Financing a Greener
FILE: SCAN OF THE ARTICLE AS PUBLISHED
- Financing a
- by Patricia Dines
- August 2009
NorthBay biz magazine
The Sonoma County Energy Independence Program
(SCEIP) benefits businesses, homeowners and the planet
-- NorthBay biz delves deep to discover the ins and
outs of this pioneering program.
(c) Copyright Patricia Dines, 2009.
All rights reserved.
- The Healdsburg home of Deke and Ann DeKay now proudly displays
a 5-kilowatt solar photovoltaic (PV) system, which trims both
their electric bill and their greenhouse gas (GHG) emissions.
- It's a story we've heard before, but this time it has a fresh
twist -- the couple funded this project through a new and unlikely
source: local government.
- The DeKays were the first customers who applied (in March
2009), when the Sonoma County Energy Independence Program (SCEIP),
the first county-level program of its kind, began offering $100
million in financing to businesses and homeowners for projects
that increase energy efficiency, conserve water, or produce
- Different than a traditional loan, SCEIP financing offers
unique features that can make it more accessible and attractive,
especially for people having difficulty getting funding in today's
tight credit market or those who might sell their building within
a few years.
- In addition to encouraging more eco-improvement projects, this
fiscal flow is also creating work for struggling local
contractors, boosting our area's economy, and encouraging vital
change for the planet.
- The birth of a
- SCEIP developed from a seed idea to a full-fledged program in
a surprisingly short period of time. It was initially made
possible in July 2008 by California's AB811 legislation, which
allowed for municipal financing (with repayment through the
property tax system) to help achieve the AB32 goal of trimming
state GHG emissions to 1990 levels by 2020 (see "Change Is in the
Air," Feb. 2009).
In September 2008, after County staff had explored the
possibility of creating a program here, the Sonoma County Board of
Supervisors initiated a feasibility study. By March 25, 2009,
SCEIP was open for business.
- Strong and immediate customer interest has validated the
county's innovative actions. As of June 19, SCEIP has already
received more than $8.5 million in improvement applications. Liz
Yager, SCEIP's daily operations manager, reports "great success in
meeting our expectations for volume."
- Completing the DeKays' project also happened quickly, taking
only six weeks from their application's submission on opening day
March 25, through approval, installation, and final payout on May
- The couple's solar system started with a $40,000 price tag,
which was reduced by a California Solar Initiative rebate of about
$8,200 and a federal tax credit of about 30 percent of the
after-rebate cost. With a final financed cost of $25,500, the
system is expected to cut their electric bill between 55 and 75
percent and prevent 13,451 pounds of carbon dioxide (CO2)
emissions, the equivalent of trimming 13,246 driving miles per
- Jason Almirol, sales manager for Sebastopol's Solar Works (who
installed the system), observes that people can be "a little
skeptical when new programs roll out. [So] I think
actually seeing a real check being cut and people taking advantage
of it [shows that] there's a system and it works."
- A new opportunity for
- Contractors are quickly recognizing that SCEIP can help them
serve customers and generate more business. Solar Works has been
"getting a lot of interest" in the program, says marketing manager
Lisa Richie. "There's not much up-front cost for customers," she
notes, so "a lot more people can make solar a reality."
- Tom Thomason, owner of Petaluma's Thomason Mechanical &
Design, which installs HVAC and solar systems, appreciates that
SCEIP gives customers "another avenue to be able to do the right
thing, which is put in high-efficiency products," even if they're
- He says, "If you put in a low-efficiency furnace because
that's all you can afford today, the reality is, even though that
homeowner may not be living in it in two more years, that house is
going to have that furnace in it for the next 20 to 25 years, as
inefficient as it is, [because] it still works."
- Thomason, who's been "in the trades" for 29 years, indicates
that, even if you only save 15 percent on energy costs, "if
everybody on your block could save 15 percent on their fuel, it
all would start adding up."
- Thomason has familiarized himself with the SCEIP process so he
can walk his customers through it. "We figure we'll become the
experts on the paperwork, because we're going to do it so many
- A unique SCEIP feature that Thomason especially values is that
responsibility for repaying SCEIP's financing stays with the
house, not the person. Thus, when a property is sold, the new
owner takes over payments, because he or she is also receiving the
lower utility bill.
- The result, he says, is "the right product can go into that
house," even if the owner is planning to move within a few years
or is buying the house just to improve and resell it. "I think
it's brilliant," he concludes.
- Asked by phone why he's so passionate about increasing
efficiency, Thomason replies, "Well, I'm very in touch with the
environment and what's going [on with it]. I'm standing
here in Alaska right now, looking at glaciers that are
disappearing as we speak. It's a huge thing we've done to the
world, so we have to start changing it."
- Showdown at the GHG
- The environment is a key reason that the county created the
self-supporting SCEIP program, to help us reach our local goal of
lowering countywide GHG emissions to 25 percent below 1990 levels
by 2015. Sonoma County-based nonprofit Climate Protection Campaign
(CPC), which, in 2005, partnered with all nine cities and the
county to establish that goal, more recently co-authored a letter
to the Board of Supervisors encouraging SCEIP's adoption.
- Ann Hancock, CPC's executive director, explains "we need to
retrofit 80 percent of Sonoma County's homes in the next six
years" to meet these reduction targets. She calls SCEIP "an
essential financing tool" that "helps overcome economic barriers
for property owners to retrofit their homes and businesses."
- CPC's Cool Schools Coordinator Maitreyi Siruguri says, "Energy
efficiency is a key component of the [CPC's] Sonoma County
Community Climate Action Plan. Through efficiency, each household
can save hundreds of dollars while protecting the climate for
future generations." The CPC Plan also calls for switching from
fossil fuels to renewable energy.
- Refining program
- Along with its successes, SCEIP's rollout has also had its
challenges. Because it's such a new and innovative program, says
Amy Bolten, public information officer for the Sonoma County Water
Agency (which helped spearhead SCEIP), "multiple issues come up
every day that we haven't thought of, and we have to figure out
how to handle them on the fly while not delaying everything." To
continue refining the program and keep it on track, a
cross-departmental steering committee meets weekly to discuss and
- Bolten adds, "This program's only going to succeed if it's
highly successful in the customer service area. We try really hard
to make it a retail program, not a typical government program
that's laden with red tape. But we're forging a brand new path
- Both Thomason and Almirol praise the County's receptiveness to
suggested system improvements, such as contractor payment
- Almirol says, "We really see that the County is interested in
making it a successful program for all parties involved, and
having that feedback loop shows a lot of cooperation. That's a
recipe for a successful, long future for this program."
- SCEIP's Yager adds that she especially enjoys this process of
developing "something totally new," solving problems and making it
better, which is reminiscent of her past job as a process
engineering manager at Palo Alto's Hewlett Packard (HP).
- It was just two years ago, after having left HP to be a golf
pro in Sonoma County, that she saw Al Gore's movie "An
Inconvenient Truth" and was inspired to take action on global
climate change. She educated herself about sustainability through
books, conferences and "surfing the web"; volunteered at CPC and
the Leadership Institute; then joined the County's Energy and
Sustainability Division last December.
- "And then this happened," she laughs. "So it's kind of a wild
place to be right now!"
- Scoping the
- The first step for a building owner making an energy, waste,
or water efficiency investment is to identify which improvements
will produce the best results incorporating financial,
environmental and social impacts. Ken Kurtzig, CEO of Marin's
sustainability consulting firm iReuse, observes that most
companies use an "Elmer Fudd," scattershot approach to
sustainability. "They sneak up and just shoot," he says.
- To help people better prioritize possible projects, SCEIP
offers various online assessment tools at
www.sonomacountyenergy.org, under the link "Evaluations." SCEIP
also strongly recommends an onsite energy and water audit to more
specifically identify potential upgrades, costs, and savings in
both energy and money. Audits are optional for homeowners, but
utility "evaluations" are required for commercial sites and are
also usually offered free by utility companies, including
PG&E. Free onsite water audits are also available from many
water providers. Any additional audit costs can be rolled into the
- Yager says, "I always try to inform people about the
advantages of getting a comprehensive test of their building
environment so they can make an informed decision about what their
- Kurtzig has seen his clients receive notable financial return
from well-targeted efficiency investments. This includes seven
commercial office buildings that reduced their waste bills by 82
percent and increased their diversion from landfill by 85
- He encourages people to look first for the most cost-effective
projects. For instance, an analysis he did for one commercial
client showed that a solar PV system would cost $85,000 (after
rebates) and reduce energy use by 9 percent, giving a 10-year
payback period. However, if the company replaced all its light
bulbs with energy-saving compact fluorescent lights (CFLs)
instead, its cost would be half that, $43,000, but energy use
would drop a whopping 34 percent, for a significantly faster
- Thus, Kurtzig gave his client the same advice most solar folks
offer: implement energy efficiency before installing solar, per
the industry mantra, "reduce then produce."
- Other efficiency improvements that can offer immediate savings
include adding insulation to reduce demand on a heating/cooling
system, upgrading an HVAC or hot water heater, and adopting water
- Signing up with
- Once property owners have identified potential projects and
costs, they can explore which funding source they'd like to use.
Various loan options can let owners avoid up-front costs and lower
their energy bills, thus shifting an expense into an investment in
- One of SCEIP's advantages is it has fewer restrictions than
traditional financing; for instance, it's not based on [the
current mortgage equity level or] one's credit rating or
annual income. The applicant is just required to own the property
free of involuntary liens and be current on their property taxes.
The property can't be involved in a bankruptcy, and proposed costs
need to be reasonable for the project and property. Additionally,
commercial properties need lender consent and a utility
evaluation. Any licensed contractor can perform work under this
program. (See sidebar, "SCEIP Basics for Property Owners" for
Kurtzig also suggests tenants wanting to make improvements can
propose them to their landlord by offering to share costs,
presenting evidence of increased property value, suggesting
attractiveness to future renters, or including modifications in
- Creating a new
- Over the past few years, because of many people's pioneering
work, environmental action has gone mainstream, and increasing
numbers of people are seeking to integrate earth wisdom tangibly
into their everyday lives. Programs like SCEIP provide tools for
doing just that, while also demonstrating what's possible when
government, business and environmental folks find ways to
constructively collaborate for the well-being of all.
SIDEBAR: SCEIP Basics For
- Financing is available for improvements to
existing homes and commercial buildings in Sonoma County. It's not
for new construction or mobile homes.
- Funds can be used for a wide variety of projects
to improve energy efficiency, conserve water, and generate
renewable energy. This includes insulation, duct-sealing,
on-demand water heaters, low-flow showerheads and toilets, more
efficient windows and heating systems, irrigation controllers,
cool roofs, solar panels and thermal equipment, geothermal
exchange heat pumps, customer electric vehicle plug-in stations,
and innovative "custom" efficiency and generation projects. Items
must be permanently attached to the property, so appliances such
as dishwashers don't qualify.
- Owners don't pay up-front capital costs and have
fewer credit restrictions than with standard financing. The
minimum funded amount is $2,500. Finance periods can be five, 10
or 20 years (depending on the amount to be financed). Interest
starts accruing on the date the lien is attached and is currently
a simple fixed rate of 7 percent. The SCEIP website has a handy
calculator for estimating one's annual repayment amounts.
- Financing is a voluntary assessment added to
one's property tax and paid over time. Also, SCEIP financing does
not, in itself, trigger a property reassessment, which only
becomes an issue, for instance, when the square footage of a
structure is increased during a remodel.
- The assessment stays with the property, not the
person, so when the property is sold, the new owner takes over
payments, as they now benefit from the improvement.
- For more specifics about the application process,
see the SCEIP contact information in the Resources sidebar.
- Caution: Pay attention to cash flow. SCEIP helps
reduce one's monthly utility bill, but the repayment is made
through the bi-annual property tax bill. To avoid an unsettling
tax bill surprise, consider setting aside monthly what's being
saved in utilities, or ask your lender if you can include the
added property taxes in your monthly mortgage payment.
- (707) 521-6200
- 404 Aviation Blvd., Santa Rosa.
- It's open Monday through Friday, 8 a.m. to 5 p.m.
- (707) 577-1080
- Go Solar California
- A "one-stop shop" for information about solar purchase
incentives, including the California Solar Initiative, rebates and
federal investment tax credits.
- Climate Protection Campaign
- This nonprofit's site has information about its Community
Climate Action Plan and Sonoma County's GHG targets.
- Patricia Dines is a writer and public speaker. Her
specialty is inspiring and empowering constructive action on
environmental issues. For more information, see
Web Bonus -- For more information:
You might also want to read my consumer article on this topic,
Your Home - With No Money Down", published on the cover of the
April 2009 West County Gazette.
This entire website is (c) Patricia
Dines, 1998-2010. All rights reserved.
Page last updated 08/04/10