Solar - Mpower Placer (pace)

[andra525]

I'm doing a refi appraisal where the homeowner just added solar using the mPOWER Placer (PACE) program where the finance payments are added into the taxes. Has anyone dealt with how to determine if this has value? I understand from things I've read that Fannie Mae and Freddie Mac won't do refis and new loans if someone has this in place. It seems that this would offset any value or even be a negative as it would deter buyers.

Thanks for any input.

 

[glenn walker]

Yes .. It's a lien against the property the real question is will a new buyer want to take the loan over ? That's the big question ? In reality it's not an owned system-unless the owner paid cash for it . Over 90% of these are financed thru-a program and often included in the owners property tax bill , when the owner tells you its an owned system the next question is did you pay cash for it or is it included in your annual property tax bill . In California it's often called the HERO or PACE program and the total cost of the solar system is included in the owners property tax bill I have seen property tax bills increased as much as $5,000 a year . Remember unless the unit was installed in the last 12 months it often does not show-up on the owners tax bill on the data records appraisers see. Ask the lender to give you a copy of the preliminary title report because that will show the date of the lien and the amount recorded for security against the subject property . This is a big issue and most owners simply say I own the system but NO they have a high interest 9% to 10.5% loan secured by the property. I would also Talk with local appraisers and Realtors and see what market reaction is on resale , I have found very few buyers willing to pay the full load for these but I may be wrong : ) LOL

 

[Elliott]

On vacation, I looked at a house in Las Vegas that had a solar system. I asked, so tell me about how the solar 'thing' works. I was told, its already installed and its a leased system (20-years) has been paid, so its built in to the cost of the home (About $310,000). So I asked the saleswoman how much it would reduce my electricity cost. And well, it all depends, but it should reduce electric utilities by 50%. And because NV Energy has changed the terms on systems in Nevada, the builder won't be installing them in new houses. Seems like without subsidies, solar is a push.

I have no clue how one would value them.

 

[Meandering]

The Property Assessed Clean Energy program allows homeowners — as well as owners of commercial property — to finance energy improvements via property tax payments over five, 10 or 20 years.

The financing model is called Property Assessed Clean Energy (PACE). The financed amount is amortized and the annual amount due is added to your property tax bill each year until paid in full. If the property is sold the equipment and the unpaid amount stay with the property.

The money you save on water and energy could be more than enough to repay the additional amount on your property tax bill.

Wildly popular with homeowners, the program hit a snag in July 2010 when the Federal Housing Finance Agency issued a directive letter stating that it would not buy loans with PACE debt.

The letter was significant because people thought it would prevent Freddie Mac and Fannie Mae from buying mortgages that had liens under PACE programs. These government-guaranteed lenders own about half the mortgages in the country. The Fannie and Freddie issues have largely been resolved, and Placer County’s position now is that a properly configured residential PACE program does not compromise federal interests, she said.
http://www.mpowerplacer.org/

first you need to know how many years are left on the increased taxes to pay off the solar panels.

Then you need to know what the tax increase premium is, Current taxes minus taxes as if there were no solar panels.

Then you need the annual true-up bill from the electric company that states how much electric was sent from the solar panels into the grid, and at what rate the electric company was crediting the home per kw for that electricity.

Then you need to know if, the solar panels generate more electric than the home uses, does the electric company;
A. Cut a check at the end of the year for the excess electric generation to the homeowner, or,
B. Credit the excess electric generation into next year's bills.

 

[Meandering]

 

[andra525]

Thank you Marion - very helpful information.

The Property Assessed Clean Energy program allows homeowners — as well as owners of commercial property — to finance energy improvements via property tax payments over five, 10 or 20 years.

The financing model is called Property Assessed Clean Energy (PACE). The financed amount is amortized and the annual amount due is added to your property tax bill each year until paid in full. If the property is sold the equipment and the unpaid amount stay with the property.

The money you save on water and energy could be more than enough to repay the additional amount on your property tax bill.

Wildly popular with homeowners, the program hit a snag in July 2010 when the Federal Housing Finance Agency issued a directive letter stating that it would not buy loans with PACE debt.

The letter was significant because people thought it would prevent Freddie Mac and Fannie Mae from buying mortgages that had liens under PACE programs. These government-guaranteed lenders own about half the mortgages in the country. The Fannie and Freddie issues have largely been resolved, and Placer County’s position now is that a properly configured residential PACE program does not compromise federal interests, she said.
http://www.mpowerplacer.org/

first you need to know how many years are left on the increased taxes to pay off the solar panels.

Then you need to know what the tax increase premium is, Current taxes minus taxes as if there were no solar panels.

Then you need the annual true-up bill from the electric company that states how much electric was sent from the solar panels into the grid, and at what rate the electric company was crediting the home per kw for that electricity.

Then you need to know if, the solar panels generate more electric than the home uses, does the electric company;
A. Cut a check at the end of the year for the excess electric generation to the homeowner, or,
B. Credit the excess electric generation into next year's bills.

 

[andra525]

Thank you Marion - very helpful information.