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|June 18 - June 25, 2009
A smart idea
First round of ClimateSmart loans pumps more than $6 million into Boulder County’s economy
by Pamela White
Thanks to Boulder County voters, more than $6.6 million has been pumped into the county’s economy, a result of the passage of County Ballot Issue 1A this past November. Those millions represent the first wave of loans offered by the county under the ClimateSmart Loan Program for energy-efficiency and renewable-energy improvements to homes in the county.
“I’m very happy with how it’s going,” says County Commissioner Will Toor. “It’s been a lot of work. I can see why other local governments decided to let us go first and see how to do it.”
Last fall, 63 percent of county voters opted to allow the county to issue $40 million in bonds in order to provide loans to homeowners for energy-efficiency and renewable-energy improvements to their homes. The first round of loans were issued this spring with work to be completed on those projects in July.
“There were some hiccups along the way,” Toor says. “This program is quite different than anything we’ve done before.”
In fact, no one has done this before. The city of Berkeley, Calif., test-drove a similar program on a limited basis last year, inspiring the Boulder County ballot measure. The ClimateSmart Loan Program issues loans to homeowners to help make their homes more energy efficient. The loans are repaid through a special assessment that goes on homeowners’ property tax bill and is paid with property taxes or through increased escrow on their mortgage. In this way, the debt is tied to the residence and not the homeowner.
If someone adds a photovoltaic (PV) system to his or her home and then moves away, that special assessment remains on the home, and the new owners take over payments.
“Boulder County’s ClimateSmart program is groundbreaking in a number of ways,” says Ann Livingston, sustainability coordinator for Boulder County. “It’s the first program to go out to the bond market. It’s the first program to comprehensively address both energy-efficiency and renewable-energy measures. It’s the first program that’s multi-jurisdictional in nature. We cover unincorporated Boulder County, as well as nine of our 10 municipalities — everybody but Ward.”
As a result, the county has been getting calls from around Colorado and across the nation, as well as calls from Canada. County
representatives have participated in national conferences and webinars sharing information with other community leaders.
“The ClimateSmart program is really getting quite a bit of attention nationally,” Livingston says.
The goal of the program is to decrease residents’ electricity costs while also reducing the county’s carbon footprint. It has had the added benefit of infusing the local economy with much needed cash, providing a boost to solar-energy companies and contractors during a recession. While some communities are waiting for stimulus dollars to institute changes in energy usage, Boulder County seems to have created its own stimulus package.
Guinea pigs with great goals
This past spring, about 1,700 homeowners attended workshops hosted by the county to learn about the ClimateSmart Loan Program, becoming guinea pigs in a financing experiment that has great goals — save people money on energy costs and reduce the county’s carbon footprint.
Alex Connelly and his wife Emily Jones, residents of Louisville, bought their home three years ago and wanted to add solar panels.
“I started talking to multiple companies and that’s when I realized how expensive it was and how out of reach it was for the average first-time homebuyer,” Connelly says.
Someone tipped him off to the ClimateSmart Loan program, and he attended a workshop. The mandatory workshops teach residents how the loan program works, explain the value of a home energy audit, go over basics on the measures that are covered under the program, and share general tips for reducing energy use in the home. People who attended the workshops also received information from the county about the incentives and rebates they were eligible to receive depending on which company provides their electricity.
“The workshop was good because you got to see some of the things they can do,” Connelly says. “You have people you can ask questions who will explain things. I think a lot of the people who were there were set on what they wanted to do and this was more questions and answers than persuading you to do any specific things.”
One of the things participants like about the program is its flexibility in accommodating a variety of improvements.
“We provided funding for about 40 different measures that homeowners could choose from,” Livingston says of the first round of loans.
Connelly says that he and Jones ended up getting the PV system they’d wanted, in addition to a tankless water heater. The PV panels were installed this week by Simple Solar. Now Connelly and Jones utilize solar energy during the day and electricity from Xcel at night. The excess energy their PV system generates during the day will go back to Xcel, meaning that their electricity bill will likely even out to zero or perhaps result in money back, Connelly says.
Without the ClimateSmart Loan Program, the cost of the PV system and water heater would have been beyond their reach, Connelly says.
“To do it all out of pocket right now would just kill us,” he says. “I’m very outspoken about this program. It’s not for everyone, but I think it’s a great thing.”
Dana Brown Kelly and her husband Darren Kelly, also of Louisville, had wanted to get an energy audit done on their home for quite
some time. Their house got cold quickly on chilly days and became hot quickly when the sun came out, and they suspected it was poorly insulated.
“It just happened to get scheduled this spring, and a couple weeks later I heard about the upcoming deadline for applying [for ClimateSmart loans],” Kelly says.
During the audit, they learned that their house, in fact, had no insulation whatsoever.
“I was shocked,” Kelly says. “When the energy auditor came, he looked in the little hole where the electrical outlet goes, and he said, ‘It doesn’t look like you have any insulation.’ He made a little hole into our wall, and sure enough, not a bit of insulation. I just couldn’t believe it. There was nothing but drywall, airspace and then the outside wall.”
The auditor told Kelly that this was a common finding in homes built in Boulder County during the 1970s.
A couple of weeks after the audit, the Kellys heard about the approaching deadline to apply for ClimateSmart loans and decided to go ahead with an application.
“Now we’re going through the process of scheduling the insulation,” Kelly says.
Once the insulation is finished, they’ll be getting a PV system, installed by Real Goods, a Louisville-based solar-energy company.
Although the Kellys will use some natural gas to heat their home, they don’t expect to be buying any electricity once their PV system is in place, something that excites them.
Part of being the first wave of residents to go through the program meant working with county officials as the program was developed and the kinks were worked out.
“There have been significant delays,” Kelly says. “Boulder County is the first to do this on such a big scale. The county would send us an e-mail saying, ‘We expect that next week we’ll be ready to tell you you’re good to go.’ Then we’d get another e-mail saying, ‘Oh, well, actually it looks like it’s going to be another week.’ So we’ve been having to kind of sit it out while they figure out all the details.”
Connelly says the county was very good about keeping him up to date, whatever problems they might have encountered during this first round of loans.
“Every time anything happened with the whole program, they let everyone know about it,” he says.
Working out the kinks
The problem that took county officials most by surprise was the difficulty they encountered getting a good credit rating from bond-rating agencies.
“The bonding for this program is a very unusual kind of bonding, something the bond-rating agencies weren’t familiar with,” Toor says. “The bond-rating agencies are very conservative right now, for obvious reasons. Any kind of financing they’re not familiar with yet, they’re nervous about. We did find we had a lot to do to get a good credit rating, which we hadn’t been anticipating, because when you look at property taxes and assessments in Boulder County, they’re essentially always paid, particularly on residential properties.”
The county’s payment rate on property taxes and assessments is about 99.9, making loans factored into residents’ property tax bill “the safest money you could ever loan out,” he says.
Toor expects the next round of bonding to be easier as bond-rating agencies become more familiar with the program and see that it is, indeed, a very safe investment.
“The federal government in the energy bill is looking at providing federal loan guarantees for this kind of program,” Toor says. “If they do that, it will take away all of difficulties with bonding and will make it much simpler. We’re very hopeful that will pass. It’s in the Senate version of the federal energy bill.”
Despite the difficulties involved in getting the program off the ground, both Toor and Livingston are happy with the results of this first round of loans. Out of the $40 million in bonds authorized by voters, $6.6 million has now been loaned out. Though there was some speculation that the recession would make homeowners skittish about getting involved in something so new, county officials are satisfied with the response thus far.
“We are very excited to see the $6.6 million being infused into our local economy,” Livingston says. “We are planning additional rounds of residential loans, as well as the launch of the commercial sector loans before the end of the year.”
Toor says that the actual benefit to the county exceeds the $6.6 million in loans. Because about half of that was for PV systems, many people will be getting rebates from their electricity providers, and that money will also stay in the community, making the amount of money coming into Boulder County closer to $10 million.
“The other thing — and this made me very happy — when we held the bond sale, we opened it one day early just for local investors before we went out into the normal bond sale process where you’re out in the national market,” Toor says. “We didn’t do a lot of publicity for it, and we still sold something like 80 percent of the bonds to local investors. Not only is it pumping money into the local economy to provide jobs and help us go green, but, in fact, most of those interest payments are staying in the local economy.”
Toor says the county is now working on ways to streamline the process before the next round of residential loans are made this coming fall. In addition, they’re working on developing the commercial loan program so that they can begin letting commercial-property owners benefit, as well.
“I think what what we’ve seen with this first round is people loved the idea, and a lot of people have taken advantage of it,” Toor says. “There was a lot of interest. We had close to 2,000 people come through the workshops back in March, and we’re getting close to 10 calls a day from people wanting to know when the next round of loans is going to be.”
From the point of view of local solar companies, the ClimateSmart Loan Program couldn’t have launched at a better time. With a recession in full swing at the beginning of the year and some solar companies and companies with related trades facing layoffs, the estimated $3 million that went to local solar vendors was a significant shot in the arm.
“It came around at a point right now in the industry where things are slow,” says Jim Welch, CEO of Louisville-based Bella Energy and president of Colorado Solar Energy Industry Association. “I think it did provide a boost in Boulder County, and I think long-term it’s going to be a very helpful boost to the solar industry.”
Generally speaking, the solar industry is in a slump right now, with many institutions waiting to see what happens with President Barack Obama’s stimulus money before committing to solar projects. But in Boulder County the solar industry had an upturn.
Welch says that the ideas and goals behind the ClimateSmart Loan Program are sound but that this first round of loans involved a
process that at times was “cumbersome,” with starts and stops.
“The next time, they’ll be able to iron out the kinks,” Welch says.
Eugene Howard of Real Goods says the infusion of dollars came at a critical time and helped people to become more comfortable with the idea of investing in solar.
“As far as activity, I would say that Boulder County… has definitely seen a greater percentage of activity versus some of the other counties,” Howard says.
Though Real Goods hasn’t hired on additional staff to meet the demand in Boulder County, it’s something they may have to consider this fall when the second round of loans goes out and the commercial loan program launches. That’s especially true if the state provides financial incentives through legislation to areas not served by Xcel, he says.
Real Goods also installs PV systems in California, where lawmakers passed a measure that enables local governments to launch programs similar to Boulder’s. San Diego now has its own version of the ClimateSmart program, as does Sonoma County, he says. As these programs succeed, he believes interest will build.
“I won’t quite call it a movement, but I do see that this kind of approach to help the affordability of solar has some traction,” he says.
Livingston says her office has received feedback from people in related construction trades who were about to close their doors but got an influx of work due to the loan program.
“That’s exactly what we wanted to have happen was to stimulate a bunch of activities that would both be providing jobs and moving us toward a cleaner energy future,” Toor says. “What’s not to like?”
Toor would like to see the program continue to grow.
“My feeling is that what we’re basically doing right now is the proof of concept showing that it works,” he says. “I want to figure out how we keep taking it to a larger scale.”
When the initial $40 million is used up, the county will go back to voters looking to authorize bonding for the program on a larger scale, he says.
“It’s been a lot of work to figure it out,” Toor says. “We’ve got some staff who’ve worked really heroically to make it work.”
For more information about the ClimateSmart Loan Program, go to www.climatesmartloanprogram.org.
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