Green Jobs/Green New York: Increasing Opportunities for

Home Energy Efficiency Upgrades

Anthony NgGreen & Equitable Economies StrategistCenter for Working FamiliesOctober 1, 2013NYS CDFI Conference

Workshop Goals• Learn about Green Jobs/Green New York

• Learn how Craft3, an Oregon and Washington based CDFI is offering energy efficiency loans

• Get your feedback on a proposal for an energy efficiency loan pilot program, that would involve a partnership between credit unions/CDFIs and the NYS Energy Research & Development Authority (NYSERDA)

Green Jobs/Green New York (GJGNY)

PRIMARY GOALS

• Conserve on energy use• Save money for low-to-

moderate income homeowners

• Create good jobs• Reduce carbon

emissions

Governor Paterson Signs GJGNY into Law

GJGNY: Removing Barriers to Retrofits

• Free/low-cost energy assessments• Low-interest financing and incentives• On-bill recovery (OBR)• 18 community-based organizations (CBO) conduct

program outreach, assist homeowners with financing and retrofit process; several also do workforce recruitment.

• Building Performance Institute (BPI) accredited contractors

• NYSERDA must approve project work scopes• Quality control: 10 to 15 percent of projects are

inspected afterwards

Green Jobs/Green NY CBOs

Positive Community Impact• Households completing a retrofit through GJGNY

like the program• Most important reasons for completing a retrofit:

save money and improve the home• Free/low cost audit, incentives, and low-interest

loans very important in decision to do a retrofit • Nearly 46% of contractors surveyed have hired

workers since GJGNY began• Creating community benefits – leveraging CBO

community outreach to generate better paying jobs and price discounts for customers

Green Jobs/Green New YorkProgress to Date

• For 1-4 family homes (as of 8/31/2013)• 40,280 energy assessments

completed (87.5% of goal)• 10,730 projects completed

(71.5% of goal) • $37.3 million issued in

energy efficiency loans• Signs of market

transformation• Developing future

statewide energy efficiency policy Tracy & Wendy Persons. Binghamton, NY

homeowners

Energy Expenses and Savings

Average annual energy expenses per household in NYS

Average annual energy savings for a retrofitted home

•$1724• Capital

Region/Saratoga: $755• Central New York: $571• Finger Lakes: $533• Long Island: $870• Mid-Hudson/

Westchester: $802• New York City: $885• Southern Tier: $924• Western New York:

$588

Many Buildings Can Still Become

Energy Efficient• Carbon War Room: Market potential of energy

efficiency is $87 billion per year• Ceres: $280 billion investment opportunity that

can save building owners $1 trillion over a decade• NYC: 75% of carbon emissions comes from its

buildings. 80 % of our buildings will still exist in 2050.

• This is a lot economic activity that can create and support businesses and jobs

How Do I Pay for It? GJGNY Financing Options

• Smart Energy Loan (3.99%; 3.49% for borrowers that repay with automatic payment)

• On-Bill Recovery (OBR) Loan (3.49%)• For each loan, two sets of underwriting standards:• Tier 1 – Standard approval process • Tier 2 – Alternate approval process that incorporates

utility bill repayment history • Loan amount: up to $13,000; goes up to $25,000

if the payback period is under 15 years• 5, 10, or 15 year loan terms; term can’t exceed

expected useful life of energy efficiency measures• Subsidies also available for homeowners above

and below 80% of area median income.

Current GJGNY Underwriting Criteria

Criteria Tier 1 Tier 2Minimum credit score or alternative

640. 680 if self-employed for 2 years+; 720 if self-employed <2 years.

None, but must be current on energy and mortgage bills:

• Energy bills: at least 2 straight months for each of last 2 years. (if less than 2 years of history, current on 9 of last 12 months).

• Mortgage bills: current for past year (minimum of 12 months of payment history). For properties with tenant-paid energy bills, owner must be current for past 2 years, but isn’t subject to energy bill payment history requirements.

• No energy/mortgage payments more than 60 days late for the lesser of last 2 years or time of ownership.

Current GJGNY LoanUnderwriting Criteria

Criteria Tier 1 Tier 2Maximum debt-to-income ratio

Up to 50% -- Up to 55%. -- Up to 70% if credit score is 680+-- Up to 100% for applicants who qualify for Assisted Home Performance subsidy

Bankruptcy None within last 7 years None within last 5 yearsJudgments No outstanding

collections, judgments, or tax liens > $2,500

No outstanding collections, judgments, or tax liens > $2,500

Administration of Current Green Jobs/Green New York

RLF• RLF capitalized with $51M in Regional Greenhouse

Gas Initiative (RGGI) funds. $26M for 1-4 family homes.

• Energy Finance Solutions (EFS) originates the loans on behalf on NYSERDA

• For on-bill recovery, the utilities collect the on-bill payments and remit to NYSERDA, which replenishes the RLF

• $24.3M bond issuance just completed to also replenish RLF

Benefits of On-Bill Recovery • Re-pay retrofit costs on utility bill – one bill to pay,

not two. Charge is placed on utility bill• Use energy savings to repay energy improvement

costs – cash flow neutrality is the goal• Customers pay their utility bills. Amount of

uncollected bills are low.• New York State has strong consumer protections

to avoid utility shut-off. These protections provide security for repayment.

• Increase in on-bill recovery loan applications: • August 2013 -- 37% August 2012 – 24%

On-Bill Recovery Loan Performance

(as of 8/31/13)• 3,737 outstanding total loans at $33.35M (Smart Energy &

OBR)

• 1,029 are on-bill recovery (OBR) loans at $10.67 million

• Average loan size is about $10,500

• 97% of on-bill customers pay on time or within 30 days of the due date.

• 944 loans (91.7%) are current ($9.8 million)• 57 loans (5.5%) are 1-30 days late ($565,531)• 16 loans (1.6%) are 31-60 days late ($185,379)• 12 loans (1.1%) are 61-120 days late ($124,950) • 6 loans are 120+ days late and have been charged off ($47,079). This

represents 0.57% of all issued OBR loans.

Craft3 Presentation

Goals of On-Bill Recovery (OBR)

Pilot Loan Program• Fulfill original vision of GJGNY’s proposal for how

on-bill recovery would work• Unlock the full potential of utility bill repayment

history as a measure of creditworthiness• Leverage the full potential of energy savings to re-

pay retrofit costs• Help more homeowners pay for and complete

retrofits, especially low-to-moderate income families

• Simplify the qualification process, leading to greater access of on-bill recovery loans

• Create a $5 million pilot program

Administration of OBR Pilot Loan Program

• Take advantage of existing loan origination infrastructure and servicing structure

• Invest capital in NYSERDA’s revolving loan fund (RLF) for residential loans

• Energy Finance Solutions (EFS) originates the loans on behalf on NYSERDA

• The utilities remit the on-bill payments to NYSERDA, allowing it to replenish its RLF. For this pilot program, it would repay all investors directly

• NYSERDA might have loan loss reserve and other credit enhancement to mitigate risk

Proposed Underwriting Criteria for OBR Pilot Loan

ProgramCriteria Tier 2 Pilot ProgramMinimum credit score or alternative

None, but must be current on energy and mortgage bills:

• Energy bills: at least 2 straight months for each of last 2 years. (if less than 2 years of history, current on 9 of last 12 months).

• Mortgage bills: current for past year (minimum of 12 months of payment history). For properties with tenant-paid energy bills, owner must be current for past 2 years, but isn’t subject to energy bill payment history requirements.

• No energy/mortgage payments more than 60 days late for the lesser of last 2 years or time of ownership.

None, but must be current on energy bill:

• Energy bills: at least 2 straight months for each of last 2 years. (if less than 2 years of history, current on 9 of last 12 months).

• No energy payments more than 60 days late for the lesser of last 2 years or time of ownership.

Proposed Underwriting Criteria for OBR Pilot Loan

ProgramCriteria Tier 2 Pilot ProgramMaximum debt-to-income ratio

-- Up to 55%. -- Up to 70% if credit score is 680+-- Waived for applicants who qualify for AHPwES subsidy

Not required

Bankruptcy None within last 5 years Not requiredJudgments No outstanding

collections, judgments, or tax liens > $2,500

Not required

Feedback Questions• Are our proposed underwriting standards too

risky?• Would you require credit enhancement such as

loan loss reserve, to manage the risk?• How do you feel about not originating the loans? • Is it essential to lend to LMI homeowners in your

community; or is anywhere in the state okay?• Are there other factors that must be addressed, in

order for your institution to invest in this pilot program?

• Are there other ways you would like to offer energy efficiency loan products (e.g. participation loan), that we haven’t already discussed?

For more information, contact:

Anthony NgGreen & Equitable Economies Strategist

anthony@cwfny.org212-206-9168, x12