Wednesday, April 23, 2014
PLACERVILLE, CALIFORNIA
99 CENTS

Who wants a massive Mello-Roos?

By
From page HS3 | October 11, 2013 | 6 Comments

Like most county residents, I am aware we have a Board of Supervisors. Five elected individuals from different county geographic districts and charged with setting policy and appropriating our tax dollars for various county services. I don’t usually attend the weekly meeting but when the board is considering issues that affect property taxes and home values I start paying attention.

I have an acquired distrust for most government programs. They are too costly to administer and continue long after they have served their purpose. So when I heard that a new countywide Mello-Roos tax district was being considered in order to implement an assessment for clean energy home improvement projects, I rescheduled some appointments and drove over to Placerville for the Tuesday board meeting.

This was likely some tax scheme by Wall Street city slickers to separate homeowners from their money. Other counties have already adopted mandatory retrofitting programs that require sellers to make costly water or energy efficiency upgrades to their homes before closing escrow. I was suspect of any similar type Green Clean Energy Mello-Roos Program that the board may consider.

Upon arriving, the suits were already giving their presentation. After listening to the presentation, I left the meeting as an enthusiastic supporter of the concept. It was difficult to be critical of a voluntary program of cost-saving energy home improvements with little or no cost to the county taxpayers.

In order to understand the proposal the board was considering, called the Property Assessed Clean Energy (PACE) program, a little background on Mello-Roos may be helpful. Mello-Roos is simply a special tax assessed to homeowners in a community as repayment for bonds used to fund the infrastructure within their community — parks, schools, fire stations, etc. Mello-Roos tax districts are pretty common in Folsom and newer communities in El Dorado Hills but mostly absent in the rest of the county.

In 2011, the California legislature passed legislation that amended the Mello-Roos Act of 1982. It now allows cities and counties to create these massive county-wide community financing districts in order to finance energy efficiency projects which are then paid back through increased property taxes.

With Mello-Roos financing, city or counties sell bonds to finance community improvements. An assessment is then levied against every property owner in the improvement district which repays the bondholders. Whenever governments take an action, like selling bonds, there are extended hearings, potential court challenges and a potential liability for all taxpayers.

The money to fund these energy improvements and administer the program does not come from selling county bonds but from a private company, Ygrene Energy Fund. Private capital does not affect the county’s balance sheet or credit rating. Turns out these guys are mostly California boys who raise money from Wall Street and national banks and bring it into the county to finance these home improvement projects.

I’m not a fan of mandatory energy efficiency programs but this program is completely voluntary. Homeowners can choose to annex themselves into this community finance district or not. My neighbor may want to install and finance a solar system and elect to op in, and it doesn’t affect the rest of the neighbors. So folks all over the county can make their individual decisions.

In exchange for providing a homeowner with the money to make energy-saving improvements, Ygrene Energy charges interest just like a bank. Unlike most banks there are no upfront costs and pre-approval happens within 24 hours. Financing of these improvements can be amortized over five to 20 years.

So do we need another financing vehicle for energy-saving home improvements? I didn’t realize that the majority of solar permits issued in the county are for solar leases and power purchase agreements. These arrangements prohibit the homeowner from actual ownership of the panels or receiving any tax credits or utility rebates. The homeowner pays a fixed price to lease the panels or agrees to purchase power from the solar company for 20 years. By opting into this Clean Energy Finance District the homeowner owns the improvement and any financial benefits.

Admittedly, this PACE concept is pretty creative and there are details to work out between the county and Ygrene Energy. A few county department heads raised their concerns. Implementing new policies in a bureaucracy is difficult. However, Sacramento, Placer and other Northern California counties have already had this program in place and have privately funded about $75 million in projects.

The PACE program offers fixed, non-recourse long-term loans as opposed to adjustable rate, recourse home equity loans. The debt has no impact on credit since payments are paid through the property tax bill. Unlike a home equity loan, the cost of the improvement stays with the property upon sale. There is no cost to taxpayers and the program is expected to generate $325 million in economic activity in the county and create 1,800 jobs. Ygrene pays for all costs for district implementation, staffing, marketing and financing.

Homeowners in our county are especially sensitive to the high cost of energy. PG&E rates are significantly higher than SUMD and with the exception of El Dorado Hills, where natural gas is available, propane or electric is our remaining heat options. Any program that reduces the cost of energy at no cost to the taxpayers should be supported. It was. The board voted to move forward with the proposal.

Ken Calhoon is a real estate broker in El Dorado County. He can be reached at kencalhoon.com.

LEAVE A COMMENT

Discussion | 6 comments

  • JimBoOctober 09, 2013 - 11:00 am

    Isn't it funny how easily the public is duped by a Billionaire like Richard Branson that has a fleet of Virgin Air Jets flying all over the world using tons of jet fuel, mega yachts and then he, Branson wants to put his stamp on Northern California Resident's foreheads by telling us how we should live by reducing our home's carbon footprint by funding Ygreen through the back door of his non-profit Carbon War Room? There is no bigger Hypocrite than Mr. Branson and Taxpayers are going to eventually get screwed on this one, as Billionaire's don't invest their money to give it away. With a new Green Energy Building code pushed by Democrats and Jerry Brown, your Government will soon be requiring you to make such Green Improvements and telling you how to live as Sir Richard laughs all the way to the bank and uses his power, money and influence to support more Socialist Government Pork. Wake up Ken.

    Reply | Report abusive comment
  • Fran DuchampOctober 11, 2013 - 8:26 am

    My friends in many places are already paying for this...soon they will pay an even higher tax--which I "paying to use the sun." People that have had it for over five years--are still not seeing a savings...but it is a personal choice. It is too bad that people who felt they were doing the right thing for the planet were lied to.

    Reply | Report abusive comment
  • Fran DuchampOctober 11, 2013 - 8:29 am

    sorry...which I call...

    Reply | Report abusive comment
  • Fran DuchampOctober 11, 2013 - 8:33 am

    Do You Pay Extra Property Taxes? Mello-Roos: Who’s Paying What (Video) http://tinyurl.com/mdqtsfj

    Reply | Report abusive comment
  • Fran DuchampOctober 11, 2013 - 8:34 am

    http://www.city-data.com/forum/sacramento/1347213-mello-roos-tax.html

    Reply | Report abusive comment
  • Fran DuchampOctober 11, 2013 - 8:37 am

    CFD is the same as a CSD. http://www.cherielliott.com/mello_roos.shtml

    Reply | Report abusive comment
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