Santa Cruz Good Times

Proposed solar financing program hopes to give Santa Cruz a boost

Solar technology is nothing new, but a new loan and incentive program is attempting to make it more worthwhile than ever.

Santa Cruz City and County leaders are supporting the CaliforniaFIRST plan, which would allow home and business owners to install solar panels and have the loan payments added to their property taxes. The program appeals to home and business owners who might have difficulty qualifying for a traditional loan. Owners would pay back the loans over a period of up to 20 years. The loan remains with the building and is paid through property taxes, even if the owner decides to move.

In addition to cutting greenhouse gas emissions and energy costs, supporters also say the plan would provide a much-needed boost to Santa Cruz's construction companies.

“It’s a pretty significant job program to jumpstart the construction industry,” says Councilmember Ryan Coonerty. “There are a lot of people who aren’t working right now. This would be a great way to put people to work in an environmentally beneficial way.” First District County Supervisor John Leopold says that the program could bring in $60 million in construction projects in its first two years.

Additionally, local non-profit Ecology Action estimates that if a little over 1,840 homeowners installed solar panels locally, the county would reduce greenhouse gas emissions to pre-1990 levels in the residential sector. The reduction would meet the guidelines outlined in Assembly Bill 32, which sets environmental standards for communities to meet by 2030.

California Communities, a statewide organization, and Ecology Action are hoping to secure some federal stimulus money to help finance the CaliforniaFIRST proposal. Ecology Action has applied for a grant from the California Energy Commission, which is in charge of allocating and distributing the state's share of federal stimulus money intended for green energy purposes. The grant would pay for some of CaliforniaFIRST's start-up and administrative costs and lower the loan program's interest rate to 7 percent, from its current rate of 9 percent—an amount that garnered some criticism after announced.

Counties and cities are banding together under the proposal in hopes of creating a program that could bring more affordable energy to thousands. Gine Johnson, executive director of Ecology Action, says their strength lies in numbers. “The proposal is partnering over 160 jurisdictions, 14 counties, and 146 cities,” says Johnson. “That is 25 percent, roughly, of all the cities and counties in our state. It's unheard of. You usually don't have that many municipalities cooperating on a proposal.”

Coonerty, Leopold, and Assemblymember Bill Monning all say CaliforniaFIRST's statewide support bodes well for the plan.

Many city and state politicians have expressed urgency that the interest rate be lowered to 7 percent in order to make it more affordable, but some households could save money even at an interest rate of 9 percent. Johnson says that a family or business with an energy bill of over $120 would experience a net savings through the plan. She added that conventional electricity costs typically go up 6 to 10 percent every year.

For people interested in lower interest rates, there are other options. The Santa Cruz Community Credit Union (SSCU) offers a variety of variable loans. A homeowner with what SCCU senior loan officer Erica Madriz calls “excellent A+ credit” would qualify for a variable loan with the interest rates currently at about 3.75 percent. Those rates increase slightly and fluctuate with the national interest rates set by the Federal Reserve. She adds that they have been offering green loans for three years and typically make five to 10 deals a month.

Joel Kauffman, vice president of Real Goods Solar, thinks people should take advantage of such opportunities while currently available. “Prices are at historic lows,” he says. “I’d actually do it now. I wouldn’t wait.” He says the prices of panels have come down 50 percent in the past year, and his contracts have decreased in price from $20,000 to $40,000 to $10,000 to $20,000.

Solar users are also eligible for additional incentives from the state and federal government. “The prices are just so cheap with a 30 percent federal tax credit, a state rebate, and recent plummet in solar panel prices,” Kauffman says. “I think the price actually will start going up soon.”

While the SCCCU’s loans, currently available, have a lower interest rate, the CaliforniaFIRST deal may be better suited for people who don't have the credit score to secure a typical loan. By allowing people to pay off the loan through their property taxes, CaliforniaFIRST hopes to open up the possibility of solar energy to more people. Still, the high interest rate, in comparison with businesses like the SCCCU, may remain a concern.  “I don't think they realized how expensive it is in the long run,” says Madriz.

Johnson from Ecology Action called the SCCCU a “great partner” but added that CaliforniaFIRST has different goals in mind. “Some folks would prefer to have a loan from a credit union. Some folks would prefer to get a loan and put the loan on their tax bill for 20 years,” says Johnson. “They're two different kinds of loans, but they accomplish the same thing, and they aren't competing with one another. They just appeal to different people for different reasons.”

Monning hopes the plan will compete with loans through competition in the private sector and drive down the price for green loans.

The main priority for the bill's supporters, though, is that it provide a service to people who might not otherwise seek one, people who would not qualify for a traditional loan, people who might not stay in their home long enough to pay off the costs. “We’re not really interested in creating a product that competes with the private sector,” says Coonerty. “The Santa Cruz Community Credit Union is performing an excellent homeowner’s loan. We’re trying to provide an affordable option for people who, for whatever reason, don’t have equity in their home or won’t see the long-term benefits of these costs. So, we’re trying to create a product for that perfect niche.”

The plan should be much more successful if the California Energy Commission approves the use of stimulus money to lower the interest rate to 7 percent. At press time, the California Energy Commission had not announced whether the proposal and low interest had been approved. Johnson and the Ecology Action grant-writing team, who worked tirelessly on the proposal, and the counties and cities of California have their fingers crossed. “I think it's compelling, and I think it's well written and I think that we are in very good position,” says Johnson. “Beyond that, I'm knocking on wood.”

Monning says the plan could still offer tremendous benefits for the construction industry, the environment and homeowners, even with an interest rate of 9 percent.

“Even if there's a savings at 8 or 9 percent, it's still worth doing it. If you bring it down to 6 or 7 percent, there's just greater savings,” says Monning. “For a family, the real question is: 'Are you saving money?' If we can get the interest rate down, there's more savings and that's better.”

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