California
Incentives/Policies for Renewables & Efficiency
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Last DSIRE Review: 07/16/2009
| Incentive Type: |
Property Tax Financing Authorization |
| State: |
California |
| Eligible Efficiency Technologies: |
Locally determined
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| Eligible Renewable/Other Technologies: |
Locally determined
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| Applicable Sectors: |
Commercial,
Industrial,
Residential,
Multi-Family Residential,
Agricultural
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| Financing Terms: | Locally determined
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| Eligible Local Governments: | Counties, cities, areas within cities
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| Possible Revenue Sources: | Bond issuance, money advanced by municipality, third-party lenders
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Authority 1:
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CA Streets and Highways Code § 5898.10 et. seq.
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| Date Enacted: | 7/21/2008 |
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Summary:
"Property tax financing" allows property owners to borrow money to pay for energy improvements. The amount borrowed is repaid through an increased property tax assessment over a period of years. California has authorized cities, counties and areas within cities to provide financing for the installation of renewable-energy systems, energy-efficiency improvements and water-efficiency improvements to residential, commercial, industrial or other real property. Contact your local government to find out if it offers financing for renewable energy and/or energy efficiency through special property tax assessments.
Financing may be used for improvements to developed property if the property owner agrees to a contractual assessment on the associated property tax bill for up to 20 years. To be eligible, a property owner must have a clean property title and must be current on property taxes and mortgages. Under terms of the state law that authorizes such financing programs, local governments are expected to establish plans that include: - A map showing the boundaries of the territory where contractual assessments are proposed to be offered;
- A draft contract agreement between property owners and the local government;
- Eligible facilities;
- Eligible distributed renewable-energy systems;
- Eligible energy-efficiency improvements;
- A designated local official authorized to enter into contractual assessments on behalf of the local government;
- A maximum aggregate dollar amount of contractual assessments;
- A method for prioritizing requests in the event that requests exceed the authorization amount;
- A plan for raising a capital amount required to pay for work performed pursuant to contractual assessments; and
- Costs incidental to financing, administration, and collection of the contractual assessment program among the consenting property owners and the city
Participating local governments may authorize the property owner to contract for the improvements or purchase equipment directly. Although local governments determine which energy projects are eligible for financing, the California Energy Commission (CEC) recommends photovoltaics (PV), geothermal heat pumps, fuel cells, high-efficiency HVAC systems, insulation and high-efficiency windows.
The interest rate of bonds may be determined by an index, but it will be fixed at the time the bonds are issued. Assessments levied, interest and any penalties constitute a lien against the improved lots until loans are paid, with the consent of the property owner at the time assessments are levied. Local governments may use bonds to reimburse the program, to pay for expenses incidental to issuance of the bonds, and to establish a reserve fund for the program either through their own finances or by working with an independent financial institution.
In California, local governments that have implemented programs using this property tax financing mechanism include:
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Please note: The information on the DSIRE web site provides an overview of incentives and other policies, but it should not be used as the only source of information when making purchasing decisions, investment decisions, tax decisions or other binding agreements. Please refer to the individual contact provided in each record to verify that a specific incentive or other policy is applicable to your specific project.
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