Supes take first steps to offer green loans in county

The Sonoma County Board of Supervisors took the first step last week toward offering green loans to homeowners by passing a resolution of intent to create the new Sonoma County Energy Independence Program (SCEIP). The supervisors will have a public hearing at their meeting on March 24 and will be poised to adopt the program.
SCEIP enables property owners to fund renewable energy, energy efficiency, and water efficiency upgrades to their businesses or residential properties through the property tax system. Participants enter into contractual assessments, which are paid back along with their property taxes over a period of up to twenty years. The SCEIP assessment is tied to the properties, not the owners, and is therefore passed from one owner to the next.
“This program is an innovative new way for people to make energy-saving improvements to their homes and businesses,” said Supervisor Valerie Brown. “The improvements will add value to their properties, provide energy and cost savings throughout their lifetimes, and help the environment,” she said. “It’s a triple whammy.”
Supervisor Paul Kelley said another benefit of the program is that it would create more green jobs.
Sonoma County would be the first county in California to create a program using authority granted under Assembly Bill 811. The cities of Desert Palms and Berkeley have both begun programs. The California State Assembly passed AB 811 on July 21, 2008 giving cities and counties authority to establish such programs.
Initially, only residents of unincorporated areas will qualify for SCEIP. However, all nine cities in Sonoma County, including Sonoma, have expressed a desire to participate, and the details are being worked out. The Sonoma City Council had passed a resolution indicating its interest to participate in SCEIP on Jan. 21 and Assistant City Manager Carol Giovanatto represents Sonoma on the SB811 Financing Committee.
Because the loans are paid back, with interest, the program is cost-neutral to the county. To start the program, the county would issue notes to the county treasury, which will in turn lend the money to program participants. The administrative overhead would be covered primarily through the “spread” between the interest rates paid on the notes and those charged to program participants. A preliminary report shows that an annual loan volume of at least $5 million with interest of 4 percent for two years would be sufficient to cover costs.
The program is straightforward – but still risky because it has never been done. It is hard to predict one major factor important for its success – interest rates. Low rates would attract more participants, but if rates jump up, that would be a deterrent and not enough people would participate to make the program viable for the county. It’s also uncertain whether the AB 811 bonds would be competitive on the bond market. The county is also seeking funding through banks and other institutions such as pension funds.
A wide range of projects would be considered for the program including installations that would save energy or water. Some examples include low-flow toilets, hot water pipe insulation, irrigation systems, waterless urinals, energy-efficient HVAC systems, geothermal exchange heat pumps, weatherproofing and window sealing. The loans would also finance the installation of solar panels. The county wants to move fast to get the program in place, to avoid a “cooling effect” as homeowners postpone projects, waiting to see if the program will pass.
Sonoma County has a stated goal of reducing community-wide greenhouse gas emissions to 25 percent below 1990 levels by 2015. Decreasing energy use is critical in achieving that goal. The loans would also finance improvements decreasing water use, even more important than ever with the county now in its third year of drought.
A copy of the detailed feasibility study on the program may be obtained at the Offices of the Board of Supervisors and County Administrator, located at 575 Administration Drive, Room 104A, in Santa Rosa. Property owners interested in taking advantage of SCEIP may place their names on an interest list by calling 707.547.1981. Applications will be made available online and at the SCEIP storefront, beginning March 24. The storefront is located at 404 Aviation Blvd. in Santa Rosa.