St. Louis County to offer new loans for Home Energy Efficiency

St. Louis County is set to offer more than $10 million in low-interest loans to help homeowners finance energy-saving upgrades and lower their monthly utility bills.

Loans up to $15,000 will be available under the program, called St. Louis County Saves, for eligible energy-efficiency upgrades, such as air and duct sealing, insulation and high-efficiency heating and air conditioning equipment.

The goal of the program, to be formally announced today in Clayton, is helping homeowners more easily afford energy-saving projects — improvements that pay for themselves in the long run, but frequently get deferred because of the thousands of dollars in initial costs.

“We’re trying to help people get past that up-front cost barrier,” said Anne Klein, the county’s director of energy sustainability.

The county initiative is the local answer to Property Assessed Clean Energy programs that were approved in Missouri and more than 20 other states before in effect being shut down by federal regulators last summer.

In fact, Gov. Jay Nixon signed a law approving PACE loans in Missouri just days before Fannie Mae and Freddie Mac, which own or guarantee more than half of the mortgages in the U.S., were told by Federal Housing Finance Authority to avoid them.

The FHFA and Office of the Comptroller of the Currency, which regulates banks, objected to the loans because they took priority over mortgages, meaning that the liens would be paid before the mortgage lender can recoup any money if a home was foreclosed on. For now, PACE programs across the country remain in limbo, and in some instances litigation, while groups on either side of the issue try to settle their differences.

By contrast, loans available through the new county program will be unsecured, meaning they’re not backed by a borrower’s home or other assets.

Interest rates will be 3.5 percent, with specific annual percentage rates based on loan origination fees and terms, Klein said.

The loans are available on a first-come, first-served basis, and minimum credit scores and debt-to-income ratios are needed to qualify, Klein said. She expects that the average loan will be about $7,500, meaning there would be enough money available to upgrade more than 1,000 homes.

st. louis county to offer new loans for home energy efficiency“Certainly we hope that people realize the value of this and that demand is high,” she said.

The program, to be administered by Abundant Power Solutions of Charlotte, N.C., is being propelled by a desire to stem rising utility costs. It’s also seen as a way to better the environment and help put area contractors to work, Klein said.

Earthways Center, a division of the Missouri Botanical Garden, is in charge of contractor training, energy efficiency verification and marketing.

St. Louis-based Anton’s Heating and Air Conditioning is among the first area contractors certified to do work under the program.

Roger Petersen, operations manager for the company, sees a growing interest among homeowners in investing in efficiency improvements. But, he said, homeowners often cannot pay for the work out of pocket, especially in this economy.

“Money is the big issue,” he said.

For the first six months, homeowners seeking to borrow money for energy-efficiency upgrades have a list of eligible projects from which to choose. They can also hire an energy auditor for an assessment to determine exactly what improvements will be of most value. An assessment will be required for any loans approved after the first six months.

“That really gives them (homeowners) the best picture of where they can realize the greatest savings,” Klein said.

The loans will be almost exclusively for energy efficiency upgrades, not renewable energy systems. But if a homeowner has an energy assessment that shows they’ve completed most of the energy efficiency upgrades, they could be eligible for funding to help offset some of the cost of solar panels.

Funding for the program comes from the sale of $10.3 million in Qualified Energy Conservation Bonds. The bonds were authorized by federal legislation in 2008 to help state and local governments finance certain energy projects.

The bonds carry an effective borrowing rate of less than 1 percent based on the county’s strong credit rating, Klein said. But the loan program isn’t intended as a money-maker. It is designed to be revenue-neutral, though funds are being set aside for any loan losses based on an expected default rate.

For Rosalind Williams, director of planning and development in Ferguson, the county’s initiative is a welcome alternative, but not a substitute for the PACE program approved by the Missouri Legislature last year.

“I’m glad they created some type of program, but I’m still holding out hope for PACE,” she said.

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