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Green Jobs/Green New York: Increasing Opportunities for Home Energy Efficiency Upgrades. Anthony Ng Green & Equitable Economies Strategist Center for Working Families October 1, 2013 NYS CDFI Conference. Workshop Goals . L earn about Green Jobs/Green New York
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Green Jobs/Green New York: Increasing Opportunities for Home Energy Efficiency Upgrades Anthony Ng Green & Equitable Economies Strategist Center for Working Families October 1, 2013 NYS CDFI Conference
Workshop Goals • Learn about Green Jobs/Green New York • Learn how Craft3, an Oregon and Washington based CDFI is offering energy efficiency loans • Get your feedback on a proposal for an energy efficiency loan pilot program, that would involve a partnership between credit unions/CDFIs and the NYS Energy Research & Development Authority (NYSERDA)
Green Jobs/Green New York (GJGNY) PRIMARY GOALS • Conserve on energy use • Save money for low-to-moderate income homeowners • Create good jobs • Reduce carbon emissions
GJGNY: Removing Barriers to Retrofits • Free/low-cost energy assessments • Low-interest financing and incentives • On-bill recovery (OBR) • 18 community-based organizations (CBO) conduct program outreach, assist homeowners with financing and retrofit process; several also do workforce recruitment. • Building Performance Institute (BPI) accredited contractors • NYSERDA must approve project work scopes • Quality control: 10 to 15 percent of projects are inspected afterwards
Positive Community Impact Households completing a retrofit through GJGNY like the program Most important reasons for completing a retrofit: save money and improve the home Free/low cost audit, incentives, and low-interest loans very important in decision to do a retrofit Nearly 46% of contractors surveyed have hired workers since GJGNY began Creating community benefits – leveraging CBO community outreach to generate better paying jobs and price discounts for customers
Green Jobs/Green New YorkProgress to Date • For 1-4 family homes (as of 8/31/2013) • 40,280 energy assessments completed (87.5% of goal) • 10,730 projects completed (71.5% of goal) • $37.3 million issued in energy efficiency loans • Signs of market transformation • Developing future statewide energy efficiency policy Tracy & Wendy Persons. Binghamton, NY homeowners
Average annual energy savings for a retrofitted home Energy Expenses and Savings Average annual energy expenses per household in NYS $1724 Capital Region/Saratoga: $755 Central New York: $571 Finger Lakes: $533 Long Island: $870 Mid-Hudson/Westchester: $802 New York City: $885 Southern Tier: $924 Western New York: $588
Many Buildings Can Still Become Energy Efficient • Carbon War Room: Market potential of energy efficiency is $87 billion per year • Ceres: $280 billion investment opportunity that can save building owners $1 trillion over a decade • NYC: 75% of carbon emissions comes from its buildings. 80 % of our buildings will still exist in 2050. • This is a lot economic activity that can create and support businesses and jobs
How Do I Pay for It? GJGNY Financing Options • Smart Energy Loan (3.99%; 3.49% for borrowers that repay with automatic payment) • On-Bill Recovery (OBR) Loan (3.49%) • For each loan, two sets of underwriting standards: • Tier 1 – Standard approval process • Tier 2 – Alternate approval process that incorporates utility bill repayment history • Loan amount: up to $13,000; goes up to $25,000 if the payback period is under 15 years • 5, 10, or 15 year loan terms; term can’t exceed expected useful life of energy efficiency measures • Subsidies also available for homeowners above and below 80% of area median income.
Administration of Current Green Jobs/Green New York RLF • RLF capitalized with $51M in Regional Greenhouse Gas Initiative (RGGI) funds. $26M for 1-4 family homes. • Energy Finance Solutions (EFS) originates the loans on behalf on NYSERDA • For on-bill recovery, the utilities collect the on-bill payments and remit to NYSERDA, which replenishes the RLF • $24.3M bond issuance just completed to also replenish RLF
Benefits of On-Bill Recovery • Re-pay retrofit costs on utility bill – one bill to pay, not two. Charge is placed on utility bill • Use energy savings to repay energy improvement costs – cash flow neutrality is the goal • Customers pay their utility bills. Amount of uncollected bills are low. • New York State has strong consumer protections to avoid utility shut-off. These protections provide security for repayment. • Increase in on-bill recovery loan applications: • August 2013 -- 37% August 2012 – 24%
On-Bill Recovery Loan Performance (as of 8/31/13) • 3,737 outstanding total loans at $33.35M (Smart Energy & OBR) • 1,029 are on-bill recovery (OBR) loans at $10.67 million • Average loan size is about $10,500 • 97% of on-bill customers pay on time or within 30 days of the due date. • 944 loans (91.7%) are current ($9.8 million) • 57 loans (5.5%) are 1-30 days late ($565,531) • 16 loans (1.6%) are 31-60 days late ($185,379) • 12 loans (1.1%) are 61-120 days late ($124,950) • 6 loans are 120+ days late and have been charged off ($47,079). This represents 0.57% of all issued OBR loans.
Goals of On-Bill Recovery (OBR) Pilot Loan Program • Fulfill original vision of GJGNY’s proposal for how on-bill recovery would work • Unlock the full potential of utility bill repayment history as a measure of creditworthiness • Leverage the full potential of energy savings to re-pay retrofit costs • Help more homeowners pay for and complete retrofits, especially low-to-moderate income families • Simplify the qualification process, leading to greater access of on-bill recovery loans • Create a $5 million pilot program
Administration of OBR Pilot Loan Program • Take advantage of existing loan origination infrastructure and servicing structure • Invest capital in NYSERDA’s revolving loan fund (RLF) for residential loans • Energy Finance Solutions (EFS) originates the loans on behalf on NYSERDA • The utilities remit the on-bill payments to NYSERDA, allowing it to replenish its RLF. For this pilot program, it would repay all investors directly • NYSERDA might have loan loss reserve and other credit enhancement to mitigate risk
Feedback Questions • Are our proposed underwriting standards too risky? • Would you require credit enhancement such as loan loss reserve, to manage the risk? • How do you feel about not originating the loans? • Is it essential to lend to LMI homeowners in your community; or is anywhere in the state okay? • Are there other factors that must be addressed, in order for your institution to invest in this pilot program? • Are there other ways you would like to offer energy efficiency loan products (e.g. participation loan), that we haven’t already discussed?
For more information, contact: Anthony Ng Green & Equitable Economies Strategist anthony@cwfny.org 212-206-9168, x12