BEST OVERALL PROJECT:Readers Laud Solar-Powered Tax Credit Development

POWAY, CALIF.—At a time when “going green” has become a catchphrase and marketing slogan, a small 56-unit project here stands out as a promising model for a comprehensive approach to energy conservation and environmental responsibility.

AFFORDABLE HOUSING FINANCE readers voted Solara as one of two winners of the most outstanding project award in the magazine’s Readers’ Choice Awards for 2007.

The project was completed earlier this year in this San Diego County community by Community HousingWorks.

As the name suggests, this project meets its electrical power needs from a series of photovoltaic panels on its roofs. Community HousingWorks incorporated many other “green” features to make the project energy efficient and environmentally friendly, said Anne B. Wilson, director of housing and real estate development.

A wide array of financing sources and strong support from the city were crucial to getting the project approved and covering its high costs, including $1.1 million in hard costs for the photovoltaic system alone. The total project cost was $16.3 million.

“The city of Poway is proud to have worked with Community HousingWorks in the development of Solara—a model of green, Smart Growth both in the state and the nation,” said Poway Mayor Mickey Cafagna.

The city and the developer “pioneered the way for more affordable housing complexes to successfully go green,’” he said. “What we did at Solara will probably be normal practice for multifamily builders in the next five years as we all work to lower emissions and counter climate change.”

The project received federal tax credits of $11.4 million over 10 years. The family project has mostly two- and three-bedroom units, with only eight onebedrooms. They range in size from 659 square feet to 1,023 square feet. All units are affordable, with 23 percent affordable to households earning up to 60 percent of the area median income (AMI), and the balance serving people with incomes topping out as low as 20 percent of AMI.

The developer covered the cost of the solar energy system by tapping several state and federal financial incentives that are generally available but not widely known to housing developers.

Equity was syndicated by the National Equity Fund (NEF). The equity proceeds from the federal housing tax credits totaled $11.3 million. On top of that, NEF raised an additional $208,000 from the sale of the federal investment tax credits for the use of solar power. The credit is for 30 percent of the amount spent on eligible solar systems.

Permanent mortgage financing came from Union Bank of California, which agreed to loan $13 million for 40 years to help defray the portion of the cost of the solar installation not covered by other sources.

Solara also received a rebate of $409,000 from the California Energy Commission on the cost of the solar energy panels.

The building is the first in California and possibly in the entire country to use solar power for all residential and common areas. The building is still linked to the public utility power grid, so that it can feed in electricity during peak solar generating hours and draw power at night. The project’s first monthly electric bills have been negative.

Located just northeast of San Diego, the development’s biggest energy challenge is air conditioning. Space heating is done with a tankless hot water system that also generates hot water. The system is gas-powered.

The project’s energy efficiency helps tenants primarily by protecting them from the increases in utility costs, especially for electricity, that California developers are expecting.

Tenants pay no utility costs, leaving the risk of excessive consumption and price increases with the project sponsor. To make sure tenants don’t lose track of their usage in the absence of monthly bills, the sponsor insists that they take training in energy conservation and includes “green” provisions in leases.

“I’m very happy living here,” said Solara resident Alfonso Perez. “Everything works very well. And, electricity from the sun! It’s very convenient to walk to the market or errands with my grandchildren—and not have to get into the car.”