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Daniel Bresette Program Manager Maryland Energy Administration March 17, 2011

EECBG and SEP Mid-Atlantic Regional Peer Exchange Meeting Presentation of the Maryland Home Energy Loan Program. Daniel Bresette Program Manager Maryland Energy Administration March 17, 2011. Context and Background.

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Daniel Bresette Program Manager Maryland Energy Administration March 17, 2011

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  1. EECBG and SEP Mid-Atlantic Regional Peer Exchange Meeting Presentation of the Maryland Home Energy Loan Program Daniel Bresette Program Manager Maryland Energy Administration March 17, 2011

  2. Context and Background • From the outset of ARRA, MEA recognized a need for an accessible and affordable residential financing option for homeowners seeking to improve the efficiency of their homes • Municipalities and counties in Maryland were in varied stages of investigating, developing, and implementing property-assessed clean energy (PACE) programs to leverage ARRA and provide financing to property-owners • MEA partnered with the Maryland Clean Energy Center, a quasi-governmental organization with a mission focused on “green” growth and economic development, to facilitate PACE programs across the State in conjunction with ongoing municipal and county efforts • Unfortunately, following the decisions of the Federal housing regulators, MEA, MCEC, and involved municipalities and counties abandoned PACE efforts in mid-2010 and began searching for an alternative program model

  3. Maryland Home Energy Loan Program Development • MEA and MCEC enlisted DOE technical assistance for program-development and legal support to identify and analyze post-PACE financing program model options • The goals for the new program remained the same: • Provide a sustainable financing option that will be viable post-ARRA • Attain some degree of leverage • Achieve efficiency first, but keep open to include renewable installations later • After several months of deliberations, MEA and MCEC settled on an unsecured efficiency finance program based on the successful Pennsylvania Keystone Home Energy Loan Program (HELP) for several reasons • A track record of lending and efficiency improvements in a neighboring state • At a minimum, the opportunity to structure loans to take advantage of the emerging secondary market for efficiency loans • An existing Home Performance infrastructure to drive marketing and outreach

  4. Maryland HELP Implementation • MEA and MCEC decided to launch a “first phase” program by lending $500,000 of ARRA funding to establish a process, identify issues to resolve, and solve start-up problems • Maryland homeowners who clear a creditworthiness review (e.g., a minimum 640 credit score, no bankruptcy in past seven years, 50% debt-to-income ratio) are eligible to take loans to finance improvements in primary residences only • First-phase loans—from $2,500, up to a maximum of $20,000—cover efficiency improvements identified in a Home Performance energy assessment • Fixed 6.99% interest rate for up to a 10-year term with no prepayment penalty • Loan repayments will revolve over time, extending the reach of the program • MCEC and its service provider, AFC First, coordinated with MEA and the Home Performance network to provide two in-person training sessions and post resources online • MEA launched its Home Performance Rebate program at the same time, which helped increase exposure of Maryland HELP

  5. Maryland HELP Outlook • So far MCEC has provided 11 loans for an average of about $8,500 to Maryland homeowners to improve the energy efficiency of their homes • MCEC is actively engaging, educating, and meeting with utilities, banks, credit unions, and other potential private-sector partners • MCEC received positive replies from a February RFP to attract sources of private capital to sustain the program beyond the first phase • MCEC plans to set aside a portion of its remaining ARRA grant to establish a loan-loss reserve to provide investors and private-sector partners protection from defaults • The added security of a loan-loss reserve should justify a reduced cost-of-capital and therefore lower the interest rate paid by borrowers and mitigate the need for substantial rate buy-downs • MCEC is also coordinating with Energy Programs Consortium and the Warehouse for Energy Efficiency Loans (WHEEL) to facilitate the eventual inclusion of Maryland HELP loans in a secondary-market sale

  6. Visit the Maryland Clean Energy Center online at: www.mdcleanenergy.org or www.mcecloans.com For more information, please contact: (410) 260-7655 or (800) 72-ENERGY www.energy.maryland.gov Terry Daly Maryland Clean Energy Center Loan Program Manager (301) 738-6285 Daniel Bresette Maryland Energy Administration Program Manager (410) 260-7655

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