Daniel Bresette Program Manager Maryland Energy Administration March 17, 2011 EECBG and SEP Mid-Atlantic Regional Peer Exchange Meeting Presentation of the Maryland Home Energy Loan Program

Context and Background From the outset of ARRA, MEA recognized a need for an accessible and affordable residential financing option for homeowners seeking to improve the efficiency of their homes Municipalities and counties in Maryland were in varied stages of investigating, developing, and implementing property-assessed clean energy (PACE) programs to leverage ARRA and provide financing to property-owners MEA partnered with the Maryland Clean Energy Center, a quasi- governmental organization with a mission focused on “green” growth and economic development, to facilitate PACE programs across the State in conjunction with ongoing municipal and county efforts Unfortunately, following the decisions of the Federal housing regulators, MEA, MCEC, and involved municipalities and counties abandoned PACE efforts in mid-2010 and began searching for an alternative program model

Maryland Home Energy Loan Program Development MEA and MCEC enlisted DOE technical assistance for program- development and legal support to identify and analyze post-PACE financing program model options The goals for the new program remained the same: 1.Provide a sustainable financing option that will be viable post-ARRA 2.Attain some degree of leverage 3.Achieve efficiency first, but keep open to include renewable installations later After several months of deliberations, MEA and MCEC settled on an unsecured efficiency finance program based on the successful Pennsylvania Keystone Home Energy Loan Program (HELP) for several reasons A track record of lending and efficiency improvements in a neighboring state At a minimum, the opportunity to structure loans to take advantage of the emerging secondary market for efficiency loans An existing Home Performance infrastructure to drive marketing and outreach

Maryland HELP Implementation MEA and MCEC decided to launch a “first phase” program by lending $500,000 of ARRA funding to establish a process, identify issues to resolve, and solve start-up problems Maryland homeowners who clear a creditworthiness review (e.g., a minimum 640 credit score, no bankruptcy in past seven years, 50% debt-to-income ratio) are eligible to take loans to finance improvements in primary residences only First-phase loans—from $2,500, up to a maximum of $20,000—cover efficiency improvements identified in a Home Performance energy assessment Fixed 6.99% interest rate for up to a 10-year term with no prepayment penalty Loan repayments will revolve over time, extending the reach of the program MCEC and its service provider, AFC First, coordinated with MEA and the Home Performance network to provide two in-person training sessions and post resources online MEA launched its Home Performance Rebate program at the same time, which helped increase exposure of Maryland HELP

Maryland HELP Outlook So far MCEC has provided 11 loans for an average of about $8,500 to Maryland homeowners to improve the energy efficiency of their homes MCEC is actively engaging, educating, and meeting with utilities, banks, credit unions, and other potential private-sector partners MCEC received positive replies from a February RFP to attract sources of private capital to sustain the program beyond the first phase MCEC plans to set aside a portion of its remaining ARRA grant to establish a loan-loss reserve to provide investors and private-sector partners protection from defaults The added security of a loan-loss reserve should justify a reduced cost-of- capital and therefore lower the interest rate paid by borrowers and mitigate the need for substantial rate buy-downs MCEC is also coordinating with Energy Programs Consortium and the Warehouse for Energy Efficiency Loans (WHEEL) to facilitate the eventual inclusion of Maryland HELP loans in a secondary-market sale

Visit the Maryland Clean Energy Center online at: or For more information, please contact: (410) or (800) 72-ENERGY Terry Daly Maryland Clean Energy Center Loan Program Manager (301) Daniel Bresette Maryland Energy Administration Program Manager (410)