California and Colorado have passed legislation that allows cities and counties to use a new financing model, similar to the Mello-Roos law, that enables property owners to lower their electricity bills. At least 10 other states are considering similar statutes.
How it works is that communities create a land-secured finance district that issues bonds to pay the upfront costs of property owners who install photovoltaic panels and other solar-energy technology. Property owners repay the community over 20 years from a new line item on their property tax bill. The taxes of residents who choose not to participate aren't affected.
In California, chartered cities have the authority to create such special-improvement districts. Last summer, the state passed Assembly Bill 811 so non-chartered cities can do so as well. Thus, any county, city, special district, school district, or joint powers authority can establish a Contract Assessment District to finance public improvements and services.
In the fall, Berkeley, Calif., authorized a $1.5-million, 40-home pilot program that's expected to increase the average participant's monthly property tax by $180. Since then, the city has authorized an additional $80 million in bond financing.
Berkeley is financing its debt through a company called Renewable Funding, which administers the CityFIRST -- financing initiative for renewable and solar technology -- program. The company also is working with Palm Desert, San Diego, San Francisco, and Solana Beach; and Santa Monica and Sonoma counties.
After Colorado passed similar legislation last year, Boulder County passed a measure allowing it to issue up to $40 million in special assessment bonds to finance clean energy improvements.
Legislation has been introduced in seven states: Arizona, New Mexico, New York, Nevada, Oregon, Texas, and Vermont. Michigan, New Jersey, and Washington are considering statutes. Environment magazine analyzes why the approach, which is included in the economic-stimulus package, may be more appealing to homeowners than refinancing over 20 years or taking out a home equity loan.
