Green for 'Green'?

By Dan Hust
MONTICELLO — June 18, 2010 — Though some uncertainty exists in the mortgage arena, Dick Riseling of the Sullivan Alliance for Sustainable Development (SASD) championed to legislators last week a new program to offer property owners the ability to cost-effectively retrofit their energy-inefficient homes and businesses.
“It’s going to sweep the country,” Riseling predicted, a play on the acronym of the Sullivan Weatherization and Energy Efficiency Project (SWEEP).
The basis for SWEEP – property-assessed clean energy (PACE) – has already been adopted by municipalities across the U.S., especially in California. In New York, Long Island’s Babylon has enacted one, while Binghamton is reportedly creating its own version.
Fed mortgage agencies are a roadblock
That growth, however, has been stalled since Fannie Mae and Freddie Mac sent out letters in May indicating they would not buy mortgages that feature a PACE lien.
That’s because PACE liens are considered senior to the mortgage itself, which the two government-backed firms – which have interests in 50-70 percent of all mortgages in the U.S. – consider unacceptable.
According to media reports, 22 states feature PACE programs of varying sorts, but officials are waiting to get clarification from Fannie Mae and Freddie Mac before allowing the programs to proceed.
In Sullivan County’s case, legislators aren’t at that point yet. Instead, they’re determining the program’s impacts and whether or not they want to offer it.
“I think conceptually it’s not a bad idea,” remarked Legislator David Sager. “The devil is in the details.”
Treasurer Ira Cohen agreed items like repayment periods must be determined, but he endorsed the idea.
“We certainly can administrate it,” he assured.
Riseling added that the staff of the county’s Office of Sustainable Energy would be sufficient for now to kick off the program, and he’s already lined up a list of in-county vendors who coulkd do the installation of energy-efficient equipment.
However, that work would have to be done at prevailing-wage levels, which he estimated at $15-$17 an hour but Legislature Chairman Jonathan Rouis thought would be closer to $25-$30 an hour.
How viable is it?
Since the county would have to borrow money at first to make such loans available (Riseling envisions bonding initially at currently cheap interest rates, with a bank consortium taking over thereafter), legislators weren’t certain SWEEP would be viable in these tough times.
Rouis, in particular, wondered if the program could begin with just a few towns, rather than the whole county.
And local real estate agent Jody Tedaldi, listening at the meeting, warned that the program could backfire by leading to higher property assessments and thus higher taxes, offsetting or even overwhelming the energy efficiency savings.
“The energy savings might be so small it could take 30-40 years [for a return on the investment],” she added. “This is just a can of worms.”
Riseling, however, felt now is the right time to begin.
“This is a beautiful program,” he gushed. “We think this could be a tremendous investment opportunity for people.”
The issue will be the focus of an upcoming Council of Local Governments meeting in Monticello. Open to the public, it will be held on Friday, June 25 at 9:30 a.m. in the Government Center.
What is SWEEP?
As defined by a handout distributed by Dick Riseling last week to legislators, the Sullivan Weatherization and Energy Efficiency Project (SWEEP) would allow the county to finance “green” projects on private and public properties.
The county would make a predefined amount of money available to home and business owners to retrofit their properties with energy-efficient systems.
People would have to apply, conducting a property survey and energy assessment to provide to the county, accompanied by a fee.
Though the county’s Office of Sustainable Energy would oversee the program, SWEEP would have an advisory board consisting of legislators, town supervisors, building/retrofit specialists and members of the general public, including youth.
Approvals would be issued on the basis of mortgage status, an energy audit, contractors’ bids, total project cost, use of best practices/materials, and alignment with SWEEP’s goals.
Denials could be handed out for delinquent tax/mortgage payments, pre-existing involuntary liens, and recent defaults, foreclosures or bankruptcies.
If approved, the county would promise funds – up to 10 percent of the property’s assessed value – to make the improvements. The property owner and contractor would have to agree to a contract, with approval from the county.
After the work is completed, the county would review it, approve it and then release the funds for payment.
The property owner would be billed monthly or quarterly thereafter for 5-20 years, with the charge being considered a tax lien that stays with the property, no matter to whom it’s sold or transferred.
Those payments would be designed to not only cover the contractor’s costs but those of the county in administering it.