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Since 2009, the Sonoma County Energy Independence Program known as SCEIP (pronounced “Skype”) has made almost $83 million in loans to 2,572 county residents for renewable energy and water conservation improvements to their homes or businesses. 

Last summer, the county board of supervisors voted to allow SCEIP to make loans for seismic and wildfire safety home improvements as well.

On the one hand, it seems like a no-brainer.

“The evolution of the program originally implemented to meet climate change goals just made sense,” Board of Supervisors Chair Susan Gorin said in an SCEIP press release. “As climate-related disasters come more frequently along with increased planned power shutoff occurrences, the ability to easily access funding is critical in our resilience as a county. Making our buildings safe and resilient can help protect lives and build sustainable communities to withstand disasters.”

Because the new offerings are so different from the program’s original goals, however, cities must pass a resolution and amend their agreements with SCEIP before the program can make loans for wildfire and seismic improvements within those cities’ boundaries.

Most cities are happily signing on the dotted line, however; after all, it doesn’t cost them anything and gives their citizens access to home improvement loans that they wouldn’t otherwise have.  

The Cloverdale City Council reauthorized the program at its council meeting on Jan. 22; Healdsburg re-upped at its council meeting on March 2, and the Sebastopol City Council followed suit last week on March 3. The program has also been reauthorized by city councils in Sonoma, Petaluma and Cotati. It’s still under consideration in Windsor, Santa Rosa and Rohnert Park.

But before you rush to the county website to finance that solar array and back-up battery wall you swore you’d install after the last PG&E power shut-off, it’s a good idea to understand the program you’ll be signing up for and how different it is from loans you may be familiar with.

Keeping PACE with SCEIP: What makes these loans different

Sonoma County created SCEIP in 2009 to administer what are known as PACE (or Property Assessed Clean Energy) loans. SCEIP Program Manager Jane Elias said that the SCEIP program “is the longest running PACE program in the nation for both commercial and residential financing.”

PACE loans were created to make it easier to invest in renewable energy for your home or business. Eleven years ago, when the Sonoma County program first began, a full-house solar panel system could set you back $40,000 or more. Over the last several years, thanks to a combination of government incentive programs and the plummeting price of solar panels, that same system now costs $18,000, but that’s still a big chunk of change for most people.

Unlike regular bank loans, PACE loans become a lien on the borrower’s house and are paid back, not in monthly installments like a regular loan, but through property taxes, once or twice a year.

Advantages

• PACE loans are much easier to qualify for than a regular loan at a bank. “There’s no credit check,” Elias said. “We simply check that you are up to date on your current property tax, going back three years, and that there are no other recorded liens against the property.”

• PACE loans require zero money down.

• The fees for applying are very low, usually around $174.

• You have a long time to pay off the loan, usually 10 or 20 years.

• There are no pre-payment penalties.

• The interest rate is fixed at 7%. The good news is it can never go higher than that.

Disadvantages

• The bad news is the interest rate is fixed at 7%, which is significantly higher than many of the interest rates currently being offered by private banks.

• Because it’s a property tax lien on your house, you can lose your home if you can’t repay the PACE loan.

• Sticker shock: because you pay it only once or twice a year, instead of monthly, those payments can really add up.

• The original idea of PACE loans was that the lien would stay with the property when it’s sold, under the reasoning that since the new owner would benefit from the home improvement, say a solar array, it was only fair to ask them to help pay for it. Unfortunately, most lenders don’t loan on properties with PACE loans and generally ask the seller to repay the loan and remove the lien before a sale can take place. At her presentation before the Sebastopol City Council last week, Elias said that one of the few ways the PACE loan can stay with the house is if the buyer is paying cash and agrees to assume the PACE loan.

Regarding the 7% interest rate, Elias said it’s been that from the beginning of the program.

 “It was never intended to compete with first mortgage rates,” she said, but noted that it’s better than the rate on high-interest credit cards and can save borrowers from having to dip into their personal savings. She said people often use PACE loans as bridge loans to get a project started while they apply for less expensive loans elsewhere.

What’s covered under the new expanded program?

The SCEIP program still finances a long list of renewable energy and conservation improvements for homes and businesses, including solar panels, back-up batteries, electric vehicle plug-in stations and more. (See the full list at sonomacountyenergy.force.com/financing /s/eligible-improvements)

“In addition to the 100 improvements we could already finance, we’ve added about two dozen more,” Elias said.

Improvements to prevent wildfire damage include:

• Class A fire-rated roofing replacement

• Non-combustible gutters and covers

• New and replacement fire-safe decks

• Attic, eave and foundation vents

• Hardscaping near structures

• Ignition-resistant siding replacement

• Dual-paned tempered-glass windows

• Custom wildfire safety improvements

Allowable seismic improvements include:

• Foundations and soil treatment

• Lateral support systems and shear walls

• Moment and brace frames

• Foundation and structural connections

• Bracing of cripple walls

• Bolting and anchoring of mudsill/mudsill plate

• Custom seismic safety improvements

For more information, see sonomacountyenergy.force.com/financing/s/

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