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A $2.5 million state grant to Sonoma County highlights the innovation brought by the county's energy financing program, but it will impose restrictions on loans to property owners.

The funding from the state Energy Commission — one of only five such grants in the state — will position the county's Energy Independence Program to become a model for other governments. It encourages property owners to cut energy use by installing solar panels, more efficient windows and better insulation.

But later this year, property owners looking for county-backed loans on energy saving projects will face restrictions that applicants did not encounter in the first year of the program. Chief among them will be a required audit to find whether the retrofit work actually will cut energy use.

"If somebody is going to ask for a solar unit, they will need to show that they will achieve a 10 percent reduction in energy use," said John Haig of the county's General Services Department. "This helps homeowners to get a full picture of the energy efficiency modifications they should be making."

During the program's first year, county supervisors were reluctant to require energy audits of homeowners because, at a cost of about $600, they were seen as discouraging home improvement projects costing less than $20,000.

But advocates of audits argued that the loan program was of little value for homeowners and contractors unless it could be shown the energy retrofit work would deliver benefits to the environment.

Haig said county officials intend to use some of the state grant to subsidize audit costs but have not yet determined a formula. Funding also will be used for public outreach efforts and water conservation programs, he said.

Other changes include:

<BL@199,12,11,10>Putting a cap on loans by mandating that the sum of all property liens plus project costs not exceed 110 percent of the property's assessed or market value, whichever is greater. Previously, there was no limit. When this restriction was imposed in early February, county officials said 20 pending project applications were rejected.

<BL@199,12,11,10>Requiring upfront payment of deed recording and title search fees, which can reach almost $200. Withdrawal of applications after the paperwork has been completed has cost the county about $20,000, county officials estimated.

A statewide program could include those elements as well as others, such as credit checks.

In its first year of operation, the program gained national acclaim, and it was trumpeted by county officials who attended last December's international climate protection conference in Copenhagen, Denmark. It allows property owners to borrow money at 7 percent interest for energy-efficiency improvements and pay it back in installments on their property tax bills.

As of early February, the program had approved 885 applications for projects worth more than $19.3 million in energy and water efficiency improvements. Solar panel units dominated the list of improvements with lesser demand for window replacements, insulation and roof replacements.

About a third of the program funding has been awarded to property owners in the 5th Supervisorial District, which includes the west county and west Santa Rosa. The district's share is $5.7 million out of the total $19.3 million in projects.

The smallest portion, $2.2 million or 12 percent of the total, has been awarded to residents of teh 2nd District, which covers the south county, including Petaluma.

Cordel Stillman of the county Water Agency, which co-sponsors the loan program, said officials will host monthly education sessions for the public.

They will be held at 5:30 p.m. the first Tuesday of each month at program offices at 404 Aviation Blvd., Santa Rosa.

Information also is available at the program Web site, sonomacountyenergy.org.