A year after county officials considered dropping it, a program that allows homeowners to make energy improvements is now available to Santa Barbara County residents.

When the county considered launching the program last year, the emPowerSBC had been under the auspices of the Property Assessed Clean Energy (PACE) program, but the plan landed in legal limbo when the Federal Housing Finance Agency warned that PACE programs would increase risks to lenders.

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The agency directed Freddie Mac and Fannie Mae, which currently guarantee about 90% of residential mortgages, to not issue loans on properties with PACE financing because it impeded lending practices, a move that prompted some counties and former State Attorney General Jerry Brown (D) to file suit.

The banks were wary of accepting PACE liens that would take precedence over the mortgage in the event of an owner default. The county Board of Supervisors passed a resolution to refuse applications for the new program.

A year of pondering the problem, the county Board of Supervisors returned to the issue on Aug. 9 and unanimously approved the loan program, opting for a public-private alternative to the PACE model.

EmPowerSBC, or “Elective Municipal Program to Optimize Energy and Renewables for Santa Barbara County,” offers long-term financing to property owners for energy improvements such as weather stripping and home sealing, tankless water heaters, wall insulation, water-efficient landscape systems, window replacement and solar equipment.

Originally, emPowerSBC was to be one of 200 PACE programs in the country in which residents would repay the county over a five- to 20-year assessment period through their property tax bills. Now, homeowners, depending on where they live, will deal with Santa Barbara-based CoastHills Federal Credit Union or Ventura County Credit Union.

The program will offer low-interest, long-term loans ranging from $1,000 to $25,000 to property owners at rates starting at 5.90% and repayment terms from five to 15 years. Angie Hacker, emPowerSBC program manager, said she expects the program to produce between $25 and $40 in economic output.

Homeowners are evaluated to ensure they are current in their property taxes and mortgage payments, among other restrictions, such as low credit scores.

Loans are primarily for basic energy-efficiency measures, but once these improvements are made, applicants can also apply for loans to purchase solar panels.

The county has received $3.2 million in grants from the Department of Energy and the California Energy Commission to fund administrative costs for the pilot program through 2013, though the county can use unused funds to continue issuing loans into the future.

First District Supervisor Salud Carbajal, an ardent supporter of the program, applauded the banks for working with the county to kick-start a program that could increase property tax revenue and buoy the construction industry, which has been trying to regain its footing in an ailing economy. “I just want to point out that we partnered with all eight cities in the county,” he said. “So there’s plenty of individuals that could apply for this.”

The public-private model assuaged concerns by 4th District Supervisor Joni Gray, who found a county-run financing scheme worrisome.

“That’s just not our forte,” she said at the last meeting. “I’m glad we’ve found a solution.”

The county is also working with Energy Upgrade California, a statewide incentive program providing rebates to homeowners interested in making energy upgrades, to pool for trained contractors who meet criteria for energy installations.

“On the one hand, we don’t want to meddle with the relationship between the contractor and the person taking out the loan,” Carbajal said. “But on the other, we want to make sure the contractors association are really partnering with us so we have folks who are experts at doing this.”

Karin Perissinotto, executive director of the Santa Barbara County Contractors Association, lauded the program. She said her referral agency has roughly 700 members on tap to participate in the program.

“We’re ready to work with the program reliably and responsibly in any way we can,” she said. “It’s a unique opportunity that brings us one step closer to developing jobs in the construction industry.” A spokesman for CoastHills said the company plans to initiate a “soft launch,” a gradual rollout over two months to advertise the program on television, radio and in newspapers. Homeowners, he noted, can apply for loans online or at bank branches where their applications will be processed “within minutes. By telling the story, we’ll have the ability to make a great number of loans and penetrate the entire market,” he said with aplomb.

A participation workshop for contractors will be held in Ventura on Aug. 25. The county is expected to accept applications in early September. County residents can find out more about the program by visiting empowersbc.org or by calling (805)568-3566.