[caption id="attachment_37580" align="alignleft" width="360" caption="Codding Enterprises wants to finance a 1 megawatt expansion of its solar panel array at Sonoma Mountain Village through Clean Fund via SCEIP."][/caption]
ROHNERT PARK -- A planned project to double the size of the 1 megawatt solar array atop the expansive rooftops of the Sonoma Mountain Village development in Rohnert Park this fall could also greatly expand the use of property-assessed clean energy (PACE) financing for energy-efficiency and renewable energy projects nationwide by allowing cash-strapped local governments to tap hundreds of millions of dollars of private money to fund the work.
The Sonoma County Board of Supervisors on Aug. 27 is tentatively scheduled to consider documents that would allow Sonoma Mountain Village to finance part of the planned $6 million project through Sonoma County's pioneering version of PACE -- the Sonoma County Energy Independence Program. If the financing is approved, an underlying bond -- figured to be $1.6 million when proposed in March -- would be purchased by San Rafael-based third-party PACE financier Clean Fund.
It would be the first owner-arranged PACE bond sale in California and could expand use of such financing for commercial and industrial projects.
"It was always the intent of SCEIP to seek secondary financing to replenish the pool," said interim county Auditor-Controller-Treasurer-Tax Collector Donna Dunk.
Currently, SCEIP is authorized for $45 million in bond purchase capacity. Third-party financing of SCEIP-approved projects would allow that capacity to go further and make SCEIP bonds more marketable to secondary investors. That's what Ms. Dunk's predecessor, Rod Dole, now a national go-to expert on PACE financing, told the board of supervisors in March.
Third-party financing was the goal when Dennis Hunter and Alan Strachan pulled together four Sonoma County banks to start the Green Energy Loan program in early 2006. That effort, now called Ygrene Energy Fund, partly led to the county of Sonoma's formation of SCEIP two years later. Since the first SCEIP-funded project was approved in April 2009, the program has financed more than $47 million for nearly 1,700 applications, including about 40 commercial projects.
In March the board of supervisors gave staff the go-ahead to draw up the financing and bonding documents for the Sonoma Mountain Village project. SCEIP financing over $500,000 needs board approval.
Also in March, SCEIP administrators received permission to use part of a $3 million state grant to study the feasibility of secondary financing. The goal is to complete the study by this fall, according to Ms. Dunk.
"We've been working for the last year plus with Wells Fargo and Goldman Sachs and others to put together a larger-scale transaction," she said.
Interest-rate pricing and bonding capacity has been a challenge for municipalities in setting up PACE programs, in addition to Fannie Mae and Freddie Mac's policy statement a year ago against having property-assessed financing payments in first priority to loan holders. That has attracted Clean Fund, Ygrene and others financiers and environmental advocacy groups to owner-arranged financing and also attracted attention from the recently launched Energy Upgrade California program.
"We've attracted $250 million to help follow through on these," said Clean Fund founder John Kinney, who also co-started fitness and wellness center developer Club Source. He said that Los Angeles, San Francisco, Sacramento, San Diego and Riverside counties are watching the outcome of owner-arranged financing in Sonoma County to be able to set up their own programs.