AUGUST 19, 2009 – The Wall Street Journal

Initial costs Long Island, NY and California’s Bay area are leading the way with recently launched programs to help residents finance retrofit and solar. Recent changes to local and state laws allow municipal governments to help residents remove upfront cost as a barrier to be green. By spreading out the costs over a decade or more residents from Berkley to Boulder and Babylon have all experienced tax-based finance plans which allow them to conduct home energy retrofits and install solar paneling.

These new programs allow residents to purchase energy efficient furnaces, weatherize their homes and put solar panels on their roofs. “To me it’s the perfect recession program,” says Babylon’s town supervisor, Steve Bellone. “It’s cost-effective. You’re actually creating jobs in a way that is not impacting taxpayers. But it’s helping everyone by improving the environment.”

CASE STUDY 1

Babylon, New York’s program, entitled Long Island Green Homes, initiated this past Fall after the city’s residents in a vote redefined its solid-waste code to include energy waste, based on its carbon content. That allowed the municipality to tap $2 million of Babylon’s solid-waste reserve fund to seed the program.

Under the new program residents of Babylon can apply for as much as $12,000 in loans to finance residential energy retrofit projects. Residents can tap the funds for installation, insulation, pipe replacement, new furnaces and even solar panels.

How does it work? First an energy auditor, approved by the town, analyzes the homeowner’s potential savings on utility bills. The owners determine the improvements they want based on comfort and/or projected savings. Next, the homeowner will select a contractor from the approved list. The municipality will pay the contractor directly.

“The homeowner then pays the money back to the town through regular trash bills, with 3% interest, and the loan is structured so the homeowner pays less than he or she is saving in utilities.”

The initiative is helping Rich Manning’s Energy Master & Environmental Solutions, which has retrofit 42 houses since the program began. Fifty homeowners a month are calling the town to ask for audits, up from 10 to 12 when the program started, according to program director Sammy Chu. And he is converting most of those audits into work contracts, where previously only 20% of his audits would lead to actual work. To keep up with demand, Mr. Manning is training a sixth employee and expects to hire at least two more workers by year end. He says, “We’ve taken the major stumbling block out: cash.” The seed money got the program started, but the town is looking to create a public-private enterprise to attract investors. “We need a more sustainable business model to finance the program going forward,” said Dorian Dale, energy director and sustainability officer for the town.

The New York State Legislature recently passed a bill to permit every municipality in the state to conduct a program parallel to Babylon’s. The measure is currently pending Governor Patterson’s signature.

WHERE ELSE Eleven other states, including Texas and Ohio, now have laws on the books that allow local governments to establish financing programs for home-energy improvements, according to the Database of State Incentives for Renewable Energy, a Web site that tracks such information. In addition to Babylon, pilot programs have launched in Boulder, Colo., and five California cities. Several other local governments — from Charlottesville, Va., to Albuquerque, N.M. — are moving forward with programs of their own. What happens when you move? No fear most of these programs have already built that in, as the new owner would take over the remaining payments.

THE STIMULUS: The Block Grants DOE permits local municipalities to utilize a maximum of 20% of the energy-efficiency block grants to establish residential loan programs. This is fueling new programs in Milwaukee, WI and Montgomery County, MD among other places.

Home Energy Plan Spreads Out Costs: by Noah Buhayar & contributed with David Kozo Read the Full Article at: http://online.wsj.com/article/SB125064722656442071.html