EECBG Pace Webinar (Text Version)
Below is a text version of the November 18, 2009 Introduction to Property-Assessed Clean Energy (PACE) Financing Programs.
Announcer: Merrian Fuller
Recipients, everyone who is on the call except for the panelist will be muted and if you have questions, please use the Q&A bar on the right side of the screen. We will try to respond to those either in real-time or at the Q&A Section at the end of the hour and fifteen minutes. If we are not able to respond during that time, then we will be responding in writing and posting those up on our financial products website. I'll be giving you a bunch of contact information and websites at the end of the session.
So, our speakers today, we have an amazing list of speakers. Cisco DeVries from Renewable Funding, Mike Martin from San Francisco, California, Dorian Dale from Babylon, New York, John Haig from Sonoma County, California, Ann Livingston from Boulder County, Colorado, and my name is Merrian Fuller, I am a researcher at Lawrence Berkeley National Lab and a member of the Financial Technical Assistance Swat Team for the Department of Energy.
So, were gonna get started just right away. We have an obviously pretty packed line up. We are gonna get started with Cisco kind of running us through How Pace programs work and some key things to keep in mind as you are creating your program.
Next Slide: Renewable Funding
Cisco DeVries:
Thank You, Merrian. Thank you everybody. This is Cisco DeVries with Renewable Funding, and it's a real pleasure to be here. I am going to go through some information relatively quickly. There is a lot of information here, but I want to give kind of a quick overview, and give an opportunity for the folks running programs to talk a little bit more in detail, and then of course be available for questions or emails later.
Next Slide: Climate and Energy Crisis
Cisco DeVries:
The first thing is sort of why we are here, and we all understand that we face a pretty serious set of challenges around climate and energy.
Next Slide: Our Secret Weapon
Cisco DeVries:
The good news is, we start to really dig into how we confront those climate and energy challenges is that we have what I call Our Secret Weapon. The Secret Weapon of course is our homes and business. We know that we can reduce energy use, we can save money, we can create jobs, and we can cut greenhouse gas emissions.
Merrian Fuller:
Sorry, Cisco was just muted, Can you un-mute him please?
Cisco DeVries:
There we go, Hi Everybody. So, I think I just was saying again in our secret weapon here, we know we have an opportunity here to save a bunch of money, cut greenhouse gas emissions, create a bunch of jobs, and reduce our energy use, if we do energy efficiency and renewable energy improvement to our homes and businesses and in fact if you look at the McKinsey Report they looked at energy efficiency improvements and said as the numbers say there $520 billion dollars investment could yield a savings of 1.2 trillion and by the way reduce our greenhouse gas emission by over a gigaton. You apply some metrics to that, say the Center for American Progress numbers or something, you'll find maybe that's around six millions jobs. So, we have this great opportunity.
Next Slide: What's the Hold Up?
Cisco DeVries:
The challenge is in what we're here to talk about, is we've known this for twenty years, and we've haven't been able to crack this nut. We've all known that there was money to be made and energy to be saved, and the challenge; what's the hold up here, is we're use to paying for our utility bills in a monthly way, and solar energy efficiency, those things all require a large upfront cost. So, let me give you an example why does this matter? Well, my cell phone bill, I pay comfortably at $120.00 a month, for my wife and myself and that's seems pretty manageable, and it turns out though that if you go over 20 years that that would be almost $30,000 in cell phone charges, that's not including the cost of me buying the cell phone, which of course would add all of $200.00 to that. If you look at your utility bill, my utility bill there, I serve Pacific Gas and Electric it looks very similar, I have a fairly low bill, but it's about the same amount and as it turns out, I think for most of us, most people were no more likely to want to pay for our cell phone bill upfront $28,000 for twenty years of service, as we are to want to pay for our energy cost for twenty years upfront. But that's in fact exactly what's required from people to make energy efficiency or renewable energy investment is to pay upfront for their energy. Their effectively reducing their energy use or producing renewable energy on their homes and that may pay back over five, ten, or fifteen or twenty years. But, that tends to be not how we like to pay for things and in fact the history of the last twenty years shows us that we don't wanna pay for things that way.
Next Slide: Pace Financing
Cisco DeVries:
One of the big solutions to that then is to try and make paying for; make solar energy efficiency paying for it, much more like paying your utility bill. Paying it on a monthly bases or at least something like a monthly bases, and that's what Property Assessed Clean Energy is designed to do and what the great folks on the call tell you about their is their experiences. This notion, that we can allow property owners to install solar energy efficiency with little or no upfront cost, and repay it over twenty years. So, I am going to go over quickly now, some of the details here and give you some markers and it's really just a way of primer of getting to thinking about things.
Next Slide: Pace: How it Works
Cisco DeVries:
But How does Pace work, and many of you will know this but you create; it's usually a land secured financing district, assessment district, tax district of some kind but there are other methods, others laws to do this. Property owners voluntary sign up for the financing, they install their project, they get proceeds from their bond; from a bond or another financing source to pay for their energy project and then they repay the cost over up to about twenty years on their property tax bill, and sometimes that will be five years, sometimes its ten years it varies by program and by project.
Next Slide: Benefits to Property Owner
Cisco DeVries:
This case model starts to solve some of the key issues, and I think we all probably recognizing this but, it remove many of the financial hurdles to installing solar system energy efficiency upgrades, and other renewable. Meaning, the upfront cost is very much reduced or eliminated. You fix your payments for a long period of time. You're allowing to transfer the property tax, transfers the repayment obligation, transfers to new owners when the property is sold. So you don't have to live in your house for all the twenty years to receive the benefits, and of course we start to move away from some of the focus on individual's private credit and look more at the property itself for the underwriting and the security. Of course there also, you have to continue to save money.
Next Slide: Benefits to Cities and Counties
Cisco DeVries:
Cities and Counties, bunch of benefits for them it just depends how you set up the program. Lots of different ideas; One of the questions is Can you reduce or eliminate the liability to your city's general fund or county general fund or If you should so choose to do so? You can certainly help meet carbon energy goals. You can hopefully run the program on its own steam, meaning without a subsidy at least after its up and running and functional or using a system of financing that is very, very similar to what local governments have been doing for 100 years, and of course there's the real opportunity to create a lot of jobs and Sonoma can talk about some of the data they've been collecting on job creation which is pretty remarkable.
Next Slide: Strong California Demand
Cisco DeVries:
So it sounds great, Right? This is this fun idea that got started a couple; 2-3 years ago in some leading communities. Does it work? And you're going here example from cities and counties that are doing this program and how it worked for them and I think that will be impressive, But I want to say that we have done a survey, the thousand properties owners to across the state of California, to ask a whole bunch of information about this program, and at the end we came back and said "Ok, you know a lot now, would you be interested in participating in a program like this? And in fact you see here that we had 28% very interested, the vast, vast majority of people who at least, they're interest were peaked, and that is a remarkable number if you think of where we are today in terms of solar penetration energy efficiency penetration.
Next Slide: Challenges to Implement
Cisco DeVries:
So, now let's dig into the details quickly and talk about what it takes to implement something like this, and I want to focus on four key pieces. The legal Authority and Structure, The financing, the administration and application processing, and the marketing outreach. Im just going to touch on each briefly and then other cities and counties on the call can talk about how their doing this.
Next Slide: Legal Authority
Cisco DeVries:
And say that the Legal Authority is one of the first key pieces, it's the foundation; you have to build the program, you have to have the legal authority to replace the tax and to implement; to do all the things you want to do to make the pace program work. This slide is slightly out of date as in New York now has two pieces of legislation, one is the Babylon, New York model and the other is they just passed a tax district program, as well, and North Carolina also has legislation. So, what we now have is sixteen states across the country that has legally authorized their cities and counties to do these programs and a couple of states which it looks like already have the authority; cities and counties can do it own their own. When you; It turns out often passing the law can be the easy part, and that was something of a surprise to a lot of us.
Next Slide: Legal Issues to Consider
Cisco DeVries:
I think what happens when you have a laws, works when your developing a laws, if you still need one in your state, but also once you have one and you're talking about how do you implement it for the first time in a city, county or local government. That can take some doing and you obviously want to work with your bonds counsels and your legal team and finance folks to work through these issues. But, I've listed here a few key things to think about on a legal side. The first is you want to create a viable opt-in procedure, a way for property owners to join the district on demand in a sense.
So one of those things that you don't want to necessarily have to do is create this as a standard assessment district, where you know every single property owner at the beginning and do it just one time, you want to make sure that you have an opportunity for properties to join overtime as they decide to. You want to make sure you can allow improvements on private property, not just on the public right of way. You want to ensure that you have the; that your using your assessment and taxation power appropriately to verify that you have the senior lien on the property, which is important for the delivery of private capital.
Then you want to avoid any requirement of local government liability. Now, many cities and counties are happy to use their local governments to help get these programs started or to help them run and their willing to take some risk. But you want to avoid a program that requires that, if you can help at least legally. We found that generally amending an existing law is an easier task than creating a new one, although that's not always the cast, and one thing that comes up a lot is to make sure that your law will allow is flexible and allow for energy efficiency and renewable energy projects.
Next Slide: Finance Overview
Cisco DeVries:
Talking briefly about the finance; The key point on the finance here is to make sure however you setup a program, whatever tool your using that you can, that you have a secure means for repaying it, and if that's an on bill financing, utility bill, if that's some other tool, there's no magic to it. The question is just how safe is the investment, how safe is it that this money will be paid back. The Pace program provides a senior lien, super senior lien, and is ahead of generally most mortgage, private debt, and that becomes a very safe means of repayment and allows for the deployment of capital. The entire property secures payments as well which is an important component here. When you think you have the finance, people say," Oh, well through a few million dollars in here to get things started or so". You want to think about scale here, were not talking about doing a few hundred homes, although that's a good thing to start with, the question is how do you do any entire community, how do you do 10, or 20, or 50% of the properties in the community.
In the United States their talking about a retrofit effort for the US that maybe 2-4 trillion dollars. So maybe we say that for Pace or so, were talking about 500 billion, you're talking about very large amounts. So, make sure as you set up your finance mechanism, there are the opportunities to grow large, you're not restricted to a small pool of money, because that might be a good thing to get started with but it will not get you to the scale that you want.
The last thing is just the financing conundrum, the square peg and round hole issue. Financing is used for large capital projects, generally speaking municipal financing as in pace require service seamless on demand availability of funds for small little projects on private property, and making sure you can bridge that gap.
Next Slide: Emerging Financial Structures
Cisco DeVries:
I'll leave this for some of the next folks to talk about. There's emerging financial structures around this; You can aggregate the bond, aggregate property owners together for an issuance as Boulder has done, and you can do interim financing in a way that both Sonoma, and Palm Desert is doing with their own funds, in a way that Berkeley, San Francisco, San Diego are doing with private capital, those are programs that we work with. Babylon, New York has a really interesting approach to this, and of course there's ways to start working with commercial banks as we have done on some of these programs.
Next Slide: Administration
Cisco DeVries:
On the administration side, we'll just say, you need to coordinate a bunch of folks who don't normally work together, from municipal finance entities to solar contractors, to property owners, to cities, and there's and eco-system here that gets created; makes sure that everybody needs are met and their timelines are meet and integrated into a system. You need to do it cost effectively, you need to be able to educate and market, you need to get property owner decision tool so they can make their decisions, you want to make sure that people have excellent customer service, they can either go into a storefront, they can call, they have an opportunity to get their questions answered.
Application processing, the project needs to be approved and the property needs to be underwritten, the property needs to be screened for various components, make sure their not late on taxes and other key pieces. In the end you want to make sure also that you have a regulatory scheme you can rely on; that you've decided upon that says your comfortable, that the property owners are participating in the program, that the quality insurance mechanisms in place. Don't guarantee everything, but your comfortable will help provide property owners the information they need to make the decisions and to protect themselves against fraud.
And Lastly, A lot of tracking reporting especially for using recovery act money has to be a part of this.
Next Slide: BerkeleyFIRST Website
Cisco DeVries:
So this slide is just an example of the BerkeleyFIRST site, it's one of the ones we did, and it just sort of puts it together in one piece, so you can have all your learn more information here, you can get your calculator, you can learn about the program, you can read term and conditions, you can find all the contractors, when you're ready to apply, you'll apply online, and you can go back online at any time to check your statues and when you're ready, you can go back online to request your funding when your project is installed. So, it's a way of trying to put all the pieces together in one place, and that's the Berkeley's site.
Next Slide: BerkeleyFIRST Success
Cisco DeVries:
The last thing I'll say is, this is the Berkeley program, the quote there is from the very first Berkeley property owner that came to the program. I think this is very important to keep in mind, is word of mouth is really important here. Making sure people have a good experience, especially early on so that they tell their friends and neighbors, and people understand that this program will work, that their comfortable with it, its not so hard. That can be very important. So last!
Next Slide: Renewable Funding
Cisco DeVries:
Just quickly; Renewable funding, this is knid of what we do. We work with cities and counties across the country to help them figure out and administer and finance these programs. Were operating in a number of states, with a number of the folks on this call but, it's been a lot of fun to work on these programs.
Next Slide: Renewable Funding
Cisco DeVries:
That's my contact information for folks, but I'll be on the call later after everyone else has had a chance to give their updates. So thank you very much.
Merrian Fuller:
Thank You Cisco! Thank you very much. So Cisco had a tone of experience working with a variety of programs. We're now going to here from some folks who are working directly with programs that are currently either going or about to be lunched. So our next speaker is Michael Martin from the country of San Francisco. I'm going to turn the audio over to Michael. Thanks!
Mike Martin:
Thanks very much! So yes, I'm Mike Martin from the San Francisco public utilities commission; I'm serving as a member of a team of folks here at the city who are developing our program, it hasn't yet been adopted, were actually still in hearings that are board of supervisors one of which is later this morning. I think there's two outcomes for that in this presentation, one being its very summary and its kind of trying to capture where we are with the moving target, but I think the general concepts will hold throughout the process, and the second one is, you'll see that my slides are much more texty than everyone else's because we haven't gotten to the point where we put pictures with the concepts yet. So, please bear with me on that.
Next Slide: Policy Objectives
Mike Martin:
Jumping to the first slide here, we got our policy objectives, and basically overtime these were developed by the team to kind of really serve as guide post to the different issues we encounter in trying to set up the eco-system that Cisco described, and I think that was a great description actually. So, among these we wanted a sustainable program, one that wouldn't kind of get to a specific pile up amount and then stop.
We want a program that was scalable, in a related way, we wanted to be able to meet increasing demand as people became more comfortable with; more interested in pursuing this potential financing option.
We wanted a flexible program, one that could take advantage of future grants or other subsidies coming down that would create a more efficient program structure, or if there are other program design opportunities that we can move towards that we wanted to be able to do that and move nimbly. We've kept our focus on creating a fundamental; a foundation for the program that upon which we can innovate and hopefully continue to make the program work better for the people participating.
The last of these is to achieve self sufficiency with a minimum of public financial support, and that's something that Cisco touched on as well.
Next Slide: Conceptual Framework
Mike Martin:
So from there, I think those touch stones kind of lead us to a desire to get to; to tap that municipal bond financing option that Cisco described. Obviously the challenge there is the municipal bond market is use to larger chunks of financing rather than the individual small financings that these programs would churn out, and so what we're trying to do is to create a thoughtful mechanism to bridge the gap from a just in time financing to a arrogation of a bunch of financings to solve other bond market and hopefully get a more efficient interest rate in that manner.
So here we see, we establish; the goal is to establish "microbond" purchase commitment with administrative and financial partner who is renewable funding. Microbond is our term for each individual financing. So one home $20,000, that's a microbond that we want to set up a commitment whereby renewable funding buys that, then the aggregated bunch those microbond together and then resale's them and uses that money to hopefully replenish our program.
So, as in the next ball; we want support the aggregation of microbond into a remarketing at earliest practicable date, we want to Utilize available grant funding sources to reduce our borrowing costs, and barriers to entry so that we get a critical mass of borrowers as quickly as possible, so that the number at the top of the page of the interest rate doesn't discourage people from finding out there are cash flow benefits to this, even with whatever that interest rate turns out to be. Then all of this we want to pursue the above with an eye towards eventually obtaining an investment-grade; credit rating for our bond program, so that we can more easily access a public sale of bonds and hopefully lower borrowing cost, kind of coming from a market way rather than a public subsidy way.
Next Slide: Financial Agreement Structure
Mike Martin:
So, with that as the conceptual framework, were currently negotiating financial agreements with renewable funding and other related parties like fiscal agents that will try to basically encapsulate what I just described, and so some of the key points to these agreements as where negotiating them is that we want to establish initial bond purchase commitment by renewable funding, and to do that we want to be able to point at something that says we know that their going to be there with a liquid amount of capital in the appropriate amount to buy these loans when people apply for them cause obviously they've gone through the work, the contractors put out the money, and we want to be able to pay them as quickly as possible. We want to see some evidence of the ability to purchase'; we're looking at the positive cash, or some sort of credit facility were we know that was there and can be used to tap funds to basically purchase the microbond as they become available for purchase.
Next we want to establish covenants on the part of both parties as to the pursuit of remarketing. We at the city realize that we're going to have to support that with work by our staff to create disclosure and other things and so we want to make the appropriate commitments and make sure we budgeted appropriate amounts of money to be able to do that as quickly as possible when the time comes, and in a similar fashion we want those commitments to be entered into buy renewable funding and the other parties to support use in getting their; and getting the remarketing completed as efficiently as possible.
Finally, once the remarketing is done, we want to be able to then turn around and have; and be able to hold out to our potential borrowers that we have additional capacity with which to finance their projects, and so the idea is that we would sign the initial bond purchase commitment, the money that's being put aside to say yes we can purchase. We want to size that as efficiently and as small as possible so that we can hopefully replenishing it through a bond market issuance, and then comeback and basically replenish that amount and repeat the cycle over again; hopefully, limiting our interim borrowing cost by doing that. I think this is the kind of thing and a lot of aspects of these programs, I thinks its once they get up and going and people become more comfortable with them including the bond market, I think models will then begin to kind of flush themselves out as to what's the most efficient way to do this and what's the most excepted by investors, and so were trying to put forward our best foot but were obviously ready to observe how people develop their programs, how we develop ours and make sure that that make sense in the continuing administration of our program.
Next Slide: Potential Evolution
Mike Martin:
This is a forward looking set of bullets. Things that were thinking about is a potential evolutionary phases of our program. The first of these is that we like to incorporate more regular bond issuances as project application pipeline becomes more reliable. Once we have a credit rating, you know all these things that contribute to us being going concern, and I think regularizing the bond issuances I think the bond market appreciates that because they know they'll be coming to the market regularly, staff can appreciate that cause we know that it's a ongoing process to staying on top of the program for purposes of the bond issuances. So, were not going to start out running from day 1 but we would like to get to that sprint as quickly as possible.
We'd like to modify structure as needed to take advantage of credit enhancements at federal and state level, we've seen different proposals out there, there are existing grants under the recovery act, and federal guarantee's have been proposed and talked about as have been extending tax exemptions or tax credits to the bonds that are issued. So, again we've tried to design our foundations structure to be able to flexibly take advantage of these as they come forward, but I think that that also requires us to be aware of them as they come forward and making sure that were anticipating where this kind of added benefit may come in.
Last bullet here is to tailor financing approaches to more tailor financing approaches to more challenging building types. I think our initial program rollout is going to be targeted at residential and smaller commercial, but the city of San Francisco is one of the more concentrated, urban areas in California, and so we have a lot of multifamily building types as well as larger commercial buildings and office buildings. Those king of create their own set of challenges in trying to find the right approach to doing energy audits and then trying to figure out the right security structure with their existing lenders, and so we defiantly want to figure out ways to see if this tax lien financing tool can be used to access those sectors that are so important to our city.
Next Slide: Advice to fellow implementers
Mike Martin:
This is the last one, just some advice to folks that are going to be treading this path with us. I think the first of these bullets is the hugest one from my perspective is Establish policy maker objectives and constraints early in process. I think we had a couple ideas of how to do this in a way that we thought would save money for the borrowers, and we took those to a decent amount of definition, but found that policymakers really weren't interested in putting forward city financial support either, interim bases or permanent bases. So once that message was received, I think we went full speed ahead towards the market based structure that we're pursuing now. But, I think that was just an indicator of; an indication of; to the extent of; if I was starting over certainly I would want to establish that first line of policy objectives very early with the folks that are going to be evaluating the work products and say this is where we are headed and therefore your best efforts can kind of head in that direction.
The next bullet is something I just touched on the last slide; keep a close eye on federal and state funding sources. I think this is a very hot item for a lot of policy makers on a lot of levels and those of us at the local level that are actually implementing, I think would benefit from being a part of that dialogue but also from anticipating where that support or that additional assistance may come from.
The last of these is to build off of program successes and I mean that in variety of ways. First in terms of your own program successes, but largely also as your formula in your program; looking at the successes that you will hear about during this webinar but also elsewhere. I think there are people that have really done some great thinking on this. Lead by the people on this call and certainly, we in San Francisco, have tried to build off of that. Certainly another thing that I really appreciated throughout this process is the willingness of people to collaborate and I think you will find that. You'll be able to find information and support from a lot of people to do what you are trying to do with these programs so I would definitely recommend availing yourself of that if you can.
So that's the end of my remarks, I'll hand it back to Merianne. Thanks everybody for attending today.
Merrian Fuller:
Thank you. So we'll go to our next presenter Dorian Dale from the town of Babylon. Dorian has been at this for………I don't even know how long Dorian, over a year now? Definitely a leader in this space and has a particularly strong way of assessing the potentials for energy efficiency savings and homes. So I'll turn it over to Dorian.
Dorian Dale:
Oh, thanks Merrian. I think what's really indicative in this is Mike was indicating really, I think instructive for everybody and that is principle number 1 when you said about doing something; ask a lot of questions, talk to a lot of people, lot of this wheels been invented. I know that I certainly learned a lot from, Merrian for example. Also in Mike's backyard from Calbroom Header's been doing this for 25 years. The other real key component when you are starting up is leadership. You really have to have the guy in the big chair have the will to do this and fortunately in our town we have a real action _____ so when we were first sitting around kind of planning this a couple years ago, we were having our municipal facilities evaluated by an energy services company. The supervisor said, "You're gonna change all our energy infrastructure and you tell us that the savings are going to cover the capital costs"? The Escow said, "Yeah". Then he said, Ok that's great! Can you do that for residential building stock"? The Escow looked at him a little crossed-eyed, didn't like all the tickets that he contemplated seeing that particular application. ______ ______ _______we said about then to try and figure this _____ on our own.
We first obviously we have to start by finding the money. How are we going to finance something like this? IN our town we are fortunate in that there has been considerable work done at the waste end of a town of activities. We have significant revenue strains as a result, both from collection and from an energy from waste facility and we have a rather significant waste reserve fund that we are obliged to carry for various applications but for the most part sitting around just collecting nominal money market rates. The first thing we did was to look at our solid waste code which includes the traditional, any discarded materials and substances and so on and so forth. We added a few simple words which included Energy Waste by dent of its carbon component. That in turn enables us to access our waste fund to the tune of $2 million to wash a pilot which we did last October. We have completed that pilot, we have hit our objectives and we are now planning to go to scale. In the interim there were legal questions that were approached by others. I should note that in our town, generally what we do with our town attorneys is keep them locked up and in a cage in a corner of Town Hall and we only let them out when they are going to affirm something that we want to do. Other towns however, are a little more differential to their legal beagles and so usually when we get into a rum with other towns that are interested in doing this we are usually entertaining a lot more challenges and objections. There were a few on a legal basis but the good news is this past summer our state legislature effectively affirmed the Babylon approach, you'll see it up here on his slide where it in fact indicates that we can do these residential energy improvements through a waste district and there is no waste district the municipalities may create specifically for this purpose and then assign the work that has been done and financed by the municipality onto the real property. Some in effect un___ to us, we were creating what is now become the big pace; the big buzz word, properties, a clean energy program.
Next, so the next part of that equation in terms of finances if you've now got the money how will you in effect build the work. Again we cast about and we saw that there was a lot of interest in something called On Bill Financing. There were a good number of pilots that had been run on a program called "Pay as You Save", we thought that seemed like a splendid approach. We'd seen a NYSERDA white paper which is our state energy association that confirms that this was in fact a good idea. We went to our local power authority who first indicated that it might be a good idea and then the chairman got with his people and they said it was a terribly good idea for a number reasons so we were then obliged to go back to the drawing board and figure it out on our own. What we did was to go back to our waste system and we knew that by providing a service from the public energy to the private energy we would normally bill that as what's called a Benefit Assessment. A Benefit Assessment is a municipal authority that was originally asserted by the Revenue Bond Act of 1933, it's a well homed principle. It was in fact aimed at the home retrofit once it had been completed, would be paid for by the town, to the contractor and the homeowner would be billed this monthly benefit assessment which was usually structured to be slightly less than the savings that one experiences on their utility bills. This is based upon energy software that we use here in the program. The other facet of that is of course, if the homeowner be delinquent in his payments of the outstanding, and then gets assigned of the property tax. This in turn opens up a whole door of features that we here to for, had not frankly been aware of and that to it is that as the municipality not only do we have intimacy with the property but when we do this kind of work and it's assignment as a tax benefit assessment we in fact have now the senior lien status even if ahead of the mortgage. That had aroused some concern earlier in Washington but I believe the issue is being addressed. The other aspect that was of benefit to this particular application was that we also had a robust software platform that was a simple matter of just creating another dedicated program to invoice the work.
Next.
Where have we arrived a year later? As you can see by these numbers we at this juncture effectively have either 275 homes that have been completed or are in the queue or waiting retrofit. Because we charged $250 upfront for the retrofit upfront and will then fold it into the cost of the job and because we have really created the delivery model that makes it easy for a one stop retrofit package for the homeowner. We have in affect gotten our jobs completed in a fashion that makes it nice and easy and to make the homes more comfortable and affordable. I think a _______ fact in that results that you are looking at up there is that 80% of our audits go through to a completed deep retrofit. In the case of our program as you can see by the numbers up here, do an average job of $8,000. The annual savings is approximately a $1,000; remember we will structure the payments to be slightly less over the course of the year, the length of the payback is 8.3. We are running a savings to investment ration of over 2 which I think underscores the discipline that we brought to the program. We really are firm on the loading order of the measures that we do; we do a lot a change out of burners and furnaces, a lot of air ceiling and attic insulation as well. We will as we've subsequently established in the program, do solar installations but only after the thermal envelope has been thoroughly sealed, that established by either participation in the Green Homes program, having a newly constructed Energy Star home which we require in this town or having a ____ rating of 70 or less.
Next slide.
Again I just described the various component measures that you can expect in our program and has been indicated about a third to heating applications. As we move forward we feel that there is clearly, obviously, our waste fund is unique to us and maybe a few other municipalities but we're also as in looking at the bond market don't feel completed comfortable with that remedy either particularly giving the kind of interest rates that money is going out for through the programs we've seen so, while we've been extending money from 3% we realize that we have to look for alternatives courses then we've been going to. The smart people who do debt financing on a large scale and also the smart people who are now noodling around, migrating the commercial solar equity application to the residential sector.
And finally in our neck of the woods, a lot of towns are now signing on by to do a green homes program of their own by singing 20% of their formula grant to a residential retrofit program. That places us in a position that which we've already inserted ourselves in and that is to provide guidance to our neighbors as they move to establish their own programs. Very quickly I will run through what I call our Green Homes 9 step set-up and the first step would be to identify an operation's officer. In our case we have a gentleman names _____ _____ who's a master electrician who's worked with contractors, he's worked with homeowners. He is a highly intelligent individual as ceased in the opportunity that he sees here and really done a fantastic job and I always suggest to other municipalities that they too can identify their ____ ____. Then it's also important to sit down with your local contractors and work force reps and establish what sort of resources you have in that context. You certainly want to make sure you have a uniform program that you've developed that you've set the paper, that would be the third. Code conformity is an inprotant element, you need to identify a billing system, and then you have to retain a support staff, finally you need to go and stake out your space and equipment, set up a website, and stir and add home owners, and I think you could live happily ever after as we are experiencing here in Babylon. Thank You.
Merrian Fuller:
So, Dorian do you want to cover the slide as well? Or are you done?
Dorian Dale:
I think that; yea I will make the final point Merrian that as far as the per home savings are concerned were averaging approximately 4 ¼ tons of saved carbon dioxide per house, and we have done comparative ratios to solar; for example at least in our reckoning comes out at an 8:1 ration in terms of cost effectiveness, and again underscoring are contention at least that there's no more effective way to comply resources which is why in effect we have; since we are a small municipality (200,020) we've really focused are efforts on building stock and were about to do a green commercial program for smaller commercials by providing pro-bono legal advice to assault the split incentive that has been so doting in efforts and not regards.
Merrian Fuller:
Great, Thank you, and Dorian let me just ask you a few quick question that have come up. One was a question on the advantage or disadvantage of using require list contractors, so I know you use BPI certified contractors. Would you recommend that? Is there any draw backs to doing that? Having a required list of contractors and if there not on the list than you can't use them as a home owner or a business owner?
Dorian Dale:
I think being exacting in terms of the criteria that you require of your contract is extremely important. I mean even when you have a contractor that has gone through that process, you will have issues. We do of course have the advantage in this regard if a homeowner on their own is contending with a contractor and some short coming, it takes some time because they don't have the leverage that we as municipalities now throwing out dozens of these jobs has, and furthermore, this is where this is all going, I suggest that in this states, BPI standards seem to be migrating cross country, so I think that elemental.
Merrian Fuller:
Great and so that everyone knows, BPI stands for Building Performance Institute, you can look them up. One last question for Dorian, on this slide, huge percentage is oil savings, Why is that?
Dorian Dale:
Were 2/3rd oil heated out here. The natural gas alternative when it's available is obviously recommended, but we have holy infrastructure issue in which the local gas company obliges hook up cost and driving through the transmission to the respective recipient houses, and so it hasn't proved to be a real practical alternative.
Merrian Fuller:
Yea and just one comment, the question on the Q&A says How does oil saving compare to electricity? One thing that's important to know when you're doing energy retrofits in homes and in buildings most of the savings your going to get from for example weatherizing a home it's going to save on the heating side, which is usually a fuel based source of energy as opposed to electricity unless you have electric heating. So, this is something to keep in mind as you're looking at where your savings will come from. This will vary quite a bit between climate zones and a higher climate zone where there's more cooling and you're using electricity to produce air conditioning, then you might see higher electric savings. So it really varies based on your climate zones. So just wanted to…
Dorian Dale:
And Merrian, we are centered with our power authority, who is principally focused on what they consider their response, which is electric delivery so if there are electrical applications we work in tandem with their rebates and existing programs to bring that to the home owner as well.
Merrian Fuller:
Great, Thanks you. So were going to move on to John Haig from Sonoma County, Im just going to turn it straight over to John to move into his presentation. Thanks.
John Haig:
Good Morning Everybody. I am John Haig, for those of you that know our program, Im not Rod Dole, kind of an inside joke, Im Rod's caddy for today. Rod's our administrator. I am pleased to be here, and co-present with such a gust company and great environmental leaders. I want to say a couple of this pathetically about the program before we get into the meat of it, and that's that we want to make a point that our program allows the county and me to leverage other roles and responsibilities that Im responsible for that connect with the effort. Including an energy watch utility partnership with our PG&E utility locally, working with our solar American cities program, solar Sonoma county, and Im on the board of that; Im working on a county greenhouse gas emissions comprehensive energy project. $22,000,000 worth of retrofits in our buildings, with no general fund contribution leveraging the energy savings, various ARRA project related work and crebs bonds and electric vehicle partnership as well as our regional retrofit programs that we've joined with our constituent cities on. All of these efforts are linked to and support our AB811 program in some form or fashion, and the point Im trying to make here, is that you probably has leveraging opportunities with your organizations as well. You probably don't have to do this all yourself if you're contemplating a program. I also wanted to make the point that I usually can't introduce myself in less than 10 minutes as Merrian said we had, so I am going to work quickly as I can.
Next Slide: What is SCEIP?
John Haig:
What is SCEIP? Sonoma County energy independence program, and that's with a bow to Palm Desert a pioneering in California who had the first energy independence program in California for their city. Our county and all of our constituent's cities are joined together within our program boundary, which is the county line. We set up our program or what some areas might call it district in that fashion. Its operated by the county as you've heard to fund private property owner projects for energy efficiency, clean generation, and water conservation which is a point that we've like to make. Were really big on the fact that water conservation saves a ton of energy, the water energy next shows us that in California 20% of energy is used to treat and use water in the state, so when you saving water, you are saving energy as well. Programs administrated by Rod Dole from our Auditor Controller/Treasurer Tax Collectors office. He's an elected official and operated by general services where I work; myself and Liz Yager teamed to manage daily operations, and we have a steering committee which helps us run our program. Comprised of some of our county council staff and some of the managers from both of the departments an excellent group of people; I can't tell you how important it is to have a solid group to help steer your efforts. Were established as I indicated under AB811 California legislation, we can't use mellow ruse for those of you that are thinking of that, that is an option because we're not a chartered county. That's the how of our program, and the why is a little more important I think for the group.
We have some robust climate goals for Sonoma County, We were the first county in the country to have all of its cities to join the county in a climate pledge and we were the first county again to have all of the elected ban together to a community wide goal, and in 2005 we set a substantial goal of reducing our 1990 emissions levels by 25% by 2015. To reach that goal we needed to do a tremendous amount of work in our community by some estimates, we need to retrofit 80% of our building stock to a 30% efficiency level by 2015 to be able to make the climate goals, and of course we needed a vehicle to be able to accomplish that, we think our AB811 program is helping us to do that and in terms of attacking the first cost hurdle. You've heard a little bit about that from others that are presented thus far. Many people want to do the right thing, and people probably would take advantage of a lot of opportunities if they had the ability to write a check, and the programs were creating are providing people the ability to people to get over the first cost or the initial investment hurdle. Finding that capital is critically important, and it also been our own local economic stimulus package; we've been doing a really good job priming the building industry here in Sonoma county and I‘ll talk a little bit about that as we go forward. That's the Why we have the program.
Next Slide: Status of Energy Independence Eight Months of AB 811
John Haig:
We opened March 25th 2009 and we've done a land office business basically over the first eight months or so. That 30 million in applications is a little dated, were higher than that, and I have another slide a little bit later on. Our first contract was In April, we've had several more a day and then it went up exponentially from there. We have a 7% simple interest loan secured by a lien on the property which has priority over other mortgages, and it is repaid through our county property tax collection system. We find that the county wide model that were using is very effective because the cities and the counties are already operating a business so to speak in collecting property taxes and assessments, and were able to utilize the existing infrastructure.
Next Slide: $100 Million
John Haig:
This is the flow of money within our program in Sonoma County. It's how our finances are actually set up; initial funding was $45,000,000 from our treasury pool, our treasury pool is now at 1.9 billion dollars. It's the collected fund for the assessments, and school districts etc. We committed less than 3%, which is a very prudent investment into buying bonds for our program, the minibonds or microbonds that was referenced by San Francisco earlier. Basically the flow of money is that if our JPA for bonding issues bonds once a month to our treasury pool which is cashed back to the financing authority, financing authority provides the funding for the individual projects through our SCEIP program, to the property owners, paid back through twice a year assessments. We have back up financing you see that on the slide of Sonoma County water agency having an annuity which they provided for additional capitalization should we need it, but our plan is to reinvigorate our initial treasury pool financing but taking an aggregation two bond and being able to replenish our funding.
The treasury pool provides funding at 3%, our 7% assessment contract provide us a 4% spread if you will, which is what we use to operate our program. That 4% is going to be enough to provide us with the cost of operation for all of our staffing, legal cost, marketing, and advertising etc. We made a commitment to no general fund dollars will be spent to operate the program; we made that commitment because the board told us we had to, so there's no room for wiggle there. We need to get a loan from our tobacco securitization fund to be able to operate the program in startup mode but we have to repay that and were going to be standing on our own in relatively short order. We hit our initial target of 7 million dollars in projects funding by 6 months and beat that by a million dollars. So, were very comfortable that the program will be successful in that regard. We looking to hopefully get a tax exempt status for the bonds that we issue, that was mentioned earlier; that will be important in term of being able to drive down the cost of assessment contracts to the customer's base.
Next Slide: $100 Million Funding Current Applications in Dollars
John Haig:
In terms of this slide, this talks about our project funding, and you can see the various line going up. The top line being funding request, were close to 37 million dollars in funding at this point. Recently receiving a commercial application for 6.5 million dollars, we actually to date have approximately 11 million dollars in funded work, we fund at the end of a project completion, sign off, and then funding. We've done 310 projects completed in to data as of the 1st of November with of course more planned for December 1st. Our breakdown has been approximately, 20 projects with an average of request of about thirteen eight, which is about 63 thousand dollars per project and 790 or so residential projects had an average of about 27 thousand dollars per project.
One of the other important pieces of data that Cisco referenced earlier is the job data that we've discovered. We did some economic research and our data show that we have in Sonoma County an 8.4% increase in construction jobs in our county, whereas joining counties of similar economic situation, without AB 811 program has a decline of 3% in their construction jobs. This is in our opinion a clear result of the funding that we've put in our local economy, remember that the 11 million dollars in construction projects was a direct result of our program and went within our county boarders. We believe that the local contractor who's getting the benefit of the majority of that work and hiring local people to do it. This is an indication of the breakdown of the type of work and projects that we've been doing, we have about 350 projects that have solar. I am going to talk about one of the problems in our program in just a moment, but we can't tell you at this point if all of those solar were solar only which we know is not the case, and how many of them have the efficiency to go along with it.
Second most popular project has been window replacements in our area, and the split is about 50/50 in terms of financing between solar and other projects and in terms of numbers on the projects as well. Please note that the activity of the storefront which is our customer interface, the face-face activity as well as the phone bank. We've got 4 thousand calls and 1000 people walk in the doors of our offices over the past 8 months, and this data is a little bit behind the curve as well, if you note the total request is 26 million dollars which is from about 60 days ago, but the roll up of the other data is at that point as well, so that growing as we speak.
Next Slide: What we should have done…
John Haig:
Looking back at it, some of the things that we should have done, I think we should have been more prepared to track our greenhouse gases and energy reduction results when we started. It would have been great to capture that information from the start in a robust database, we been using excel tracking at this point and spreadsheet tracking and the fact of the matter is that were behind the curve in terms of having a tool. It's going to be expensive for us but we have to find a way to either get grant funding or come up with money from our spread to be able to finance that. We were laughably under equipped when it came to technology that the program would require, we didn't have enough computers for example for the staff that we needed to process the paperwork and that was unforeseen in our part, we could have planned that better. The database as I indicated was important we have touched up to do in terms of populating that database, but it will really help in term of our reporting. We have a lot of request from constituent cities for example that ask for the number of projects in their areas, the types of measurers that are being done, the average dollar volumes in each area, and that's difficult to get in a spreadsheet analysis.
When we started we pieced together the front office staff, we borrowed a program manager from another area, and as good as the programs been, I think it would have been better if we'd had everything setup and staff planned and in place before we actually got rolling.
Another piece of advice I think we can share from our experience is that it important to go with a broad vision, and go as big as you can because economy of scale are going to be important to your program, you can spread your cost more effectively if your program has some size and scale.
Next Slide: And another thing…
John Haig:
This is a piece that is important as well, in terms of the financing structure, we have our interim financing set up with our treasury, we need long term financing, and bonding; that issue is still open, were not exactly sure how that's going to shake out and were going to work diligently to make sure that we have a place to place our financing as we accrue it for bond purposes. We have a monthly payment structure, which has caused some problems with the building industry. Imagine if you will a project that has to be completed before it's paid, and has multiple elements, so that the first contractor that goes in and completes waits for the last contractors to paid for his share. The reason we do it once a month is because it cost a lot of money to issue a microbond, so we aggregate once a month to try to get our economy some scale there, and the problem is if we're going to finance, something upfront and provide for payment for individual contractor early, we would have to put the money into a escrow account of some type which would require that the project comes in exactly on the money or we'll have left over money and a need for re-bonding, and reissuance of a bond which is a financial challenge and expense that the program can't really afford to undertake. So, were having some issue with respect to that and were working through it and were looking for an solution and maybe some sort of interim commercial financing that would allow people to do construction take out, might be a way for us to get over this hurdle. We're also looking for possibilities to issue bonds more frequently, perhaps twice a month but that's going to be an expense for the program as well. One of the questions that was asked of us is that what the heck kind of a bank is this? And the answer of course is, it's not a bank, we are the government, we are here to help but were working on government financing program and not a bank and there are some economic realities that we have to deal with that maybe or not present in the standard lending environment.
Next Slide: SCEIP Website
John Haig:
This is our website, it's a beautiful website; houses all sorts of legal information, and our forms, it houses an extensive frequently asked questions section, has a payment calculator that helps people figure out their payments over 5,10, or 20 years the 3 scopes of assessment contract within our program. This has been a wonderful tool, we did some stuff right obviously, and this is one of those things. The other thing that we did well recently is a validation action where we got legal approval for our program by the local superior court, we basically brought the question in front of the court to make sure that we were solid legal ground with our program and we were in fact rewarded in that regard. So, those are two of the great accomplishments that we made. If you have questions, you call the program directly or check our website. I'll also share my information with Merrian that can go out to anyone that is one the call. Once again Im John Haig and you can reach me at my email jhaig@sanoma-county.org. Thanks very much.
Merrian Fuller:
Thank you John, So were getting tons of great and important questions but were probably not going to able to answer them all on the call today, I will be looking at those and responding to all of them in written format after the event and send that out to everyone that's registered for this event, on the same page where you click to sign up for this webinar, we will be posting the slides and also those Q&A and again I will be sending those Q&A responses that were not able to get to today out by early next week.
We're going to move to our next presenter Ann Livingston; Ann has a ton of experience. I want to make sure that we give her full time because they've really been doing an amazing job as an enervator in Boulder County, Colorado. I'll turn it over to Ann. Thanks.
Ann Livingston:
Thank you Merrian, Im going to cruise through this quickly in case folks have time for questions at the very end here.
Next Slide: Basic County Information
Ann Livingston:
Boulder County is a relatively small county, 300 thousand people, what that means is that we've structured our program in a way that we aggregate demand and then go to the bond market. Again, sort of what you've heard from other folks, really in an effort to minimize cost from the program side and therefore from the borrowers side. One thing to know in terms of our additional level of complexity, like Sonoma County we have all our municipalities engaged in our loan program. So, were servicing the unincorporated county as well as all 10 municipalities. We have 6 electricity providers adding and additional layer of complexity, although almost all of our natural gas is provided by Xcel Energy.
Next Slide: Boulder County's Emissions
Ann Livingston:
Im going to cruise through this real quick, but like many other communities over half of our emissions are from our existing buildings stock, and in Colorado unlike in California, we don't have existing authority to go in and work on homes and commercial properties that are sitting there now. As existing structures in most cases getting worst in terms of energy efficiency as the years go on; So, we've really developed this program as an opt in incentive based program to help folks get over the financial barriers that we know are there with startup cost for efficiency and renewable energy measures. But also, to provide a product that is not available on a private market, so again you have _________ religious __________ it's not a bank loan program, it's very much in our case a local improvement district program where we provide access to credit primarily to people who don't have access to private credit or folks who really sensitive to the financial risk of taking a loan associated with their personal credit vs. the property itself. That maybe for a number of reasons including that they think they might move before they payoff these measures.
Next Slide: Program Purpose
Ann Livingston:
This is kind of the same stuff like everybody else. Were really doing this to get Energy efficiency and renewable energy measures, was our first program to go after efficiency measures, so we based a lot of skepticism at first. I will say that over half of our dollars are going to efficiency measures at this point, those tend to be cheaper measure than renewable energy but the energy efficiency improvements, well I would argue vigorously are well worth doing. Maybe even if you do only efficiency and renewable but they are harder to manager and they are harder to staff up for, and a little harder measuring anticipated savings in advance. We had to go get states authority to run the program at all, that was House Bill 1350 run in 2008, that's on our states legislatures webpage if anyone wants to reference that, and in Colorado you have to get voter approval to go out to take on any government that including bonding, so we did that through county ballot measure 1A in 2009.
Next Slide: Program Basics
Ann Livingston:
We have over forty efficiency renewable measures on our prescriptive list of eligible measures for residential properties; those are the only things the people can borrow for. For the commercial sector program which were launching late this year, and loans will be available in early 2010. Boulder County can participate in the program because of the municipalities opt in by ordinance. The exception here is likely the exception most states is that Mobil homes cannot participate because their taxed differently. So, what we do in our system is that our online application form is behind the county firewall, which allows us to immediate access the treasures database and the assessors database, so if a property is classified as a mobile home we refer people directly to our weatherization program and other subsidized services were we can provide them help, and through the treasures database if there delinquent in their taxes in any way they get stopped right there as well and get redirected to the treasures site. We will loan up to the full upfront cost of improvements, except for a $75.00 application fee. The only thing we won't loan for in terms of rebate or tax credit at this point and time are the espouser rewards rebates and that's because those are paid out within sixty days and are solar vendors are very much in the habit of fronting that for customers anyway. Every other rebate tax credit or incentive whether someone asks for a loan for that or covers it up front is at their discretion. Some people have the funds to do that some don't and again trying to minimize the barriers.
Next Slide: Country Level Administration
Ann Livingston:
We are administering this at the county level again similar to Sonoma County and a large part because of the way we structured our program when we aggregate demand and then go out to the bond market without doing it at the full county scale we have a fairly significant concern about not meeting that threshold _______ In Colorado that prism both initial and opportunity, out assessor and our corporate recorder in fact are all constitutional offices from the board of commissioners and we have a very good working relationship with them they are not charging us any fees to collect or provide some supplemental assessment services. That may not be the case in very jurisdiction but that definitely is something that helps to keep cost down. Running at the county level also allows us to keep our staffing and messaging centralized. So again reduces cost but also creating a defined brand and a defined messaging.
Ann Livingston:
So the process that we run through is a little different than other folks we do require that every home owner attend an educational workshop before they can apply. At the workshop we cover that value and the reasoning for doing a home energy audit with at least a blower door although we push hem towards infrared, we discuss every single efficiency measure that on the prescriptive list and how that might function in the home and anticipated energy and cost saving, broad range of, we cover every single renewable energy measure and again discuss why you should. If you really want to spend your money most cost effectively do the audit first, and then renewable energy. Than we had a couple other topics like appliances, which we can't loan for cause there not affixtures of properties and behavior change. It's a very comprehensive educational workshop; we have had 2500 people in the community attend those workshops which is actually a greater penetration than we were getting through our designated education outreach campaign. We also cover in the workshops how our loan program, our local improvement district is different than a private sector loan. We are very clear with folks but they may want to go talk to their bank or credit union because this may or may not be the best program for them to describe how it's different than a private sector loan we send some folks out to get their bids and estimates from the contractor of their choosing. We do have list through a couple of our non-profits that they can reference. But we don't a local certification program that we can rely on to direct people too. So choose a contractor of your choosing all of those bids and estimates are either fixed cost and not to exceed bids and estimates. Again getting a little bit back to John's point of trying to find that certain _____ of what you are actually bonding for and what you're going to pay out. Homeowners than applies online, I just described that a little bit. We not only have some safety features in the application process but we review every application with a human eye. If they look good we send them on to talk face to face with the loan originator. That gives us the opportunity to our final bond sizing. So once we have all the applications in we do a preliminary bond sizing once the loan origination _____ we do our final bond sizing and we go out to the institutional bond market. Now we've done two sells now, one in May, one in October for both taxable and non tax exempt bonds. Once the bonds are sold we close on the bonds, we place the assessments and the home owner receives a notice to proceed much like under conventional construction loans. Once the work is completed what we make ____ turn in is a homeowner letter of acknowledgement that work has been completed and signed by the homeowner or all homeowners if there is more than one. The final invoice from the contractors sometime folks switch contractors between when they apply and when they finish work were ok with that but we need to know who to pay and exactly how much to pay them. They also have to attach all of the permits and inspection paperwork. Most of the items on our prescriptive list require a permit and inspection in most of our jurisdictions. So once that's done we get that in hand, we pay out the contractors within 7 business days. If a single contractor has three jobs they are working on we will pay them for each of those three as they are done. If there is four contractors on someone's application we will pay out each contractor as soon as their work is done. We pay the contractors directly; we don't give any money to the homeowners at any point and time. Part of the logic there is 1. Reduce the risk of the contractors in term of homeowners holding onto that money, they are already having to wait until the job is completely done which is different than a lot who structure their typical jobs but also want to get the money out to them as quickly as possible because when we launched the program I think John eluded to this as well, we had a number of trade people that were on a verge of shutting there door, so e really wanted to stop that job loss and get people back to work. Than homeowners begin their payments during the next tax cycle.
Next Slide: Eligible Measures
Ann Livingston:
The same as everybody anything that we are loaning under the loan have to be a fixture of property because debt stays with the property. All of our loans are 16 year term loans so all of the measures that we approve under the residential program have an average use of 15 years or more. On our prescriptive list if you check that that out on the website you will notice that everything is set as a minimum standard. So we allow for people to see those minimum efficiencies that not go below and a couple of items that we really require to be a part of a package is for replacements only. So for windows we require that people do installations or other silly measures in conjunction with the widows or demonstrate that they recently did so. For centralized air conditioning can only be a replacement that will allow evaporative coolers for a wood biomass heat. We allow stove upgrades for any home and will allow new bio mass for electric only houses which is about 15 to 20% of our homes depending upon what part of the county your are in.
Next Slide: Energy Efficiency and Renewable
These are just broad categories of what we loan for on the energy efficiency side and there are details within each of those. So we also loan for a wide range of renewable not just solar PV and solar thermal.
Next Slide: Monitoring and Research
In order to monitor program impact we require that all borrowers' sign a utility borrow release for electricity provider and national gas provider. We can monitor the impact of the program. That data is linked to other programs participation and set on top of GIS layers.
Next Slide: Assessing Demand
Ann Livingston:
In order to sort of assess demand because of the way we have structured our program we need to know that we can get enough borrowers and enough dollars on the program each time because of our market. We've done a couple of things we, obviously our population. We look at participation in other programs including our residential energy action program and our energy corp. program just to name a few. We've had around twelve hundred dollars on our own without pretty much implementation so we launched the REAP to provide energy counseling to people who needed help figuring what to do in their homes both pre-audit and post audits, which furnace do I pick do I pick a furnace before PV those are the type of questions. One point to make with those I think this is very important for the success of these programs that you have some sort of counseling or technical assistance support either directly attached to the loan program or provided by adjoined programs to help people really make the right decisions. We also look in terms of the average cost of work done under home performance energy star and other retrofit programs. So we are thinking the average loan will be about 10 grand per home, we are significantly off but that you will see in the next slide. Go ahead and go to the next slide.
Next Slide: Residential Loan Sizes
Ann Livingston:
We set a minimal aside of $3000 per home cause lower than that the administrative cost are way too high. We also set a sliding scale of 20% of the statutory actual value of property or $50,000 whichever is less. For our open loaned that are income qualified loans are secured for a low interest rate and are subject to provide cap allocations, have a federal require both in term of the income level and the capital, and the 6.68, 6.8, 5.2, and 5.8 numbers that you see there are the interest rates we've gotten for each category in the first and second bond bill. We've given out about ten million dollars in loans at this point the average loan size is actually turns out to be 17-18 thousand dollars per house, very significant. However, about 20-25% of our loans in each batch are under 10 thousand dollars, and why that number is relevant is it our community most of the banks won't do a heal under 10 thousand dollars, again serving a market that's not verify the private sector. Our top three measures just like some of the other communities, 1. This is in terms of dollars not units, PV is about 1/3 of our dollars windows, and then insulation followed by other measures furnaces is right up there as well. The income qualified loan, just to hit this real quickly has end up being 1/3 of our dollars but about ½ of the loan. So those loans are intending to be smaller.
Next Slide: Residential Loan Sizes and Types
Ann Livingston:
One of our biggest issues with the programs the way we run it is that we are unable to guarantee the interest rate to borrower or even the exact amount of fees associated with each round until we actually review the bonds bill. What we found second bullet from the bottom is that were funding a large sort of ripple effect. So for every dollar that is going out through the loan program, at least one of our solar companies are seeing an extra $.50 coming in through people who have heard about the program that did the workshop and then refinanced their house, or other means. But it's important to continue to work with the state on the federal level to both reduce barriers programs and create new authorities for us to put more bells and whistles on.
Next Slide: Contact Information
Ann Livingston:
Next slide is my contact information.
Merrian Fuller:
Thanks you Ann. So were right at our time now, I think we will not take verbal questions but, what Im going to do is look through the Q&A request on the screen and we will be responding to as many of those as we can in writing and then creating probably one or two more additional sessions that focus on some of these very specific issues such as you know their sponsored mortgage holder, or insuring payments to the borrowers cause there are some discussions and interesting this that have happened on that an different programs to address those issues. So look for that, we will send you an email by Friday if you have registered for this session with further resources the link to the PDF of this presentation will be on that webinar page on the DOE website probably by tomorrow or the next day, and then some of the Q&A responses to by written form and pushed to the website and also send out 2 guides.
Next Slide: Resources
Merrian Fuller:
So this page that you seeing now are some of the resources that are currently available. You can send request and questions to Bret Kadison emails right there, there's our new DOE resource portal for financing programs that walks you through some of the financing options available to you and some helpful links we will be continually adding to that, a how to guide for PACE programs, that actually answers most of the questions that has been asked on the call. It's about a 40 page document that kind of walks you through some of the issues involved in setting up a program and looks at 4 different key stones to existing programs, and then the federal government did issue as policy framework for pace financing programs that's available on the links that you see. If you want to check if your states has legal authority for pace programs the DSIRE database track that and get legislation from all the other states there that has passed already, if you are looking at passing states staffing legislation in your states and then the links to the different programs that you have heard form today are available there. So please give us feedback at financingrapidresponse@ee.doe.gov at the top of the screen and thank you very much too all our participants for being her today and providing great information thanks to all of you who were listings for being leaders in your communities looking in to this new sort of financing program. Thank You.