OK, looks like we’re getting somewhere in understanding this new going for less than 7 percent right now. Again, this is practically a guaranteed payback during a time of ridiculously low interest rates. And we have to pay 7 percent?
Here are Bruvold’s thoughts:
Couldn’t agree more that AB 811 programs seem really interesting and smart. What I have not gotten an answer out folks (asked California Center for Sustainable Energy) is why the programs seem to “sole source” the financing. Given that the loan is attached as essentially a Mello-Roos to the property, it is about as safe as money as there is — like property taxes even in the case of a default on the mortgage, the taxes would just accumulate as a lien on the property, eventually requiring them to be paid off.
So the rates should be extremely low and attractive. But, as the programs are now structured, there is little to no incentive for the municipality to go out and negotiate the best possible deal for would-be borrowers. Berkeley’s rate, for example, is about 50 to 75 basis points above what I was able to find for a comparable home equity loan.
Memo to mayor then: Get us a better deal than 7 percent. Show them your bad cop routine.