Solar Mortgages Drive Sales
A Denver condo developer offers lower-cost financing to buyers who "go solar"
According to Zocalo Community Devlopment, each of its solar-equipped condo owners saves an estimated $417 per year. (Photo: John Robinson)
Real Estate Innovation
2009 INNOVATIONS REVIEW
Companies find that environmental sustainability helps reduce costs and gain advantages.
RiverClay, a Denver condominium complex with 60 residential and two commercial units, is Colorado's first LEED-certified condo development. As such, the building is chock full of environmentally-friendly features—from recycled cellulose insulation in the walls to Energy Star-rated appliances to a reserved space on the bike rack for each parking space in the garage.
But what makes RiverClay stand out from the crowd is an impressive array of solar photovoltaic panels—and an innovative way of helping condo buyers afford the units connected to those panels.
Built by Zocalo Community Development, the RiverClay complex sports more than 30 unit-specific, 1.26-kilowatt solar modules on the roof. The solar panels are designed to supply about 20 to 30% of each unit's electricity needs.
To sweeten the deal for prospective buyers, Zocalo offers lower-interest "solar mortgages" to those who elect to have solar power routed to their condos.
Here's how the financing works: The cost of each four-panel module—about $11,000—is adding on to the 30-year mortgage, allowing buyers to pay back the upfront costs over time. Better yet, Countrywide Financial (now part of Bank of America) and RiverClay teamed up to provide a 1/4 of a percent discount on the interest rate. Buyers are also able to take advantage of federal tax credits and a utility rebate for new solar power installations.
Owners benefit from unused electricity
Any electricity that a condo owner does not use is automatically fed back into the grid, and Xcel Energy (the local utility company) pays that owner for the returned power—a concept known as "net metering." RiverClay's homeowner's association even benefits from 10-kilowatts of free solar power from the sun.
According to Zocalo, each solar-equipped condo owner saves an estimated $417 per year from the combination of the mortgage interest rate discount, electrical savings, tax credits and utility rebates from Xcel Energy, compared to owners of units without the solar option.
Says Sarah Harman, a partner with Zocalo: "As long as the sun is shining, you're either producing and using electricity, or you are producing and selling."
Since RiverClay just completed construction in the third-quarter of 2008, it's too soon to fully quantify the environmental impact of its solar installation, but Zocalo is tracking the energy usage in each condominium and plans to make data available after the building's one-year anniversary.
The solar offering has already been good for business. Harman reports that Zocalo has received significant recognition through local and national awards, and the company has been sought out by institutional and individual investors looking for "green" investments.
And most remarkable, all but one of the units in RiverClay sold within the first six months on the market, an impressive achievement in a real estate market that is sluggish at best.
"There is no other condominium in Denver that comes with a solar power option," says Harman.
Posted: 09-Apr-2009; Updated: 20-Apr-2009
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