CA: Can HOA enter into a 20-Year Lease for Solar Panels?

We've been exploring a possible Solar Conversion for our Condo Complex in Sunny Southern California. The conversion may pencil out to significant savings over the years as we're faced with escalating utility increases. Significant being $250K to $500K in savings over five to ten years (probably more for the duration of the Solar Lease).

The cost is minimal and through Solar City (a reputable company), but our CC&Rs (from 1981) state we can't enter into long term leases or finance improvements over a certain period of time. (I'm not sure of the exact wording).

I've been searching the Davis-Stirling website on this lease issue (and Googling as well), but can not find anything that addresses the lease. The guaranteed savings means that we won't have to raise HOA dues since it will offset so many other budget items.

We're in the process of updating CC&Rs but that will not happen for another 12 months based on other items we're working on.

Anyone have any experience or knowledge on this? Precedents? I understand that certain cable companies have long term leases with HOAs and that's allowed.

Thanks so much!

Hi, Steve, Thanks. I know there are a lot of bad solar companies out there. One of our HOA Board Members is an architect who has successfully worked with this company. I asked LOTS of questions regarding guarantees, how they make their money, what happens when panels have to be replaced, what if we have an earthquake (who's responsible to replace them), etc. We have 300+ days of sunshine here a year and in our part of the country we can have a huge benefit to offset our HIGH DWP bills. Leasing solar is one of the most cost effective ways to do the conversion, but the 20 year lease is the sticky wicket. Our other option is to pay upfront (not a large amount given that it will "pay for itself.")

Pardon my rant .. .. .. but one of my pet peeves here is that folks ask questions about what to do when they've not carefully studied their own CCRs.

OK so your CCRs are pretty old (e.g. 1981) and that may have some bearing, but when you way "I'm not sure of the exact wording", to me that means that you haven't taken the time to look at them with an intent of trying to understand how your current situation juxtaposes against your governing documents.

Once you understand your own governing documents, you will have a better framework on the "boundaries" within which you can make informed decisions (assuming your CCRs don't violate higher authority laws/regulations).

Take care of that first.

Talk is cheap, guarantees mean nothing. Solar companies are going bankrupt everyday.

II know one town that spent $150k on a windmill and the feds kicked in another $200k. The company gave a money back guarantee and had plenty of other windmills in the usa. The windmill ran for 1 year, the company went bankrupt, and the windmill broke. Its been broken now for 2 years. That guarantee was worth $0.

The most plausible question is, what will happen when the solar company goes bankrupt, and the solar panel system stops working, what happens? No one can answer that. The equipment, the lease payment, the contract, the assets, everything is up in the air.

I also happen to live in an area serviced, or better yet, controlled, by LADWP, so I know the rates they are imposing are more than what other municipalities are seeing. While we don't have the same issue with electricity as Mari is facing, as our owners pay their own power bills, our association took steps to reduce our common area water bills. We are starting the second phrase of our program which will save a minimum of $500K over ten years.

I also realize talk is cheap, but sitting on your thumbs, well, that's "priceless."

The way I approach solar is that the homeowner or association at the most freezes their power bill for a specific period of time. The association benefits and the solar company makes money. IF, someone told me my association COULD MAYBE save $500K over a period of time why wouldn't I look at a proposal and ask questions, maybe from this site of all places.

Who knows, what assurances do any of us have the world doesn't just end tomorrow.

Richard, you are right. We are controlled by the LADWP and our COMMON AREA electric bills run around $5K+ a month. We really get hit with the non-government controlled Tier 3 usage in certain months - as an HOA and as Homeowners since we're in the San Fernando Valley with triple digit temperature heatwaves. I'm really just looking at options to see if it's even feasible. Solar City is a company that makes it's money on the rebates. Feel free to look them up, but based on the initial presentation (and our roof space), this could be a good thing for the HOA. Also, depending on roof space, we want to explore the possibility of individual unit conversions if homeowners want to pursue it.

Richard, it also sounds like you're using solar to heat your hot water and that's another possibility but based on our roof space, we'd probably choose Solar to power electric instead of replace the hot water system.

I, like many of you, are skeptical about solar companies as there are a lot of horror stories. This is not a decision that will be entered into without complete and proper vetting of whatever solar company we choose IF and only IF we feel comfortable that they will be there to service it.

If anyone has had experience with Solar City (good, bad or ugly) - please feel free to share your experience with me.

Thanks again for all your replies. I really appreciate this forum.