reimburse the cost of government staff time needed to form the districts.

In January, the city of Sacramento and Ygrene announced the launch of Clean Energy Sacramento. Since then, Ygrene has touted financing the largest PACE project in history — a $3.16 million commercial retrofit in downtown Sacramento. Ygrene reported in July that it had another $10 million in pre-approved applications for the city.

And in June the company financed the first PACE project in the state of Florida. Ygrene funded a "hurricane resiliency" project for a commercial property in Miami, with a second project then in process for funding. The two projects would total more than $210,000.

Along with Sacramento and Miami-area municipalities, Ygrene is working with Sacramento and Yolo counties, Atlanta and a collection of local governments in Riverside County, said Lawson, who joined Ygrene nearly a year ago.

Hunter, who co-founded Sonoma National Bank in 1985 and has extensive experience in real estate development, acknowledged the pace can seem slow to win government approvals and open offices for running the retrofit programs. Even so, he said, Lawson and her staff of nearly three-dozen employees have "exceeded my expectations."

And while the company goal of 100,000 retrofits may seem like a big number, Hunter said it is "a pretty small piece" of the potential homes and commercial buildings nationwide that could benefit from retrofits.

Mendocino County supervisors this spring considered Ygrene's program but in June voted 4-1 to drop the idea. According to the Ukiah Daily Journal, supervisors expressed concerns over how federal housing objections toward PACE programs might affect both homeowners and local banks.

Barclays Bank originally was part of Ygrene's consortium but since has ended its relationship, Lawson said. Without naming its lenders, she maintained that Ygrene has a "wide range" of regional and national banks that are willing to provide capital for the programs.

The interest rate Ygrene charges on home projects varies from 4.95 percent for a five-year loan to 6.95 percent for a term of 20 years, Lawson said.

PACE programs offer an attractive selling point for property owners: the ability to reduce their carbon footprint without spending any money out of pocket. The savings on their energy and water bills are supposed to offset the annual costs of the retrofits.

Even so, PACE efforts remain fledgling around the nation.

To date about 170 commercial projects across the U.S. have received $33 million in improvements, according to a June report by the nonprofit PACENow. Another $71 million are reportedly in the pipeline.

"It's been really hard to get projects (on commercial buildings) funded," said Joseph Katz, who authored a March study on the state's PACE programs for the University of San Diego's Energy Policy Initiatives Center. Success, he said, will require getting bankers more comfortable with financing such improvements.

The challenges can be even greater on the residential side.

In 2010 Fannie Mae and Freddie Mac told lenders they no longer would purchase home loans for properties with an outstanding PACE loan. Together, the two federally sponsored housing enterprises own or guarantee more than half the mortgages in the U.S.

The PACE programs pose a dangerous risk to mortgage lenders, according to federal officials. In the event of a default, the PACE loans are structured in a way that gives them priority in repayment over a normal home loan. The officials contended such an arrangement can alter the value of mortgage-backed securities linked to the affected home loans because of the uncertainty surrounding potential foreclosures.

Sonoma County officials strenuously disputed the federal position and that same year sued the Federal Home Finance Agency, conservator for Fannie Mae and Freddie Mac. But this March the 9th U.S. Circuit Court of Appeals upheld the federal action.

Ygrene officials insist the court ruling isn't a cause for worry for homeowners. The company still can do a brisk business in residential retrofits, said Dole, the former county official.

"I don't think I would rank it a significant disruption," Dole said.

Others paint a different picture. The news site Green Tech Media noted that residential PACE programs were cut short or canceled in 23 states after the 2010 federal announcement.

And PACENow said in its annual report that after the federal announcement, most of the PACE programs shifted from residential to commercial projects. In the current uncertainty, it recommended that homeowners seeking a PACE loan obtain "a full understanding of the possible consequences," including the possibility their current lender could find them in breach of their mortgage agreement — a finding that theoretically could require them to immediately pay back the home loan.

"Based on the (Federal Home Finance Agency) decision, it's been difficult to get much traction for residential PACE" projects, said Brad Copithorne, director of clean energy financing solutions for the Environment Defense Fund in San Francisco.

As a result, environmental groups are exploring and promoting new financing options for energy-saving projects.

Copithorne said his organization backs a method known as "on-bill repayment." Under this model, private financing is used for retrofits and property owners pay the debt back on their monthly utility bills. The state Public Utilities Commission is considering such a program for commercial properties, and the Marin Energy Authority may start a pilot program for both residential and commercial buildings.

"This can be a solution for the residential market," Copithorne said.

Even Sonoma County is exploring new ways of financing energy retrofits, said Liz Yager, the county's energy and sustainability manager. Officials "absolutely" will examine on-bill repayment as a possible option, she said.

The county's energy program, said Yager, "is more than PACE now."