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Front Page » Top Stories » Tax Districts Remove Cost Barrier To Going Green

Tax Districts Remove Cost Barrier To Going Green

Written by on January 28, 2010

By Risa Polansky
"Green" has become a buzzword in both political and grassroots circles, with citizens and governments growing increasingly involved in promoting energy-efficient practices.

But some, particularly major "green" capital improvements like solar paneling, can be costly.

States like California have already taken steps to remove funding barriers and allow more property owners to "green" their homes and businesses.

But "it’s a fairly new concept for Miami," said Miami-Dade Commissioner Katy Sorenson at a Budget, Planning and Sustainability Committee meeting this month.

She’s proposing the county explore creating a "voluntary Energy Finance District" — basically, an opt-in taxing district that would help property owners finance energy-efficient home improvements through the local government.

Essentially, the government would make a loan for the project, whether it be solar panels, an energy-efficient air conditioning system or another "green" improvement, and the property owner would pay it back over time through a new assessment on the annual property tax bill.

To make the loans, the governments would probably issue taxable assessments bonds that would be secured by the new assessment revenue.

Such initiatives are "gaining traction" around the country, said Sergio Masvidal, senior managing consultant with Public Financial Management, or The PFM Group, in Coral Gables.

He laid out the concept for county commissioners at the budget and planning committee meeting.

The goal, he said: increase local energy efficiency by "providing homeowners with a low-cost, or lower-cost, form of financing without any upfront costs."

Cutler Bay Mayor Paul Vrooman has been pushing a similar idea in communities in the southern part of the county, his focus primarily on financing solar panels.

"This is the sunshine state after all," he said, but installing panels on a typical three-bedroom, two-bath home can cost $30,000 to $35,000.

"The problem becomes, how do we get the upfront cost covered?"

Mr. Vrooman flew to Berkeley, CA, last year to meet with the city’s mayor and learn about the program there.

Berkeley established a citywide special taxing district that allows interested residents to opt in and have the government pay for solar panels, placing a lien on the home for the price of the installation.

The lien stays with the property itself, not the occupant.

Owners pay it back on their property tax bill over 20 years through the special assessment. Berkeley issues bonds to finance the loans.

Also, the federal government offers tax incentives and credits.

"So here we’ve got a situation where all of a sudden those upfront costs are taken care of," allowing more people to join the green movement — and to save money on electricity costs, Mr. Vrooman said.

Solar panels "in many cases can result in you basically getting free electricity," he said, and if any extra is generated, owners can sell it back to the power utility at the retail rate.

One issue: "This is new ground that hasn’t existed before… so currently that kind of [taxing] structure does not exist in this state," Mayor Vrooman said.

Also, it would be difficult to issue bonds without a significant number of borrowers participating in the program.

Hence his "green corridor" idea — clustering neighboring cities to establish a formidable base.

He’s asking area municipalities to support a measure encouraging the state to allow for such a program.

"What this does is it clears a path so that we can partner and do this," Mr. Vrooman said.

So far Palmetto Bay is on board with Cutler Bay.

Pinecrest and South Miami are set to vote soon, and Mr. Vrooman has passed the idea along to Coral Gables’ mayor Don Slesnick.

With state approval, the municipalities would then consider creating the green corridor and rolling out the voluntary taxing program.

The county is also looking to take action.

Ms. Sorenson’s proposal asks the administration to "prepare legislation at the State and/or County level, whichever is necessary and legally permissible… regarding the establishment of a voluntary Energy Finance District."

It calls also for a report outlining an "Energy Savings Program" to encourage energy-saving installations and retrofits.

The report would consider financing mechanisms and the types of energy-efficiency improvements the program would cover, among other details.

The full commission is to vote Feb. 2.

"This is all very new — we’re working as we go," said consultant Mr. Masvidal, whose company has developed such programs in other states.

Said Mr. Vrooman, "It’s gone off like gangbusters out there…. It hasn’t happened in Florida." Advertisement