San Diego County Adopts New Solar Financing Option for Homes

Good news for residents of San Diego County: a new program will soon make it easier to finance the installation of a solar photovoltaic (PV) system. The Financing Initiative for Renewable and Solar Technology (FIRST) program will permit homeowners to borrow money from the municipal government to install solar panels, then will allow them to repay the funds over 20 years through an annual surcharge on their property tax bill. More generally, the approach is called Property Assessed Clean Energy (PACE) financing.

Originally conceived in Berkeley, CA, the new approach is catching on. The League of California Cities and the California Association of Counties has organized California FIRST, a government coalition dedicated to encouraging municipal governments to adopt PACE financing for solar.

Last Wednesday, San Diego County became the latest to enlist, when the Board of Supervisors agreed to join California FIRST. “Sadly, our region has not even begun to tap into the potential of rooftop solar,” Board Chairwoman Dianne Jacob said. “I am very excited and very eager to plug into this program and get it off the ground.”

At the outset, PACE funding will be available only for solar energy installations, though in the future other renewable energy and energy efficient applications may become eligible. The county will pay $25,000 to join the coalition. Cities within the county must join, too, in order for their residents to participate in the financing arrangement.

The benefits of PACE funding are three fold. First, upfront costs for the homeowner are minimal: after an application fee, all that is due in year one is the newly assessed property tax. Second, payments are amortized over 20 years and, presumably, the relative terms are better than what’s available from private lenders. Third, the debt stays with the property, not the property owner. This mean that, if a homeowner decides to sell, the revised property tax assessment is the responsibility of the buyer. While this may seem unfair from the buyer’s perspective — no one likes higher property taxes, after all — but remember that the property’s cost of ownership is lower because the solar PV system reduces monthly electricity costs.