Financing for energy retrofits coming soon, but facing hurdles
on July 2, 2010
North Oakland homeowners may soon have incentives to insulate their walls, upgrade windows and install solar panels, thanks to a countywide program set to launch this fall. Through the Alameda County Energy Efficiency and Green Retrofit Program, owners of residential property in the county can get rebates for making energy-saving improvements to their property. They will also be able to get county financing to pay for the improvements, and then pay it back through their property taxes over a period of up to 20 years.
In what he called a “sneak preview of what we think is coming,” Bruce Mast, director of programs for Build It Green, one of the retrofit program’s numerous partners, introduced the complex scheme to some 70 contractors at Hayward City Hall on Wednesday evening, June 30. It was the first public meeting held to present the program, part of a statewide initiative called Energy Upgrade California.
“There’s a big tidal wave of money coming into the state for energy-saving home retrofits,” said Mast. “It’s a government-sponsored tidal wave so it’s moving at a glacial pace,” he joked, followed by chuckles from the audience, who listened intently to what could be a major boon to the green building industry.
“But it is eventually going to thaw, and when it does it’s going to be big, and hopefully we’re going to be ready,” Mast said. He estimated that between $500 million and $1 billion dollars will be funneling into California for energy retrofit programs over the next few years from the federal stimulus program, as well as state and local governments.
The goal of the Alameda County retrofit program is to help homeowners cut down their energy bills, and improve their indoor health and comfort, while reducing environmental impacts and creating jobs. The retrofit program, currently scheduled to begin in September or October, will set verifiable standards for energy efficiency retrofits, help train contractors to do the work, and offer financing and rebates to property owners who choose to participate. While some of these components already exist, like rebates for some home energy-saving measures, the program seeks to create a “one stop shop,” said Mast, “so contractors and homeowners can go to one place…and not have to chase multiple buckets of money all over the place.”
Program coordinators hope to get both contractors and homeowners thinking of the house as an integrated system, explained Mast, to determine the most appropriate energy-saving improvements in the right order. For example, he said, homeowners should think first about weatherizing their house, and then about harnessing renewable energy.
“We want to size [photo voltaic solar panels] to an efficient [energy] load, not to a system that’s wasting energy,” said Mast.
The incentives come in two packages. There will be a $1,000 utilityrebate for property owners who choose a basic package designed to “tighten up” the home — for example by sealing air ducts and insulating attics — and a rebate worth between $2,000 and $3,500 for owners who implement improvements that result in energy savings of 20 percent to 35 percent or more. (Owners cannot get rebates under both paths.) The rebates will be available when the retrofit program gets going this fall.
Homeowners will also have the option to finance retrofit work under CaliforniaFIRST, a statewide property assessed clean energy, or PACE, financing scheme. Under the PACE model, the county will provide financing to property owners, paid for through special bonds. The owner pays back the money as a line item on his or her property tax bill over a period of up to 20 years, depending on the expected life of the upgrade. If the owner sells his or her home, the obligation to repay transfers over to the new owner.
The funding mechanism was first piloted by the City of Berkeley in 2008 as a way to encourage homeowners to install solar panels. It has since taken off around the country as a way to help property owners spread out the cost of paying for expensive energy-saving measures. In California, in July, 2008, the governor signed AB 811 into law, allowing local governments to adopt PACE financing for energy-saving upgrades. A total of 14 counties and 127 cities, including Oakland, are now piloting the model under CaliforniaFIRST.
However, the program faces some obstacles, most notably from Fannie Mae and Freddie Mac, the government-sponsored enterprises that guarantee the majority of residential mortgages. Both sent letters to mortgage lenders in May, indicating they wouldn’t buy mortgages that carried energy-related liens—those resulting from PACE financing—according to a recent article in The New York Times.
The letters have put similar PACE programs on hold in places like San Francisco and Sonoma County. State and local officials, along with Oakland-based Renewable Funding—which administers the CaliforniaFIRST program—are working to straighten out concerns with Fannie and Freddie, according to Mike Marcus, regional program manager at Renewable Funding.
Though important to homeowners, the PACE financing mechanism is just one component of the county’s energy retrofit program. The program’s backers hope to help grow a new industry in green building improvements, which would create skilled, local jobs, said Mast.
“This is going to stimulate the economy if we do our jobs well,” Mast told the contractors at the event in Hayward. But he noted there are still kinks to be worked out before the program gets up and running. The package of basic weatherization measures that will trigger the $1,000 rebate is still being finalized, for example, along with numerous other details.
Eventually, program coordinators hope to have a single website where contractors can find out how to become certified under the program, and homeowners can find lists of contractors and file application forms. “We’re trying to make it as streamlined and convenient as we can,” said Mast.
At the Hayward event, contractors seemed hopeful that the program would take off. “I’m cautiously optimistic,” said Eron Ersch, a general contractor who works in Oakland and Berkeley. “It’s a very smart thing to do, it’s just painful to watch the [slow] government process,” Ersch said. However, he and several other contractors at the meeting expressed concern that the rebates offered would be too low to motivate homeowners to get the work done in this tight economy.
Emily Kirsch, lead organizer for the green-collar jobs campaign at the Ella Baker Center in Oakland, said she hoped the program would create new, well-paying jobs in the green economy. “People are ready and have the skills to enter into that economy,” she said. However, she regretted that the program wouldn’t be available to renters, who make up around 60 percent of Oakland residents, according to census data.
Readers can find basic information about the program, and sign up for updates, at http://www.acgreenretrofit.org/.
The California First website provides information about PACE financing.
Lead image: Trainees of the Oakland Green Jobs Corp relay solar panels up a ladder. Photo courtesy of the Ella Baker Center.
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This is Daniel Bell, I am a home performance specialist with Recurve. Recurve is the nation’s leader in home performance, I am the senior person on our auditing team, and I live in North Oakland.
As a small update to this story the original schedule for PACE in Alameda county was September 1st. However the story is right that given the mentioned delays a September or October time frame is more realistic.
For Oakland homeowners with specific questions about this program or home performance in general please email daniel [dot] bell [at] recurve [dot] com
PACE loans could be in trouble after Fannie and Freddie “vetoed” the program several days ago. Check out this story from the Wall Street Journal: http://online.wsj.com/article/BT-CO-20100706-713211.html
[…] who hire participating contractors to retrofit their houses as part of the Energy Upgrade California program are eligible for a reimbursement of up to $4,000. […]