Let the Sunshine In!

With the lengthening days and the coming of spring, my thoughts turn again to the sun. Specifically, the fact that the days are growing longer, and that I would love to have solar panels on my roof. However, this is not happening for awhile. It costs too much. Yes, there are some tax credits available, but it is still a very large up front capital cost which I cannot afford now. However, if I lived in a city like Berkeley, California or Boulder, Colorado, I could potentially take advantage of municipal financing for my (hoped-for) solar roof.

The crux of the program is that municipalities provide a loan to residents interested in installing solar power. The loan is paid back over the course of 20 years via a property tax increase for the homeowner. This is in addition to any other state or federal tax credit or write-off the homeowner can qualify for. A crucial benefit is that If the current homeowner sells the house before the 20 year payment period expires, the payment for this loan becomes part of the new homebuyer’s tax payment. (The new homeowner also gets the benefit of the solar power. )

Contrast this financing to a mortgage or home equity loan, in which the current homeowner is ultimately responsible for paying back the entire loan–no matter if or when the house is sold. For this program, the balance on the loan is attached to the property, not the person owning the property. The 20 year amortization period and the ability to not have the balance of the loan follow you if you sell the house make the finances workable for many more people. This combination helps to alleviate the upfront capital cost hurdle that deters so many people from installing solar panels on their roofs (like me).

The program started in Berkeley, California (no surprise). The program germinated for a year or so, and was approved in September, 2008, On November 5th, the morning of President Obama’s election, the City of Berkeley made this program available. The limit was 5 houses in each of the Berkeley’s 8 City Council districts. The 40 slots sold out in 9 minutes. The program is also in effect in San Francisco, San Diego, Palm Desert and Santa Monica California. Legislation is under consideration in Vermont, New York, Texas, Oregon, New Mexico, Arizona, and Nevada.

This program is a very fair way of allocating costs and benefits of individual solar power improvements. Everyone wins (over time). The city gets its loan repaid securely via property taxes, the homeowner gets the solar power, while the environment and the utility grid have incrementally less demands put upon them. Sounds like a win-win-win(-win) to me.

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