Montgomery Council Becomes First in Region to Adopt Home Energy Loan Program
Councilmember Berliner’s Bill to Provide Zero Interest Loans
For Energy-Efficient/Renewable Energy Home Retrofits
ROCKVILLE, Md., April 14, 2009—The Montgomery County Council today unanimously approved legislation proposed by Council Vice President Roger Berliner (D—District 1) to create a County Home Energy Loan Program (HELP). The legislation makes Montgomery County the first county in the Washington metropolitan region to adopt such a program, and one of a handful of jurisdictions in the nation to adopt such a measure.
The legislation was co-sponsored by five other members of the eight-member Council (Councilmembers Marc Elrich, Valerie Ervin, Nancy Floreen, George Leventhal and Duchy Trachtenberg).
“This measure will help our homeowners reduce their skyrocketing utility bills and their carbon footprint at the same time, while putting people to work in the new green economy,” said Councilmember Berliner. “It has broad support within the environmental and business community and it should impose almost no cost on the County thanks to the good work of Congressman Chris Van Hollen and the federal stimulus bill.”
Under HELP, a homeowner would voluntarily obtain a home energy audit from a certified auditor to identify the universe of cost effective, energy efficient and renewable energy measures that could be taken. The homeowner would then take the results of the audit to the County, which would provide a zero interest loan to make the improvements.
The HELP program is among the top priorities of the County’s Sustainability Working Group, where Councilmember Berliner co-chaired the Residential Energy Efficiency Subcommittee.
The importance of HELP is the role local government plays. The loan would be secured through a lien on the homeowner’s property. This is the critical piece: the loan, which would be repaid over 15 years as a voluntary additional line item on the property tax, would run with the property—not with the homeowner that took out the loan. This allows a homeowner to entertain a more robust home retrofit as long as the annual loan costs are equal to, or less than, the savings on their utility bill. Monies could also be borrowed for the installation of renewable energy devices once the home is energy efficient.
[EDITOR’S NOTE: A fact sheet detailing the HELP program is attached on a separate sheet.]
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A Fact Sheet on Montgomery County Council Bill 6-09:
Home Energy Loan Program (HELP)
April 13, 2009
- Sponsored by Montgomery County Council Vice President Roger Berliner
- Co-sponsored by Councilmembers Marc Elrich, Valerie Ervin, Nancy Floreen, George Leventhal and Duchy Trachtenberg
• HELP can reduce greenhouse gas emissions by an estimated 20-30 percent; reduce utility bills by an equal amount; put money in Montgomery County homeowner’s pockets; and create green jobs.
• Montgomery County would be the first county in the region to adopt such a program, and one of a handful of jurisdictions in the country to adopt such a measure. State legislatures in California and Virginia have passed legislation authorizing such programs.
• Historically, there have been three principle barriers to homeowners making significant investments in energy efficiency:
- They don't know what they need to do
- They may not have the resources in this economy to invest the dollars necessary to make a significant difference
- Even if they have the resources, home owners don't know if they will be in their homes long enough to pay for the improvements
HELP addresses all of those issues directly, and as a result, represents a significant conceptual breakthrough.
• Under HELP, a homeowner would obtain a home energy audit from a certified
• auditor. The nature of the audit, i.e., whether the audit should use a “blower door” or some other technology, will be determined by the Department of Environment.
• The audit will identify the universe of cost effective measures, including renewable energy, as well as a package of measures that based on the economics of the loan and projected energy savings would result in a net savings to the home owner (i.e., the amount by which the reduction in projected utility costs exceeds loan payments).
• The cost effectiveness test is based on the number of years required for the cost of the energy efficiency device to be recouped in energy savings (the “pay-back” period). It is expected that the payback period will be in the range of 7-8 years (as determined by the Department of Environmental Protection).
• The homeowner would take the results of the audit to the County or its designee (including a non-profit or private sector entity that could administer the program). The County would provide a zero or low interest loan, including the cost of the audit.
• The loan is repaid by a special assessment on the homeowner's property tax bill. This is the critical piece that local governments uniquely bring to the equation: the loan would be repaid over no less than 15 years (except where prepayment is desired by the homeowner) as a voluntary additional line item on the property tax. Thus, the obligation runs with the property not the homeowner that took out the loan. This means that a homeowner no longer has to do a cost benefit analysis based on how long they may own the home. Instead, the homeowner only has to calculate their net annual savings in the form of reduced utility bills.
• The County has estimated that a $5,000 zero interest loan would result in homeowners having $230 more a year in their pocket after paying their annual loan payment while reducing their greenhouse gas emissions by more than 20 percent.
• The interest rate on the loan will be determined by the source of funds (federal grants/federal and local bonds/private banks) and administrative costs. Montgomery County will use some portion of federal stimulus dollars for this program and can use the federal funds to pay down the interest on private sector funding.
• HELP is a revolving fund. Once the initial capitalization costs are covered, the securitization of the loans through the property tax add-on virtually guarantees that the loans will be repaid, and available for new homeowners. Congressman Chris Van Hollen has introduced legislation that would provide federal funds for this purpose.
• Loans will be available for the “net” costs of measures, i.e., a homeowner is expected to take advantage of county, state and federal tax credits (assuming availability) for both renewable and energy conservation measures.
• The legislation is supported by a broad coalition of business and environmental groups, including the real estate community, builders, and the Sierra Club.
Independent surveys by the Greater Capital Area Association of REALTORS have shown strong interest and support by homeowners for the program. It is expected that there will be very substantial demand for the program.