City OK's solar loans for homes

SAN DIEGO — San Diego homeowners got a much easier and more affordable way Tuesday to install solar power and make other upgrades that improve energy efficiency and shrink utility bills.

The City Council unanimously approved allowing owners of residential properties to pay for such projects without any up-front costs as part of the state’s “property assessed clean energy” program.

The program was previously open only to the owners of commercial properties, including apartment buildings with at least four units, and residential properties with no mortgages.

Instead of paying for the upgrades immediately, homeowners can now secure private loans from lenders participating in the program and then pay the money back over several years as a surcharge on their property tax bills.

City officials said reductions in utility bills will often be larger than the property tax surcharges.

“It’s a slam-dunk kind of economic stimulus,” Councilwoman Marti Emerald said.

Councilwoman Lori Zapf called the inclusion of residential properties “a long time coming,” noting that former Mayor Jerry Sanders began pursuing such a loan program several years ago.

Industry officials said two-thirds of applicants seeking loans from the program are typically approved.

San Diego joins several other local cities that have approved such programs, including Oceanside, Carlsbad, Vista, San Marcos, Lemon Grove and Solana Beach.

An estimated 80 of California’s nearly 550 cities and counties are participating, city officials said. They estimated the programs have created more than $400 million in economic activity across the state.

Adding residential properties to San Diego’s program is expected to create many local jobs and reduce energy use, a greater regional priority since the San Onofre Nuclear Generating Station ceased operations last June.

Drawbacks for homeowners include possible hurdles refinancing their mortgages or selling their homes. Some buyers might request homeowners pay off the debt before a purchase can be completed, city officials said.

In addition, city officials said homeowners that have mortgages funded by Fannie Mae or Freddie Mac could be at greater risk.

The Federal Housing Finance Administration, which regulates those lenders, has imposed special restrictions on mortgages where homeowners have participated in energy-efficiency loan programs because the loans for energy upgrades have priority over mortgage loans.

That decision curbed the spread of the program, but the state passed legislation last year that aims to help homeowners with loans from Fannie Mae or Freddie Mac participate.

The state set aside $10 million over 10 years to cover any outstanding debts for energy-efficient upgrades owed by homeowners who had Fannie Mae or Freddie Mac loans.

Deputy City Attorney Brant Will said city officials are optimistic the state set aside enough money, but he said the city will warn homeowners of the possible risks.

Will also said rising property values make it less likely homeowners participating in the program will struggle to refinance or sell their homes because they are expected to have accumulated significant equity.

The two lenders participating in San Diego’s program are the Western Riverside Coalition of Governments and the California Enterprise Development Authority.

Will said the city also plans to add a third program in the next few months called Ygrene, which the city of Chula Vista has chosen for its energy-efficient loan program. Under Ygrene, the loans are paid back as part of a community facilities or Mello-Roos district.

david.garrick@utsandiego.com (760) 529-4947 @UTDavidGarrick

City OK"s solar loans for homes