Homeowners face dizzying new choices to fund improvements
Sonoma County homeowners seeking to add a solar energy system, replace that old furnace or install artificial turf soon will have an array of options to fund the improvements.
The county is witnessing a proliferation of government-sponsored programs that offer to finance various energy- and water-efficiency projects. But figuring out which option is best can be difficult.
Many homeowners already know about the 6-year-old Sonoma County Energy Independence Program, or SCEIP, which is available in each of the county’s nine cities and the unincorporated area. For little money down, the county-sponsored effort provides financing for various projects, with costs added to the homeowners’ property tax bills. Approved contractors complete the work, and owners pay back the borrowed funds over periods of 10 or 20 years with an annual interest rate of 7 percent.
Now three more separate programs are joining SCEIP to compete for residential projects, and a fourth offers financing solely for commercial work. Fees vary and interest rates range from just under 7 percent for a five-year loan to more than 8 percent for a 20-year loan.
However, none of the new residential programs currently are available throughout the county, as SCEIP is. For example, two new programs are taking applications today in Sebastopol and one is available in Windsor and Petaluma. None are yet available in Santa Rosa, though that may change this summer. Program officials said they hope to eventually operate countywide, but that depends on getting approval from each city council.
Sound complicated? Homeowners thinking about improvement projects first may benefit by contacting the Sonoma County Energy Independence Office, the government office that is gearing up to provide consumer information on the emerging marketplace.
“We’ll steer them to whatever resources we know of,” said Jane Elias, a community program coordinator for the county’s energy efficiency efforts.
The new residential financing programs include Santa Rosa-based Ygrene Energy Fund, San Diego-based Home Energy Renovation Opportunity, or HERO, and CaliforniaFirst, operated by Oakland-based Renewable Funding. The programs also offer financing for commercial projects, as does San Diego-based Figtree Financing. Each was authorized under state law by a government entity somewhere in California.
The programs belong to a financing approach known as PACE, or Property Assessed Clean Energy. The efforts began about six years ago with the idea that homeowners could improve their homes for virtually no money down. The expected savings in water and energy costs then could offset the increase in property taxes.
However, the fledgling programs hit a roadblock in 2010 when federal home loan regulators deemed them an added risk to the nation’s mortgage system. The regulators argued that in foreclosure, PACE liens on homes would take precedence over first mortgages. Federal regulations now limit PACE liens accompanying most mortgages. To date the rules have prevailed in court, while efforts to overturn them in Congress have failed.
In California, the PACE programs benefited in 2014 when the state set aside $10 million as a guarantee to protect banks from any mortgage losses tied to PACE programs. That guarantee is one reason for the programs’ expansion this year into Sonoma County.
However, PACE now isn’t the only financing option for energy- and water-saving work.
“SCEIP and the others like SCEIP have lots of competition now,” said Daniel Smith, a director at Zero Energy Associates, a Santa Rosa building contractor approved for the county PACE program.
These days some homeowners are finding more attractive interest rates outside of the PACE programs by refinancing their home mortgages or using a home equity line of credit to fund improvements. For solar systems, some banks and credit unions offer special loans, while another option is to lease, rather than own, the solar panels and other components.
“As a solar contractor, my job is not just solar but it’s also financing,” said Jeff Mathias, a partner in Sebastopol-based Synergy Solar & Electrical Systems.
The company offers four or five financing options to purchase systems, Mathias said, but for now SCEIP is its only PACE program.
For those interested in improving their homes’ use of energy and water, homeowner Abigail Smyth has some advice: “Ask lots of questions. Be an informed consumer.”
In 2011 Smyth and partner Bradford Rex bought a century-old home near downtown Petaluma. The home, she said, “didn’t have a lick of insulation” and was both drafty and noisy.
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