QUESTION: Our board is considering securing a 5-year loan for the purpose of installing solar panels to generate electricity and solar heating for our pools. We estimate the costs will be almost completely off-set by the savings in our gas and electric expenses. We plan to submit a ballot to all homeowners to confirm approval from a majority before we proceed. Is this required? And how will this indebtedness impact individual homeowners?
ANSWER: If the loan requires a special assessment of more than 5% of the budget, you need homeowner approval. The indebtedness should have no effect on owners' credit since the loan will be to the association and not to individual owners.
Solar Leases. Other funding options include Solar Leases and Power Purchase Agreements (PPA). Under a Solar Lease or PPA, a third party pays for and owns the solar installation, taking advantage of the tax benefits and selling the electricity generated to the association. The advantages to the association are (a) no or minimal up-front costs, (b) lower energy rates and (c) certainty about the rates/tariffs the association will be paying for energy for years to come (typically 15-20 years).
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.