Wednesday, 17 September 2008

Berkeley Approves City-Backed Loans for Solar Panels

Original Article

New York Times
Published: September 17, 2008

SAN FRANCISCO — The Berkeley City Council late Tuesday unanimously approved a program to give city-backed loans to property owners who install rooftop solar-power systems. The loans, likely to total up to $22,000 apiece, would be paid off over 20 years as part of the owners’ property-tax bills.

Tuesday’s vote gave final approval to the creation of special property-tax districts, which property owners could opt to join. The final piece of the puzzle, however, is still missing: a deal with a lender whose capital the city would use to finance the program.

At first, the city seeks to raise $1.5 million for a pilot program for about 50 homes. If it program is successful, the kitty could eventually contain tens of millions of dollars, and hundreds of property owners could be eligible to participate.

If the early phase of the program lives up to the high expectations of its backers, the city government is likely to expand the field of projects it will fund, giving similar grants to energy-efficiency projects like putting in double-glazed windows or adding to a home’s insulation.

The program, said Daniel M. Kammen, a professor of energy at the University of California at Berkeley and director of the school’s Institute of the Environment, is designed to entice people who might be scared away by the high initial cost of retrofitting homes to incorporate solar power or become more energy efficient.

It allows homeowners “to think about creating clean-energy homes with basically no cost” up front, he added.

Participating homeowners would pay roughly $180 more per month on their property tax bills, though much of that cost could be expected to be recouped in savings on electrical bills.

“We have about 100 names of people who have expressed interest in the program,” said G. Craig Hill, a representative of the firm Northcross, Hill & Ach, which is advising the city council on the financial details. Mr. Hill is also negotiating with two private groups. He said they seem willing, even in the midst of the meltdown of large institutions on Wall Street, to try to resell the city-backed debt obligations in a skittish marketplace.

Christine Daniel, a deputy city manager working with Mr. Hill, said, “I would argue that this is very, very secure debt,” since it is backed by the property tax revenues in a city that collects 98 percent of the money it is owed each year.

The city’s mayor, Tom Bates, said in an interview shortly before the vote, “I think this is probably the most important contribution Berkeley can make toward taking on global warming,” and reducing greenhouse gases.

He added, “I think the idea is going to go like wildfire” through other city governments. Already, he said, nearly two dozen cities, from San Francisco to Annapolis and Seattle to Cambridge, Mass., have called indicating they want to follow suit.

As Ms. Daniel said, “We’re certainly gotten a lot of calls from cities that are interested, but most cities are saying: Let’s wait and see how Berkeley does.”

The overwhelming gloom in the national financial markets might hamper the program’s ability to expand, she said, but added, “If the secondary market is not as robust as we hope it will be, we believe the market will see the wisdom of this eventually.”

Mr. Kammen, the Berkeley professor, was not worried, pointing out that venture capitalists have been pouring billions of dollars into the development of alternative-energy technology and looking for new ways to finance potential breakthroughs. “There’s so much more money there than ideas,” he said.

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