Solar plan for San Diego

Sanders promotes financing program

By Mike Lee
STAFF WRITER

December 5, 2008

San Diego Mayor Jerry Sanders will today roll out one of the most aggressive plans in the nation to help homeowners and small businesses buy solar power systems.

The program, authorized in July by a new state law, would allow residents to pay for solar panels through their property tax bills over 20 years. The privately financed loans would carry a fixed interest rate and could be transferred when a property is sold, eliminating a common fear that homeowners have about paying for a system they no longer own.

“I don't see any barriers. It's the perfect solution,” said Irene Stillings, executive director of the nonprofit California Center for Sustainable Energy in San Diego, which coordinates financial incentives for solar installations.

“What this does is give an immediate positive cash flow to the homeowners because they are going to be able to see these incredibly lower utility bills,” she said.

Generally, federal and state tax benefits for solar power will apply to properties enrolled in the city's financing program, Stillings said.

Starting Jan. 1, the federal government will dramatically raise its incentives: It will provide a 30 percent tax credit for residential and commercial solar installations and cancel the existing $2,000 tax-credit cap for residential projects.

Solar experts said San Diego's approach could dramatically increase solar installations because the upfront cost is the biggest hurdle for most individuals considering alternative energy sources. Solar panels commonly cost about $25,000 for a single-family residence.

San Diego officials expect to start with a few hundred homeowners by fall 2009 and later expand to thousands of houses and businesses.

Berkeley and Palm Desert have similar programs, but San Diego would be the largest city by far to take advantage of the solar law, AB 811. Advocates of solar power hope San Diego's initiative will start a national trend.

“If you guys pull this off, you would have trumped the cities who stand as the most progressive on green issues, like Santa Monica and Davis. That is a very smart move,” said Vincent Battaglia, co-owner of Renova Energy Corp., a solar installation company in Palm Desert.

The San Diego City Council has to approve Sanders' proposal, which the mayor intends to bring up for a vote by February. Energy experts said the council is likely to approve the program because its participants will pay all costs, including the city's administrative expenses, through their loans.

Sanders said informal conversations with council members suggest the plan will pass. The program offers the potential for reducing emissions of greenhouse gases, which contribute to global warming, and the mayor emphasized the possibility of creating jobs in the fast-growing solar industry.

“San Diego is a perfect site for this. We have the sun. We also have a community that is very attuned to green issues,” Sanders said.

At the nonprofit group Environment California in Sacramento, Bernadette Del Chiaro said local governments must play a major role if California is to meet its long-term goal of putting solar panels on 1 million rooftops.

She wasn't sure why more cities haven't taken advantage of the solar legislation, but she suspects most civic leaders are focused on fiscal crises and haven't made solar power a priority in recent months.

“Having a large city like San Diego unveil something like this could help get the ball rolling,” Del Chiaro said.

While San Diego's program lacks many details, Sanders has outlined its framework.

The city would request bids from financial institutions willing to put up money for the solar loans. The winning bid would determine the program's interest rate – which is about 7 percent in Palm Desert – and its size.

San Diego officials said they have been approached by two financing companies interested in participating. They said it's a sign of the fiscal markets welcoming what they describe as low-risk loans.

With a financial backer in place, the city would accept applications from people who want to install preapproved solar devices on their homes, and eventually, businesses. As the program matures, it could be expanded to include energy-efficient devices, including those that conserve water.

Participants would agree to be annexed into a special assessment district as the legal mechanism for adding the solar-loan repayment to their property tax bills. Over the two-decade span of their loan, the average cost would amount to about $150 a month.

“When homeowners and companies install solar, they are basically paying the upfront cost for 20 to 30 years of energy use. Our home and business finances are really not set up to do that,” said Monique Hanis, spokeswoman for the Solar Energy Industries Association, a trade group in Washington, D.C.

“By offering these financing options, . . . (San Diego) is putting solar power in the same paradigm as your current utility bills, where you are basically paying a little bit each month,” Hanis said. “This is a great recipe for opening the doors for way more installations.”

In the event of a tax default or foreclosure, city officials said, normal rules for tax liabilities would apply.

“There is a low-risk component to this. When you have a tax lien on a property, you get paid before the mortgage. The government always gets its money,” said Rachel Laing, a spokeswoman for Sanders.

Mike Lee: (619) 542-4570; mike.lee@uniontrib.com