By Vindu Goel, San Jose Mercury News

Article Launched: 11/25/2007 01:45:34 AM PST

Every once in a while, somebody in government comes up with an idea so brilliant, that everyone else ought to copy it.

Cisco DeVries, chief of staff to Berkeley Mayor Tom Bates and a former official in the Clinton administration, dreamed up one of those just-gotta-steal-it notions.

DeVries crafted a plan, just approved in concept by the city council, to help Berkeley homeowners and businesses pay for solar electric systems, solar water heaters and other energy-efficiency improvements through a customized, voluntary surcharge on their property taxes.

Essentially, the city would use its access to cheap bond financing to offer residents low-cost home-improvement loans, repaid over 20 years by whoever owns the property. Homeowners paying the typical $15,000 for a solar-power system after federal and state rebates would owe an extra $100 to $115 a month in taxes, much of which would be offset by savings on their monthly electric bill.

Meanwhile, taxpayers who don't borrow anything wouldn't pay a dime. All administrative costs would be borne by participants.

"It's not rocket science," said DeVries, who came up with the notion after a couple of intense weeks of brainstorming at the beginning of the year. "I was pretty convinced that someone would have thought of this before. We do this for underground utility districts."

DeVries is too modest. Although a lot still needs to be worked out before Berkeley starts offering the loans next summer, the property-tax financing structure could offer a national model for how local governments can help fight global warming and save residents money.

In one stroke, the plan would remove the biggest barrier to installing solar - coming up with the upfront cash. It would cut participants' energy costs and make their homes and buildings more valuable. If adopted widely, it would significantly reduce the greenhouse-gas emissions that contribute to global warming.

Tom McCalmont, chief executive of solar installer ReGrid Power in Campbell, said the concept also could give the California solar industry a huge boost. "If it sweeps like wildfire, I think we could see a dramatic increase in demand, like a doubling," he said.

EPA is impressed

The U.S. Environmental Protection Agency is so impressed that it's expected to give Berkeley $160,000 to figure out the legal and financial details, with the goal of helping cities around the country copy the idea. Berkeley hopes to target 100 homes and 25 commercial and multifamily buildings in the program's first year.

State officials are already trying to figure out how to extend the notion beyond Berkeley to help meet California's goal of cutting greenhouse-gas emissions 25 percent by 2020. Under current law, only California's 86 charter cities - which include San Jose, Sunnyvale and Palo Alto - have the authority to create a "sustainable energy financing district."

But "there's no reason you couldn't have a statewide assessment," said Ken Alex, who coordinates global-warming initiatives for California Attorney General Jerry Brown. "It just strikes us as one of these very creative solutions that doesn't seem to have any downside."

San Jose Mayor Chuck Reed is also studying the mechanism, which could help him achieve his vision of 100,000 solar roofs in San Jose in the next 15 years.

"The payback is almost guaranteed," said Jeff Janssen, a senior policy adviser to Reed. Janssen and other local officials are pushing the idea of forming a Bay Area regional entity that could borrow the bond money more cheaply than an individual city, lowering the costs to homeowners even further.

Just about the only losers in this scenario could be the banks that offer home-equity loans for energy efficiency. But with the turmoil in the mortgage market, especially for second loans, lending money to a city government looks a lot more reliable.

Removing an obstacle

Mike Borbely, a custom home builder who recently organized more than 40 Willow Glen residents to make a group purchase of solar panels, said one of solar's thorniest issues is that it takes up to 10 years for a homeowner to recoup the installation costs through lower electric bills.

Although people can take out home-equity loans to finance the system, owners who think they might move in just a few years often don't want to make the investment. By bundling payments into the property-tax bill, a new owner would inherit the tab along with the solar panels. "It's pretty cool," Borbely said.

Not bad for government work.