FREQUENTLY ASKED QUESTIONS

General Program Information	Program Finance Information
Eligible Costs and Improvements	Program Tax Information

General Program Information

Q:	What is EIP?
	The Yucaipa Energy Independence Program (EIP) offers property owners the opportunity to finance energy efficient property improvements through the property tax system. It is an innovative new effort to improve energy efficiency, water conservation and renewable energy generation, thereby reducing greenhouse gas emissions.
Q:	How does EIP work?
	Property owners apply for the program, describing the energy improvement(s) they wish to make. If the application is approved, the city and the property owner enter into an assessment contract, through which the city pays the up-front cost of the improvements. The city places an assessment lien on the property, and the property owner repays the city for the improvements as an assessment on his/her property tax bill over a 10,15, or 20 year period.
Q:	Who can participate in EIP?
	Any residential, commercial, or industrial property owner in the City of Yucaipa may participate in the program. In order to qualify, the following criteria must be met: Property title is vested in the applicant(s), without federal or state income tax liens, judgment liens, or similar involuntary liens on the property; All property taxes on the property are current; Property owner is not in bankruptcy and the property is not an asset in a bankruptcy proceeding; Property owner is current on mortgage(s); The EIP Administrator, in his discretion, may require the consent of pre-existing secured lenders; Costs of the proposed Energy Improvements are reasonable relative to the value of the property. As a guideline, improvements should not exceed 10 percent of the property’s assessed value; Energy improvements comply with all applicable covenants, conditions and restrictions; Property owner has applied to state and/or federal rebate programs including, but not limited to, the California Solar Initiative, Self-Generation Incentive Program, and other weatherization programs, as applicable.
Q:	How do I apply for EIP?
	Applications may be obtained at the front counter of City Hall at 34272 Yucaipa Boulevard in Yucaipa, or online at www.yucaipa.org.
Q:	Can I use EIP for my business property, or just my house?
	Yes, EIP is intended for improvements on residential, commercial, and industrial properties. You do, however, have to be the property owner, not a tenant, and different requirements are applicable to business property. You can review these online at www.yucaipa.org.
Q:	The improvement I am planning requires a building permit. Can I get that from EIP too?
	You must obtain any needed permits from the Building and Safety department. The costs of those permits may be rolled into the EIP loan amount.
Q:	I am a licensed professional contractor. Can I do my own EIP work on my property?
	Licensed, professional contractors working on their own property may request EIP financing for materials, cost of their work crew’s labor and overhead but not for their own time. The labor and time of the contractor is not included.
Q:	What if my house is “under water”? Can I still participate in EIP?
	Yes, if the project makes sense in terms of value, and you otherwise meet requirements (current on mortgage, property taxes, etc.).
Q:	What action defines the start of my project, (which would preclude my participation in EIP)?
	A project is defined as “started” and not available for participation in the program when labor associated with the construction or installation of improvements has occurred on-site. Action not defined as “starting” include: audits, estimates, being ‘in contact’ with a vendor, including the delivery of materials. EIP is not responsible for any expenses incurred if your application is not approved for some reason.
Q:	What if the property owner is a trust?
	Property owners must supply documentation that they are authorized to sign legal documents on behalf of and bind the trust.
Q:	Can I apply to EIP for work that is already completed?
	No, AB 811 does not allow us to fund improvements that have already been installed. It also prohibits using the program for refinancing. A property owner that has already pulled a permit and/or has a bid or signed contract for a project may apply to the program as long as no work has been started and no other funding has already been provided.

Eligible Costs and Improvements

Q:	What improvements can I finance with EIP?
	Improvements must be permanently affixed to the property. In general, the type of improvements contemplated by EIP would include: High efficiency windows Solar and/or tankless water heaters Solar panels Upgraded wall and roof insulation “Smart” irrigation systems High efficiency HVAC systems For a more comprehensive list, see Appendix “ B ” in Program Guidelines Owners may also propose improvements that are not on the list as “custom” applications. These will be reviewed on a case-by-case basis, with the ultimate goal of increasing energy efficiencies.
Q:	What if my improvements are a mixture of repairs and energy improvements?
	State law limits the EIP program to energy and water efficiency improvements. Repairs and/or new construction outside the improvements do not qualify. Therefore, if certain repairs need to be done before, during, or after the improvement project takes place, you must bear the cost of those repairs outside of the EIP assessment. An example would be dry rot discovered during the installation of energy efficient windows. The cost of the new windows and their installation would be covered, but the repair of the dry rot would not. City staff can assist in clarifying these types of issues.
Q:	If I am building an addition onto my house and doing energy upgrades at the same time, can I still apply for EIP financing?
	The program cannot finance the construction of the new addition. You may, however, apply to EIP for the energy upgrade portion. You should obtain separate bids for the energy improvements and the new construction. Energy improvements eligible under the program could include solar for the entire structure, upgrades to windows and insulation in the existing structure, and system wide improvements to HVAC and water heating.
Q:	I want to remove sheetrock to install better wall insulation. Will EIP cover the removal, replacement and painting work, or just the insulation?
	Perhaps. EIP staff will need to review these kinds of issues on a case-by-case basis evaluating the age of building, framing, and wall material such as the plaster, and existing insulation.

Program Finance Information

Q:	How much financing is available to me? What are the terms?
	The minimum loan from EIP is $5,000. The maximum loan from EIP for residential properties is $35,000. For Commercial or Industrial properties the maximum loan is $100,000. EIP loans greater than $50,000 must be approved by the City Manager. Loans greater than the maximum must be approved by City Council. All projects may be repaid over a term of either 10, 15, or 20 years at the property owner’s option. Approval of loans will be made on first come, first serve basis and will be subject to amount of funds available in the program.
Q:	What is the interest rate being charged to participants?
	EIP anticipates offering competitive interest rates that are at, or below, the fixed rates on home equity loans that participants could obtain from financial institutions; the rate is currently at 7%. The interest rate will be fixed at the time the assessment contract is signed, and will not go up.
Q:	Why should I participate in EIP, as opposed to a regular home equity loan?
	EIP financing has several advantages that you may want to consider: Easy and simple to qualify Unlike bank loans, assessment financing is not restricted by a rigid formula related to value Financing is not based on the owner’s annual income Assessments do not appear on your credit report Assessments are paid semi-annually along with your property taxes Assessments are passed to subsequent property owners, so you don’t have to pay them off if you sell For financial reporting, these transactions would be treated the same as other assessments on your property
Q:	Is there an early payment penalty? If so, how much is it?
	No. Early payments enable the City to fund additional improvements within the City.
Q:	How long does it take to receive payment once my project is finished?
	Once city staff completes its final inspection and deems improvements are completed, the EIP Administrator disburses loan funds to the property owner within 10 business days of the completion of the inspection.
Q:	Is the interest paid to EIP “simple interest”?
	Yes.
Q:	Can I include energy evaluation/audit costs in my EIP application even if they are paid beforehand?
	Yes

Program Tax Information

Q:	What about any rebates or tax credits associated with my improvements?
	EIP will only finance your actual costs for the improvements. You will be required to disclose rebates that you receive and the amount will be deducted from the assessment contract. Tax credits, on the other hand, are yours to keep.
Q:	When does the City place the assessment lien on my property?
	The lien is placed at the time the assessment contract is signed.
Q:	If the improvements increase my property value, will my property taxes go up?
	This is a complicated issue, but the short answer is they certainly could. Besides the energy savings, an advantage of these improvements is that they add value to your property. Certain solar projects are exempted from reassessment, but other projects are not. In addition, items that have a dual purpose, along with solar issues, must be reassessed. Applicants are encouraged to call the San Bernardino County Assessor’s Office at (909) 387-8307 for clarification.
Q:	My mortgage company pays my property taxes. Will they take care of this, too?
	Yes, you should advise your lender of the assessment on the property, so that the proper amount can be set aside for both your taxes and the EIP assessment. It is a good idea to check with your lender before you apply to EIP, as some mortgages might prohibit participation without your lender’s consent.
Q:	What happens if I can’t make the payments?
	Failure to pay the EIP assessment would be just like failing to pay your property taxes. Penalties and interest charges would apply until the assessment is paid. The city would, ultimately, have the right to force the tax sale of your property.
Q:	What happens if I sell my property before the assessment is paid off?
	Because EIP financing is an assessment against the property and not a personal lien, the assessment will stay with the property until it is paid off. The assessment will appear on any title search of your property. Therefore, it is a good idea to disclose the assessment early in any negotiation about the sale of your property.
Q:	Are my tax dollars being used to improve someone else’s property?
	The program will be initially financed with funds from the General Fund. EIP participants will repay the General Fund, with interest. EIP will charge participants an interest rate and administrative fees that ensure the program’s costs are recovered.
Q:	Is my EIP assessment tax deductible?
	It may be. However, we are not qualified to provide tax advice. We recommend you consult with your tax professional.

For additional information, please contact:
Greg Franklin, Director of Administrative Services or Dustin Gray, Accountant