Book Puts Price on Use of Solar Panels, Rainwater

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Robert Freilich walks from his Century City condo to his office nearby. He’ll even walk to Beverly Hills with his wife for dinner. The exercise is great, but he’s got a point to prove, too.


A partner at Los Angeles-based Miller Barondess LLP, Freilich has been promoting environmental sustainability since the 1970s, when he worked on legal issues to curb suburban sprawl in New York.


During the last several years, Freilich has been devising ways for homebuilders to affordably incorporate solar energy panels, and rainwater capture and treatment systems in their residential developments.


“If developers could get their money back, then they would be happy to install those systems,” Freilich said.


Developers he has worked with say they’re open to suggestions.


“There is a sense that we have some level of responsibility to do a better job of sustainable development,” said Peter Johnson, president of SunCal Cos.’ San Bernardino County division. “But unfortunately it all costs money, so to reasonably finance the costs without affecting our bottom line would make the project viable.”


Freilich is helping Irvine-based SunCal plan a community in Barstow that will incorporate a plant where water will be treated and reused for landscape irrigation.


The attorney lays out his plan to promote sustainability in the newest edition of his book, “21st Century Land Development Code.” Through one method, Freilich said utility companies or water districts could loan developers the money to install the solar energy and rainwater capture systems, and then the companies would add a monthly surcharge to each homeowner’s bill to recoup their money.


A second method involves the creation of special assessment districts, where the district would build the solar energy facility or install the rainwater capture system and issue bonds based on the cost of the systems. Or, developers could front the initial costs for installing solar energy and rainwater capture systems and recover the expenses by charging homeowners an extra monthly fee through the homeowners association.


But with the current slowdown in the home real estate market, Freilich’s system of monetizing sustainability may not shift into full gear until home developers restart their engines.


“This crisis will slow down that type of innovation,” said Robert McMurry, a real estate partner in the Los Angeles office of Paul Hastings Janofsky & Walker LLP. “A homeowner is not worried about what their water usage is, they are worried about how they are going to pay the bills.”



Long-term savings

While initially there is a substantial investment to install these environmentally friendly amenities, in the long run homeowners save money on energy and water bills.


Solar energy systems run around $28,000 per home, whereas air-conditioning units cost $8,000 to install. Therefore, developers would have to invest an extra $20,000 to outfit each individual home with solar panels.


Looking at the average cost of solar panels versus air conditioners, Freilich said the amount that utility companies, special assessment districts or homeowners associations would have to charge to recover the loaned money is $40 per month.


When a single-family home uses solar energy to power amenities such as air conditioners, Freilich said studies show the average monthly energy bill is reduced to $80 from $400. Therefore, with the $40 surcharge, homeowners are paying $120 per month for energy, saving an estimated $280 per month.


“The net savings to homeowners is around 60 to 70 percent with the surcharge included,” Freilich said.


While Freilich’s methods of paying for sustainability are ideal in theory, some land-use attorneys said an assessment on homeowners for solar energy and rainwater systems may not work as well in practice. For a new development, the assessment would be part of the association’s conditions, covenants and restrictions. For an existing development an assessment would have to be approved by majority vote.


“The homeowners all have to agree to a special assessment on themselves,” said Kenneth Bley, a partner in the Los Angles office of Cox Castle & Nicholson LLP. “And if you have a couple hundred people and it costs $10,000 or $20,000 per unit to put the solar panels up, that is really asking the homeowners to contribute that amount over time, and that is difficult to do.”

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