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OLR Research Report


January 14, 2009

 

2009-R-0031

BERKELEY SOLAR FINANCING INITIATIVE

By: Kevin E. McCarthy, Principal Analyst

You asked for background on Berkeley's municipal solar financing initiative.

SUMMARY

The city has a program called Berkeley FIRST that allows property owners to borrow money from the city's Sustainable Energy Financing District to install solar photovoltaic (PV) electric systems. The property owner repays the cost of the system over 20 years through an annual assessment on their property tax bill. The tax is only paid by property owners who voluntarily participate in the program. The PV system and the associated tax obligation stay with the property. As a result, if the property is transferred or sold, the new owner will pay the remaining tax obligation.

The program is in its pilot phase and the application period is now closed. The city has committed funding to 38 sites. The city will next evaluate the program and determine whether another round of funding can be made available. 

In addition to this program, the city council authorized the waiver of building permit fees for solar installation on single-family homes (electrical permits for PV installations and plumbing permits for solar hot water systems). The council allocated $25,000 to cover the fees, which range from $100 to $200 per residence.

SOLAR FINANCING

In November 2006, Berkeley, California, voters endorsed ballot Measure G, which established a goal of reducing greenhouse gas emissions in the city by 80% by 2050 and directed the city to develop a plan for achieving this target. In November 2007, the city council approved a program to help property owners buy PV systems without paying any money up front. Under the program, home and business owners voluntarily tax themselves over 20 years to pay for PV systems. The annual tax is about the same or less than what the property owner would save on energy bills.

To be eligible, the property must have no (1) notices of default on mortgage, property taxes, or any other type of financial obligation; (2) tax liens as a result of a failure to pay taxes in the past 3 years; and (3) current mechanic liens in excess of $1,000. The property must comply with the city's residential or commercial building ordinances, as applicable, before the solar installation is paid for. The property owner must (1) apply for and comply with the California Solar Initiative (CSI) program in order to receive a state rebate on the cost of the program and (2) consent to release his or her name and contact information to CSI and electric company billing information for the 18 months before and after installation of the PV system.

Under the program, a property owner hires a city-approved solar installer, who determines the best PV system for the property. The city pays the contractor for the system and its installation, less applicable state and federal rebates. It then adds an assessment to the property owner's tax bill to pay for the system. The assessment includes administrative fees and interest, which is tied to the interest rate the city pays on its tax-exempt bonds. The tax stays with the property even if the owner sells it, and the initial owner is required to leave the solar panels in place.

Further information about Berkeley's energy initiatives is available at http://www.cityofberkeley.info/SubUnitHome.aspx?id=15404.

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