A group of business leaders is in a race against the clock to win Colorado Springs a spot in a federal pilot program that would allow homeowners to obtain low-interest loans for energy-efficiency improvements.
The program, its advocates say, has the potential to stimulate economic growth and brand the city as a bastion of green-energy progressivism.
The Federal Housing Administration announced plans for the PowerSaver Home Energy Retrofit Loan Pilot Program on Nov. 10.
In response to the announcement, a Colorado Springs committee, called the Energy Working Group, headed by local architectural consultant Scott Harvey, began to organize an effort to secure the city’s inclusion in the program.
The EWG has until Dec. 27 to convince the FHA that the “community infrastructure” exists in El Paso and Teller counties to support such an initiative. The program is set to roll out in early 2011.
Under the program, up to $25,000 in loans would be available to homeowners for everything from window upgrades and insulation, to furnace replacements and solar installations.
The Housing and Urban Development agency is appropriating $25 million to the pilot with the goal of creating green job opportunities and boosting energy savings for homeowners.
“Right now if a homeowner needs to replace an inefficient furnace they might get a tax break, but that still leaves them with too much to fund on their own,” said EWG participant Gregor Huesgen. “Through this program, energy savings would outweigh the loan payment for the installation.”
According to the EWG, the PowerSaver program also would benefit local banks writing the loans, companies selling energy-efficient products, contractors performing the installations, and would increase city revenue through sales taxes.
The official program doesn’t go fully live for another two years, but those cities adopted into the pilot phase could see an immediate economic impact, and would be well ahead of the curve should the program unfold as intended.
A consortium of 48 cities and communities, including Boulder, Denver and Eagle counties, have already been grandfathered into the program because of their involvement in the American Reinvestment and Recovery Act’s Better Buildings Program.
The FHA has opened a small window of opportunity for other communities to submit bids for inclusion, and the EWG recently started holding weekly meetings to organize a proposal for the government’s consideration.
Last week’s meeting was attended by more than 20 representatives of local entities interested in participating in the push.
“(The FHA) wants evidence that there is full community involvement to lead the charge,” Harvey said. “We have UCCS and Colorado College student groups willing to do small-business retrofit assessments on a donation basis. The infrastructure already exists; we just need to pull it together.”
Harvey said the EWG has the expertise and capability to provide free estimates to homeowners interested in an installation, and will volunteer to remove inefficient furnaces for homeowners looking to upgrade.
“It’s all about community infrastructure, volunteers, outreach and educational groups,” he said. “That’s what our group is trying to provide.”
The EWG needs independent letters and applications from a diverse group of community stakeholders that includes banks, contractors and businesses that would benefit from, and have the resources to fulfill the requirements of the pilot program. The group is reaching out to these entities to help them through the application process.
The program would be a nice windfall for local contractors still struggling through the economic downturn.
Leigh MacKenzie at Affordable Plumbing and Heat said the program would pick up where other government programs left off.
“The Federal Star Energy program ends Dec. 31, and those tax credits on high-efficiency installations are what have really driven our industry over the last three years,” he said. “I go out all the time and see homeowners that could benefit from an energy-efficiency installation, but unless the incentive is there, people won’t do it because of the costs. People aren’t looking at the savings because they’re not prepared to spend a lot of money up front.”
Rick Bingham, Owner of the Line-X spray-foam insulation company, said his company would also be helped by the program.
“Our product can be expensive, but the savings are worth it,” he said. “We’d pick up a good deal of business if it really does spur that kind of activity.”
The FHA initiated the program after concluding that the lack of financing was the primary barrier to energy-efficiency upgrades. It’s targeting the relationship between lenders and homeowners as a way to reverse this.
According to the FHA’s program outline: “The upfront costs of home retrofit projects are often beyond the average homeowner’s budget … and small loans for home-energy retrofits may have relatively high transaction costs for lenders, discouraging some from offering such loans and forcing others to offer them at an increased cost to borrowers.”
The FHA plan will provide federally insured second mortgages, incentives to lenders through a 1 percent premium paid on the value of the loan, and grants to lenders to buy-down interest rates, making the loans more affordable to homeowners.
Getting the banks on board is the biggest challenge facing the EWG and the lynchpin of the proposal’s success. The program will not be a large revenue-generator for banks, and will create an administrative burden due to government reporting requirements.
Lenders will have to provide regular reports to the FHA on the origination and performance of retrofit loans, although the EWG said that it will provide support to banks on this front.
“Reporting and data collection is not what banks do — they make and service loans,” Harvey said. “Our group would be happy to handle that aspect as a service to lenders.”
As the EWG ramps-up its pitch to local banks, at least one lender has expressed interest.
“We wouldn’t go into this for the profit,” said Bank at the Broadmoor senior lending officer Patrick Sullivan. “But as a contribution to the community, this is definitely the kind of project we’d like to get involved in.”
Still, widespread agreement on the merits of the initiative is not enough to land Colorado Springs a spot on the FHA list.
The onus is on the EWG to put all the pieces in place.
The Energy Working Group will meet at 5:30 pm every Tuesday in December in the Adult Reading Room at the Penrose Library, 20 N. Cascade Ave. The meeting is open to anyone who would like to attend.
For more information or to contact EWG principals visit www.greencoloradosprings.org/energy/energy.html