Municipal sustainable energy financing program

Section 119-ee - expands the legislative findings and declaration; * to more fully describe the public purposes that will be fulfilled by establishing Municipal Sustainable Energy Financing Programs including the development of new industries and new jobs; fostering a cleaner environment; helping to avoid future energy shortages; and enabling the state and municipal corporations to reduce its reliance on sources of energy that have a negative impact on air quality, thereby contributing to the health and well-being of the people of the state. * to declare that it is necessary for the Authority and municipal corporations to play a critical role in providing cost-effective financing for the large-scale installation of renewable energy systems and energy efficiency measures.

Section 119-ff - adds definitions for the following terms: assessment district and governing body, energy efficiency improvement as it applies to one to four family residential properties

Section 119-gg 1 - expands the permissible funding sources for sustainable energy financing programs established by municipal corporations having the power to enforce delinquent tax liens.

2 - permits the Authority to enter into contracts with municipal corporations with mutually determined terms and conditions allows municipal corporations to enter into such other contracts with third parties as may be necessary or appropriate to implement their sustainable energy financing programs.

3 - permits cities with populations of one million persons or more to establish their own lists of cost effective energy efficiency improvements for different building types.

4 - permits cities with populations of one million persons or more to establish their own systems for verifying the installation and performance of renewable energy systems and energy efficiency improvements financed by their sustainable energy financing programs.

6 - replaces the term "appraised real property value" with the term "fair market value of the real property, as determined by the municipal corporation."

9 - clarifies that municipal corporations are authorized to assess real property located within their jurisdictions benefitted by improvements financed by their respective sustainable energy financing programs. Also allows any county, town, city or village to enter into agreements with a municipal corporation and/or the Authority relating to the administrative functions of a sustainable energy financing program, including incorporating assessment charges on tax bills, determining fair market values, providing notifications when such assessments have not been paid and collecting unpaid assessments.

New Sections: 119-gg.10 is added to provide an appropriate procedural mechanism for municipal corporations to follow in order to establish assessment districts in connection with sustainable energy financing programs.

119-gg.11 is added to ensure that participation in any sustainable energy financing district is entirely voluntary on the part of property owners.

119-gg.12 is added to clarify that nothing in Article 5-L shall prevent a town from electing to proceed with any program under Section 209-i of the Town Law.

Existing law

Chapter 409 of the laws of 2009 authorizes town refuse and garbage districts to provide financing to residential property owners for energy audits and energy efficiency improvements.

Chapter 344 & 336 of the laws of 2009 authorizes the City of Binghamton & the Town of Bedford to create a sustainable energy loan program similar to this bill.

Article 5-L of the General Municipal Law authorizes municipal corporations to create sustainable energy loan programs, but limits their funding sources to federal grant assistance or federal credit support available for this purpose.

Justification

Governor Paterson's 2009 State of the State address outlined his aggressive plan to meet 45% of New York State's electricity needs through clean renewable energy and improved energy efficiency by 2015 ("45 by 15"). The Governor's "45 by 15" goal advances several policy objectives important to New Yorkers, including the need to lower energy costs, create jobs, improve energy reliability and security, and reduce greenhouse gas emissions.

In November 2009 the legislature passed S66004A/A40004A, which allows municipalities to establish sustainable energy financing programs using a federal grant opportunity announced by the Department of Energy (DOE) under the American Recovery and Reinvestment Act (ARRA). Without the passage of that legislation, it would have been unlikely that any New York municipalities would have been awarded any funding under the DOE's grant opportunity. In April 2010 the DOE awarded $40 million to a joint application submitted by the Authority, New York City and the Town of Bedford, to create sustainable energy financing programs. This single award was the largest of any application for this pool of DOE funds in the nation.

Given the small window of time allocated in the existing legislation, the governor's office and the legislature were unable to fully consider alternative sustainable energy financing mechanisms. As a result the existing statute limits available funding sources for these municipal loan programs only to federal grants or federal credit support. Thus, the existing statute must be amended to expand permissible funding sources for sustainable energy financing programs beyond federal assistance or credit Support.

The DOE funding opportunity required applicants to commit to leverage any federal funds awarded under the grant program at least 5:1 with funding from other sources. The NYSERDA/NYC/Town of Bedford application proposed to comply with that leverage requirement through the use of private capital and funds available under the Green Jobs Green New York program. Unless the existing legislation is amended to expand funding sources programs established by the NYSERDA, New York City and Bedford grant may not be able to comply with the leverage requirements of the DOE grant program.

As a result, the new programs would be constrained and unable to contribute meaningfully to the Governor's "45 by 15" goal. Furthermore, unless amended the vast majority of New York municipalities that did not receive federal ARRA grants will be unable to establish sustainable energy finance programs, and consequently unable to take advantage of this exciting opportunity to promote clean energy retrofits in their communities.

NYSERDA currently proposes to support three separate financing mechanisms through the Green Jobs Green New York (GJGNY) program passed during the 2009 legislative session: the sustainable energy financing program, on-bill recovery, and unsecured consumer loans. Each of these mechanisms will be more appropriate than the others to serve certain constituencies. For example, it is extremely difficult to finance retrofits for the large number of homeowners that use oil heat using the on-bill recovery mechanism, and the consumer loan product is restricted to property owners with a 640 or better FICO credit score. The existing enabling legislation would not permit NYSERDA to use GJGNY funds to provide funding for or otherwise support sustainable energy financing programs.

Also an important procedural mechanism included established clean energy assessment districts under this legislation. This will provide municipalities with a clear process to follow in setting up their programs by providing the public with notice, an opportunity to participate in the process, and ensure that participation remains entirely voluntary for property owners.

Many cities, towns, villages and counties across New York State are very excited about establishing sustainable energy financing programs to finance clean energy retrofits in their communities, but their hands are tied by the existing legislation's restriction of funding sources to federal grants or credit support. The existing legislation must be amended to allow municipalities across the New York state to move forward using funding from NYSERDA and other appropriate sources to create sustainable energy financing programs.

Budget implications

This bill would have no State budget implications.

Effective date

This bill would take effect immediately.