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 years

Judgments 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 required

Judgments 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