Santa Rosa’s Ygrene Energy Fund has received a $30 million investment to expand its operations nationally and spread the word about its business model, which helps property owners install green energy systems without huge upfront costs.
The infusion of money from Virgo Investment Group also will allow Ygrene to grow its contractor network, a vital conduit to alerting property owners to its service, said Stacey Lawson, president and CEO at Ygrene.
Virgo is the first institutional investor in Ygrene, which previously raised $15 million from private investors, Lawson said.
Ygrene has been at the forefront of using a financing approach called “property assessed clean energy,” or PACE, that allows property owners to borrow money for energy-efficient projects with repayments tied to their property tax bills. The minimum cost is $2,500, but the average loan for Ygrene is $26,000, Lawson said.
Virgo partner Mark McNair said in a statement that Ygrene was unique within the industry because of its success in both the residential and commercial markets. It is the only company funding projects in multiple states, which include California, Florida and Georgia, he said.
“We want to make sure our growth is well orchestrated,” Lawson said. “We’re in conversation with a whole host of counties.”
Lawson declined to reveal how much lending Ygrene has so far financed, but said the company has completed 200 projects and has a potential pipeline that would total more than $100 million.
Some analysts have questioned the viability of PACE residential projects after the Federal Housing Finance Agency in 2010 expressed concern about the financing tool as overseer of Fannie Mae and Freddie Mac, which own or guarantee more than half of the $13.3 trillion U.S. mortgage market.
FHFA issued guidance saying the structure of the PACE assessments would give PACE lenders priority in repayment over a home loan in the event of foreclosure or a sale, potentially causing problems for lenders. The 9th U.S. Circuit Court of Appeals upheld FHFA’s authority last year.
Lawson said the industry has adapted by adopting more rigorous underwriting standards and additional notices to borrowers warning that they may be asked to pay off the PACE loan if they sell their property.