This document discusses launching a residential energy upgrade program in Salt Lake County using a combination of Qualified Energy Conservation Bonds (QECBs) and the PowerSaver financing product. QECBs offer below-market interest rates subsidized by the IRS, while PowerSaver provides mortgage insurance through HUD. The proposed program would issue QECBs through a conduit to fund low-cost loans originated by an approved PowerSaver lender. This structure could create a sustainable financing model to scale the energy upgrade market in Salt Lake County while offering homeowners energy improvements at affordable rates.
3. VISION FOR SALT LAKE COUNTY
Launch residential energy upgrade market with affordable interest rates and scalable design
The Salt Lake County
QECB/PowerSaver model can spark
consumer demand for residential
energy upgrades, including solar and
cost-saving energy efficiency.
Demand can be met with local
equipment vendors and
contractors, creating not just local jobs
but a market as the offering scales.
Creation of the market will attract
subsequent investors, thereby allowing
the Salt Lake region to become a hub
of energy upgrade activity
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4. WHAT ENERGY EFFICIENCY LOOKS LIKE
Low cost, high return upgrades with immediate savings and increased value and comfort
Before upgrade After upgrade
• Wasted heating and cooling • Balanced, efficient HVAC
• High utility costs • Reduced utility costs
• Hot/cold zones and low comfort • Liveable space and high comfort
• Average resale value • Marketing advantage on resale
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5. ELIGIBLE UPGRADES
Most measures will be available locally and can be installed by local contractors
Insulation Water Heater
Duct sealing (gas, propane, electric, tankless)
Energy Star Roofs
Storm Doors
Ground Source Heat Pump
Window Replacement
Water Heater (Solar)
Storm Windows Fuel Cells
Heating System Micro-turbines
Gas/Propane/Oil Boiler / Furnace Solar Panels
Air Conditioner Small Wind Turbines
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6. ENGAGING THE LOCAL COMMUNITY
St. Louis County and others have seen tremendous contractor support
• Over 60 contractors were approved within the
St. Louis program.
• Many contractors paid for independent
marketing, including one that spent over $30k
promoting the program.
• These projects are primarily initiated by
contractors.
Rollout strategy for integrating contractors with PowerSaver lender will be
critical.
Contractors need to understand financing and be enabled to originate
projects.
Fannie Mae lenders have used this “dealer loan” model successfully for
years.
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8. BENEFITS OF QUALIFIED ENERGY CONSERVATION BONDS (QECBS)
• Well below-market interest rates
• Up to 70% interest subsidy from IRS
• Consumers benefit directly from low rates
• Boulder County – 1.1 to 2.9% for
commercial loans
• St. Louis County – 3.5% for
residential loans
• Available for qualified energy conservation
purposes
• Renewable energy
• Energy efficiency
• Certain transportation projects
• “Green community programs”
• Exempt from the 30% private activity
cap
• Salt Lake County has approximately $4.49MM
of available QECB allocations
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9. POWERSAVER SUMMARY
• FHA-based private mortgage insurance product
designed to result in low-cost lending for
residential energy upgrades
• HUD has approved 17 PowerSaver lenders to
date
• The mortgage insurance guarantees up to 90%
of each qualifying loan and up to 10% of the
lender’s Title 1 portfolio
• The maximum loan amount is $25,000
• Loan must be secured if over $7,500
• Credit requirements include:
• FICO ≥ 660; Debt-to-income ≤ 45%; Loan-
to-value ≤ 100%
• Employment and income verification
requirement (2 years)
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10. POWERSAVER APPROVED LENDERS
At least 7 PowerSaver lenders would be available to partner with the County
HUD Approved and Utah Licensed:
AFC First Financial - Allentown, PA
Bank of Colorado - Ft. Collins, CO
City of Boise - Boise, ID
Neighbors Financial Corp. - Sacramento, CA
Paramount Equity - Roseville, CA
Sun West Mortgage Co. - Cerritos, CA
WJ Bradley - South Jordan, UT
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11. ADVANTAGES OF COMBINING QECBS WITH POWERSAVER
• QECB interest rate subsidy combined with HUD PowerSaver’s mortgage
insurance could allow Salt Lake County to launch a below-market rate
financing program for residential energy upgrades
• PowerSaver mortgage insurance may allow pure conduit structure without
credit support from Salt Lake County for the bond issuance
• Establishing a relationship with a PowerSaver lender could allow the program
to scale as QECB proceeds are expended, resulting in a sustainable, low cost
model
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13. CONDUIT ISSUANCE QECB WITH SALT LAKE COUNTY SUPPORT AGREEMENT
Bond Purchasers
DSR for benefit
of bond Principal
purchasers and interest Bond proceeds
paid to
investor
IRS: Interest Conduit Issuer Created
Rate Subsidy Up to 70% by Salt Lake County
Capital supplied
P&I passthrough to fund loans
FHA: 90%/10%
Mortgage PowerSaver Lender
(with optional Administrator)
Insurance
P&I payments
Loans are originated with
made to the
funding to contractor
Lender
5% Borrower Residential Property
Funded DSR Capitalized Owners
Fee
= Capital Inflow
= Capital Outflow
= Credit Enhancement 13