DALLAS - In what is thought to be the first deal of its type in the public market, Boulder County, Colo., on May 19 plans to price $7.8 million of special assessment bonds for clean energy projects.
The issue for the Clean Energy Options Local Improvement District is the first of $40 million authorized by voters last November. D.A. Davidson & Co. is the underwriter, with Kutak Rock LLP as bond counsel.
The bonds, which are awaiting an initial rating from Standard & Poor's, will be sold in two series. Series A will consist of $2.4 million of tax-exempt bonds, while the $5.4 million Series B will be taxable. The Series A bonds will be used for low- and moderate-income property owners in the affluent county. Both series will carry maturities of 2014, 2019 and 2024.
Under the program, residential and commercial property owners can finance renewable energy improvements, such as installing a solar power system, or retrofitting a home to increase energy efficiency. Participants who volunteer for the program choose a loan value based on the energy improvements they select.
Loans are paid back through an annual special assessment on the property itself. When the current owner sells the property, the lien remains with the property under the new owner. Thus, the loan does not work like a home equity loan that must be repaid when the property is sold.
"It's one of the most interesting concepts for a local improvement district that I've ever seen, having spent 20 years on the implementation of special districts in the assessment process," said Boulder County Commissioner Cindy Domenico. "It offers financing opportunities to people in a way that is truly useable and can be a model for the state."
The initial loans will go to 385 homeowners with an average loan of $17,000, said Russ Caldwell, vice president of D.A. Davidson, which is also working as financial adviser. The minimum loan must be $3,000 and the maximum $50,000, he said.
Solar voltaic projects will take the lion's share of the proceeds, $2.4 million, or 37%, followed by exterior window and glass doors at $1.2 million, or 18%.
Other projects covered include high-efficiency furnaces, new roofs, insulation and tankless water heaters.
Creation of the Clean Energy Options District was authorized by the Colorado Legislature's passage of HB 1350 last year.
Although Caldwell calls this deal the first public debt issuance for a local energy program, Berkeley, Calif., last year financed a similar program using privately placed debt.
The Berkeley City Council approved the program on Nov. 6, 2007, and authorized a maximum $80 million of debt on July 22, 2008. The Berkeley bonds were not tax-exempt.
The Berkeley program is similar to Boulder County's in that property owners finance solar installations and energy-efficiency improvements through their individual property tax bills. Only property owners who choose to use the financing for improvements pay the special tax.
As in Boulder County, the energy projects and the loans remain with the property in the event of a sale, becoming the responsibility of the new owner.
The University of California at Berkeley's Renewable and Appropriate Energy Laboratory estimated that there were 4,000 homes in Berkeley that could benefit from having solar photovoltaic panels installed on their rooftops.
