The city of Berkeley has chosen Renewable Funding to finance a $1.5 million pilot program that will allow residents and businesses to pay for solar power systems through property taxes.
The city council on Tuesday night authorized the city manager to sign contracts with Oakland, Calif.,-based Renewable Funding. The decision was made after its staff spent about 10 months trying to line up backers for the city's unusual solar loan program.
The complexity of running the program caused several banks and private investment firms to back out of discussions, according to a staff report.
As a result, the city decided to start with a trial program to gauge how it might want to finance and operate the program over the long term. The City Council also approved an ordinance Tuesday night that would allow the city to borrow up to $80 million for the program.
Berkeley first approved the idea of the program in November, then approved more details – subject to a second and final vote Tuesday – last week (see Berkeley to Finance Solar Installations and Berkeley Set to Vote on Solar Financing).
The city said it was the first in the country to approve this kind of program, which finances the upfront costs of installing solar-panel systems on residential and business properties. Home and business owners pay the city back through property taxes over 20 years, including interest. The interest rate would be determined and locked in at the time that a property owner signs on by joining a special tax district created for the program.
Only property owners who opt to take advantage of the program will see the extra charges on their tax bills.
Other cities and counties in the country, including Santa Cruz County in California and the city of Boulder in Colorado, have expressed interest in creating programs using Berkeley's model.
Cities, such as San Francisco, have set up rebate programs for solar-power installations. San Francisco has set aside between $2 million and $5 million annually for 10 years for its solar program, which provides $3,000 to $6,000 for a solar power system at home and up to $10,000 for one on a commercial property (see San Francisco Solar Incentives Become Official).
Renewable Funding, started by Stephen Compagni Portis, plans to buy up to $1.5 million worth of bonds to finance the solar-power equipment and installation and to manage the application process.
Portis, a visiting researcher at the University of California at Berkeley's Renewable and Appropriate Energy Laboratory, has ample experience in investment banking, according to city staff. He was previously a partner at VX Capital Partners, president of Leveraged Equity Management and chairman and CEO of Kettle Restaurants.
The $1.5 million is expected to be enough to finance installations on at least 40 properties, according to the staff report. Each property owner will be eligible to request funding for up to $37,500.
An average solar-power system costs roughly $28,000, not counting an average $6,108 rebate available though the state-run California Solar Initiative. After adding other fees and charges, a property owner could expect to pay about $2,100 per year on his or her tax bill, the city said.
The program is scheduled to begin in a month. The city hasn't announced when it will begin accepting applications, but the goal is to do so in the fall. The first workshop for the program could take place as early as next month.