Page 10 RAIN November 1978 I Peter Sardagna, vice president of San Diego Federal Savings . & Loan Associatfon, recently propo_sed a method for financing retrofit solar systems in California. He believes this "EnergySaver" plan "is the financial key to large scale commercialization of solar energy in California." "The importance of such·a program is that it can be put into motion immediately," he says. "It taps the expertise and resources of the existing financial institutions a·nd does not rely on the creation of new, UI?tried and probably inefficient and ultimately more expensive lending sources, such as utility companies or taxpayer subsidized ~state solar banks.' " Essentially Sardagna's plan boils down ·to an extension of the house mortgage. Wilson Clark, Jerry Brown's energy advisor, is keeri for the idea, which expands on the energy conservation loan program he helped to start in Sea~tle. The . federal Department of Energy gave Sardagna a sympathetic hearing this summer, and the federal Home Loan Bank Board promises to push the idea with savings and loan associations. The scheme is new and,the bankhas had little experience in administering i~ so far. Sardagna himself is g_lum about· short-term prospects since the_state is experiencing_a slump with solar firms going out of business. Low gas prices are blamed for the decline. But over the long term, the San Diego Federal official is hopeful. Below we are publishing Sardagna's own description of the plan, along with an example, which he also prepared, of how it would work in detail: I. Home Buyers-This program can be used where the home buyer wishes to install energy saving devices at the time of his purchase: 4.. The buyer provides a cost breakd9wn and contract showing the improvements to be made. B. The appraisal will be completed utifizing this additional cost as value added to the property and the loan to, value will then be based on the total appraised vahfe. C. If the .funds required for conservation devices are less , •than two percent of-the purchase price, these funds will be released to the buyer at close of escrow. D. If the funds required for conservation devices are in excess of two percent, but less than ten percent, the funds will be placed in a non-interest-bearing, Loansin-Process account until the work is complete. Upon completion, the borrower will request in writing these monies and an inspection:will be made before the funds are released. r . E. A maximum ~f 10 percent of the house sale price will be provided for the energy conservation devices. F. Only 80 percent loans will bdncluded in this program. G. It is important for _the loan officer to use.discretion in determining the increased value to the home after considering_the feasibility and workability of the system and materials chosen. II. Home Owners-This program will help existing SDF borrower:s convert to lower cost, alternative solar energy sources, mainly for hot water heating. , A. Maximum loan amount of $4,000,' or 10 percent of house market value, whichever is less. B. A ,flat $200 fee will be charged to cover the cost of, title policy, appraisal, processing, credit reports, recording fees, etc. If additional costs are incurred, due to the subordination,of junior liens·, these fees will be added to the basic fee. The paleolithic ba_nking system ·is finally discovering that the sun exists and that it can be a wiser investment than business as usual. Here ar.e details on one program. Converting banking investment to good things like this is commendable, and wiser than giving more power to utilities, but praising their belated awakening shouldn't obscure the ,value and need to experiment with new processes such as state solar banks. Innovation is survival. Thanks to Jim Ridgeway for permission to reprint this article from The Elements ($15/year individuals, $25/year imjtitutions,. 1747 Connecticut Ave., N. W., Washington, DC 20009).• -TB I C. San Diego Federal must receive evidence that the solar system qualifies for the California 55 percent tax credit. This is necessary since the state requires the system to meet certain specifications and we want all systems financed by San Diego Federal to meet the state's minimum requirements. • D. Funds will be disbursed when installation has been completed and the system is operating properly. This fact will be verified by letter from the applicant. E. The amount of the additional advance will be at current residential prime rate. The existing-loan will not be raised. Therefore, the rafe stated in the Modification Agreement will be a weighted average of the existing rate and the current rate. The new rate will be rounded up to the nearest .01 percent. The automatic document printer has·the capacity of calculating the monthly payment and daily interest factor. . F. The mortgage will be recast up to 30 years, if necessary, ' in order to keep the payment as close to the.original amount as possible. G. If additional funds are required to pay off existing junior deeds of trust, the borrower will not·qualify _under the program. A standard refinance will be conducted utilizing San Diego Federal's current outstanding policies. • . H. The i;naximum loan amount permitted will be 90 percent loan to value. I. The customer should be urged to open a San Diego Federal savings account. It is hoped that the customer will place all savings from this alternative energy source in this account. By doing so, this program becomes selfperpetua ting.
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