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On-Bill Financing. in Green Jobs-Green NY. for mass-scale retrofits, efficiency & economic recovery. Emmaia Gelman, Laborers International Union of North America [email protected] // (917) 517-3627 KEEA ACI conference, Sept. 20, 2011. LiUNA!. Green Jobs/Green NY:.

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On-Bill Financing

in Green Jobs-Green NY

for mass-scale retrofits, efficiency& economic recovery

Emmaia Gelman, Laborers International Union of North America

[email protected] // (917) 517-3627

KEEA ACI conference, Sept. 20, 2011


green jobs green ny
Green Jobs/Green NY:

Signed in October ‘09, now under RFP for work to begin 2011

Mass-scale retrofits + good local jobs

  • 1,000,000 homes in 5 years
  • 14,250 permanent jobs
  • ~$1000/year home energy savings
  • $5b in new capital invested in New York

…to build a sustainable retrofit economy in 5 years.


why on bill recovery
Why On-Bill Recovery?
  • Overcome barriers: up-front cost, lack of trusted messenger, lack of clarity about return on investment, etc. - GET TO MASS SCALE
  • Open up closed customer sectors – about half of NYS homes?
  • Give lenders enough security to raise $billions in market-rate funds (without high interest rate, huge loan loss reserve or defaults)
  • Create consumer-safe loans to avoid creating debt spirals... (Utility bill is the safest available debt vehicle for vulnerable pops.)
  • Tie savings directly to repayments (use energy savings as revenue)
  • Create a vehicle that community groups willingly market to customers
  • Create sustainable, scalable, replicable retrofit fund.
  • Leverage state's role to ensure good jobs, good impacts


critical building blocks
Critical building blocks
  • Universal standards for worker/contractor certification already in place
  • State agency with programming standards, including some M&V
  • Bulk data from prior years’ energy efficiency retrofits
  • Utility rates high enough to provide good returns on retrofits (although lower-cost states are also making it work!)
  • Utility bill protections for consumers (NYS HEFPA)
  • Loan Loss Reserve funding (RRGI in NY)
  • Legislation setting terms of retrofits, standards & customer recruitment
  • On-Bill Recovery legislation


play by play
  • Convened 150+ stakeholder groups to devise program to be funded w/ OBR
  • Consulted with lenders from the very start – maybe even fatigued them!
  • Held utilities separate, so they didn't overrun process, but consulted from start
  • Convened political actors/political will: primarily around jobs message
  • Provided competent technical drafts of legislation to bill champions
  • Continued intensive education, problem-solving & drafting for legislature
  • (Negotiated job standards between business, communities & labor after trust had been well-established.)
  • Introduced legislation in 2010, passed in 2011.


on bill recovery
On-Bill Recovery
  • State action
    • State creates Retrofit Fund & Loan Loss Reserve legislates utility role, basic loan terms & economic impact standards
  • Utility bill provides security for lenders
    • Low rate of default and write-offs among OBR-eligible customers
    • Possibility of power shut-off backs payment
    • Revenue from retrofit is sent directly back to Retrofit Fund
  • Utility bill provides safer borrowing for vulnerable households
    • No one puts their home up as collateral
    • Missed/late payments aren't catastrophic
    • Penalty for default (shut-off of service) is reversible
    • Homeowners don't have to budget in order to repay


on bill recovery cont
On-Bill Recovery (cont.)
  • Obligation to repay stays with the meter (and the retrofit)
    • “Enforcement Mortgage” (or maybe UCC1 filing) is assumable by a new owner, so even homeowners who may move can do retrofits
    • Projects can be scoped for cost-effectiveness within longer time period (15 years in NY legislation)
  • Utility focus supports community organizing around retrofits
    • On-Bill Recovery allows massive engagement by community groups
    • On-line tools like “EarthAid” can support post-retrofit engagement
  • Etc...


utilities appeared
Utilities appeared...

Issues mostly based on misinterpretation of the bill/program.

  • We don't want to be a bank.
    • Utilities are only collecters – no other obligation. Retrofit charge is just a line item on the overall bill; no separate collection.
  • We don't want to collect the debts of some state agency.
    • Utilities are part of the energy infrastructure. Providing access to energy efficiency is an appropriate role.
  • We don't want to shut off customers' power for a debt that's not ours.
    • Customers would be paying the same or more for without the retrofit, so shut-offs will not increase.
  • You can't accurately predict savings from retrofits.
    • Inaccuracies are minimized by using home-specific data on utility bills and usage, and periodically recalibrating projections using real program data. The program can also build in a cushion (don't use all of your monthly savings to pay the bill)


utilities appeared1
Utilities appeared...
  • This will increase our uncollectible bills (and therefore raise rates.)
    • OBR rules require that project savings match the repayment amount. Bills will not go up because of a retrofit loan. OBR will not increase shut-offs nor uncollectibles.
  • When there's a new buyer of a retrofitted home, we'll have to sue/deny service/do expensive collections to get them to start paying.
    • OBR builds in strong provisions of notice and transfer of obligation, at the demand of mortgage lenders and utilities.
  • This will cost a lot in collections.
    • Administrative costs are coverable by NYSERDA.
  • This will require millions of dollars in software upgrades.
    • Flipping on a new monthly charge can be manual till customer numbers grow. When upgrades are needed they can be rate-based. And yes, utilities need to upgrade outdated systems.


and then realtors who channel the mortgage lenders too
… and then Realtors(who channel the mortgage lenders, too)
  • OBR financing may be an impediment to sale of a home
    • Is the benefit obvious?
    • Will the benefit “stick” when there's a new occupant?
    • Will the On-Bill Loan impinge on repair/renovation loans later?
  • Prospective buyers may find the OBR obligation onerous
    • How clear is notice?
    • How hard will the obligation be to assume?
    • Can the obligation be satisfied at sale?
  • At foreclosure, OBR may become a burden on the lender
    • Will the bank be on the hook for benefits it's not using?
    • Does the repayment obligation survive?
    • What happens when a home is “dormant?”


solutions for mortgage lenders
Solutions for Mortgage Lenders
  • Notice of Lien?
    • Appears in Title Search
    • Transferable at sale
    • A bit unknown to lenders & realtors
    • Survives foreclosure (good for the Loan Loss Reserve.)
  • Enforcement Mortgage?
    • Appears in Title Search
    • Transferable or satisfiable at sale
    • Well known & used in NYC for subsidized properties
    • Doesn't survive foreclosure
  • UCC1 Filing?
    • Appears in Title Search
    • Transferable at sale
    • Probably survives foreclosure


key elements of the bill
Key elements of the bill
  • Sets standards for contracting and cost-effectiveness
  • Requires that payback be achieved on the bill used to collect
  • Sets standards for data collection & use of data to recalibrate
  • Permits savings across fuels
  • Lays out some parameters for alternative creditworthiness tests
  • Provides for seamless collection as part of utility bill (including consumer protections)
  • Provides for complaint remediation
  • Allows cost recovery for utilities, while mandating “prudence”
  • Creates Enforcement Mortgage & Note


the sausage grinder effect
The sausage-grinder effect:
  • On-billing only mandated for combined gas/electric utilities
  • Requires participants to pay a utility fee of $100 + 1% of loan value
  • Defers OBF roll-out for 10 months (while outreach begins now)
  • Doesn't establish key elements like scale, customer demographics or job standards.
  • Doesn't provide benchmarks for success & continuation of program


next hurdles
Next hurdles
  • Scaling up investment capital, possibly through CDFIs/regional banks
  • Setting terms for “pilot” loans that work for communities, lenders
  • Establishing CRA eligibility for early loans
  • Aligning customers, contractors and financing on the messy timeline


ny on bill recovery as a model
NY On-Bill Recovery as a model?
  • What's the alternative?
    • NYSERDA “Tier 2 loans” use OBR's alternative credit tests, but may not be safe for vulnerable borrowers...
    • Small credit unions issuing subordinate mortgages on a local scale,but use homes as collateral
    • PACE! But not for a while, and not for folks with lower incomes or lower home values
  • On-Bill solution documents at
    • Critical elements of On-Bill Recovery policy and legislation
    • Green Jobs-Green NY “Enforcement Mortgage” language
    • Talking points & solutions on utility objections
    • Model legislation (near future!)


Emmaia Gelman, Senior Researcher

Laborers International Union of North America

[email protected]

(917) 517-3627