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One paper named the loan program team their “People of the Year” for 2009, giving front-page coverage to the program and its jobs-development goals.4 Yet in many ways, program designers opted for simplicity and speed to market, rather than fine-tuned jobs-development strategies. For example, the program only required that participating contractors be licensed in the communities they served. About 300 contractors from across the Denver area ultimately received at least one payment from the program, and of these, more than 40% were from outside of Boulder County (see map on page 40). The number of out-of-county contractors was partly justified by the breadth of qualifying measures. It also was an indication of business appetite for this type of program. One Boulder County contractor who was interviewed (see sidebar below) suggested that contractors in the energy retrofit business need to go wherever the work is—in this case, anywhere within the Denver metro area. Nevertheless, the open invitation to contractors resulted in many energy retrofit dollars leaving Boulder County.
White, Pamela, “2009 Boulder County People of the Year: Team ClimateSmart,” Boulder Weekly, December 24, 2009.
Debbie Weingardt, who owns and manages Bestway Insulation in Lafayette (Boulder County), said she has seen too many workers come and go since her business opened in 1976.
“I was excited about the [CSLP], but I’d learned long ago to be cautious about growing my business too fast,” Weingardt said.
She estimated as much as a quarter of her $2 million annual revenue in 2009 came from the CSLP, and she added employees to handle the work. Altogether, the business has 25 full-time employees. But Weingardt said that some of the job impact from CSLP might be hidden by two factors: first, her business is affected by the ebb and flow of several incentive programs in the region, and second, she prefers to add hours for existing employees before she commits to hiring anyone new.
Weingardt says she makes a commitment to her employees, including paying for training from the Building Performance Institute and counseling good workers on how to advance their careers from labor to sales and management jobs. She has promoted many employees over the years, she said. Weingardt has also struggled to keep workers on when the fates turn. “I’ve been known for trying to keep employees on until it almost bankrupts me,” she said, recalling at least one time when she took out a loan in order to meet payroll. “It’s hard to not have consistency in this business,” she said. Boulder’s ClimateSmart Loan Program had the greatest single impact of any of these programs, she said. When the freeze on ClimateSmart started to take effect, Bestway let four workers go, Weingardt said. But following new leads, Bestway began sending trucks to Fort Collins (north of Boulder County), which has just launched a new energy efficiency rebate program.
According to Weingardt, the challenges of building the energy efficiency industry and a green-jobs economy are hard to meet when small companies like hers must keep changing their business plans in order to succeed. She said that she has participated on several state and local committees to advise on green jobs development, where her message has been to stress the need for multi-year programs, to open the pipeline from solid job training to secure employment.
Photo by Dennis Schroeder, NREL/PIX 17963
The involvement of many contractors (a simple ratio of about one contractor for every two homes served) spread the benefits of the CSLP thin, so that most companies would not see a big change in their volume of work. Some contractors reported that they appreciated the extra hours for their workers but did not feel justified in hiring new employees because of the CSLP. Other contractors, notably in solar businesses, reported a marked surge in business, which triggered new hires. These impacts are discussed in greater detail in Section 3 of this report, Qualitative Assessment.
The bottom line is that, Phase 1 of the CSLP produced significant jobs-development benefits.
Section 2 of this report details how the program created more than 85 jobs from in-county spending alone and at least 126 jobs statewide. Boulder County leaders embraced a secondary goal to reach out beyond the county line and contribute to PACE start-ups statewide. County staff advised leaders in Eagle, Pitkin, and Gunnison counties in Colorado, as they approved their own PACE programs. In this light, the benefits that flowed out of Boulder County had far-reaching effects that could be widely shared.
1.4 CSLP Implementation Steps Before analyzing its impacts, it is useful to review how Phase 1 of the Boulder County CSLP
worked. Program guidelines allowed for:
Fifteen- (15-) year loans • Minimum borrowing: $3,000 per home • Maximum borrowing: For open loans (using taxable bonds), up to 20% of the actual • value of the property, or $50,000, whichever is less. For income-qualified loans (using tax- exempt bonds), up to $15,000. For Phase 1 residential projects, interest rates ranged from 5.2% to 6.8% depending on the type of bond and the issue.
Because Boulder County intended to take its project-finance bonds to market, it had to prequalify
projects and bundle them together. This led to a multi-step process:
1. Participant attends Home Energy 101 Workshop. The workshop reviews the process, the 40 qualified measures, and the costs and the benefits of making such improvements.
2. Participant obtains two or more bids and submits a preliminary online application.
3. County prequalifies the participant, who then completes a detailed application and submits it with a $75 fee.
4. Participant awaits the aggregated bond issue and notification that the work may proceed.
5. Once the bond is issued and the homeowner receives notice that work may proceed, the contractor or multiple contractors complete work on each home.
6. Contractor submits the final invoice, permit/inspection paperwork, and the participant’s approval, for full payment from the county.
7. Participant receives notice of additional payment due on the next property tax bill, and will continue payments through property taxes for 15 years or until the property (and responsibility for tax payments) changes hands.
Program participants paid a $75 application fee and other fees (approximately 4%) added to their principle. The fees covered the cost of issuing the bond, the cost for program and administration staff, and other program costs. The total budget for CSLP Phase 1 was about $800,000, plus $2.4 million was set aside as a reserve fund to help secure the bonds. Participant fees covered all these costs, so the program could be self-sustaining.
Program economic impacts depended most upon participants’ bottom-line spending and on energy savings that could be respent. However, two surveys—one of program participants and one of program contractors—suggest that some aspects of the process and of program costs may have affected outcomes. For example, relatively strict program rules, such as the early application for the exact amount to be financed, and fees, which could be proportionally high on smaller jobs, led some applicants to seek alternative financing. It is also likely that CSLP program publicity and public education triggered community-wide energy efficiency improvements that are not reflected in this relatively short-term and narrowly focused study.
A Homeowner’s Perspective
Megan Kram bought her first home in Boulder three years ago, knowing that it needed some work. Kramer is single, keeps a busy schedule, and asserts that she has “pretty basic” maintenance skills. She heard about the Boulder ClimateSmart loan program from a friend, who emailed her an invitation to a free workshop on the program. Kram’s furnace was overdue for replacement, and the workshop confirmed her thoughts about the benefits of wall insulation. The house had “practically no insulation to start with,” she said. Kram had wanted new energyefficient windows, too, but the price tag was daunting. She made a spreadsheet with columns and rows listing the estimates that she’d gotten from different contractors, plus estimates of what she
expected in tax credits or as a rebate from the utility. Her headings were meaningful to her:
“Stuff I’m for sure going to do,” “Windows...,” “Nicer windows,” and “Monthly Cost.” “I decided I could pay about $50 per month, though I understood it would all come through on the annual property tax bill,” Kram said. She liked the idea that she would not have to pay the investment off entirely if she decided to sell the house in less than 15 years. “I would say I’m very likely to move within that time,” she said. It seemed fair to her that the future owner would share in the costs and continuing benefits of the improvements. She was a little disappointed by the ClimateSmart program-related fees, but the interest rate, at 6.75%, was attractive. She also liked the responsiveness of contractors who were in the program. “The job was easily done. It took half a day for the furnace and half a day for the insulation,” she recalled. Her decision to keep the equivalent monthly payments low prompted Kram to chose replacement windows that were not qualified as high-efficiency. She used personal financing to have them installed. “My old windows were so leaky that even a normal window replacement is a huge improvement. I’m sure there will be energy savings there, too,” she said.
Other PACE programs around the country have also reported that PACE-related outreach may trigger improvements, whether or not PACE is the ultimate source for financing. In addition, nonqualifying improvements, made along with PACE improvements, affect the community economic impacts in ways that are difficult to track. Such effects are discussed in the Qualitative Analysis section of this report.
Left: Kram used a simple spreadsheet to facilitate her home improvement projects.
Right: Kram upgraded the look of her home at the same time she financed invisible energy improvements. Photos from MRG & Associates 2 Economic Analysis The central goal of this study is to analyze employment and other economic impacts of the Boulder County residential ClimateSmart Loan Program (CSLP), an example of PropertyAssessed Clean Energy (PACE) financing. The economic analysis used to achieve this goal focuses primarily on CSLP dollars spent. The analysis utilizes an analytic tool called an inputoutput (I-O) model, which identifies relevant interactions among all sectors of the local and statewide economies. For example, the model shows how homeowner spending on attic insulation or solar panels spurs business on the local level among vendors and contractors, as well as up the supply chain, among suppliers and manufacturers. To the extent that these products are installed by local contractors or purchased from local manufacturers or retail vendors, there is additional benefit to the local economy. The I-O model also identifies other impacts as described below.
Subsequently, Section 3 of this report will go beyond the quantitative analysis provided here.
Section 3 includes an assessment of factors that could not be quantified but could affect the total long-term economic impacts of the CSLP or of similar PACE programs.
2.1 Methodology To capture the full economic impacts of the Boulder County PACE program, the economic analysis evaluates three separate effects (i.e., direct, indirect, and induced) for each expenditure.
The sum of these effects yields the total effect resulting from a single expenditure.
1. The direct effect refers to the onsite or immediate effect produced by expenditures. In the case of installing energy efficiency upgrades in a home, the direct effect is the onsite expenditures and jobs of the construction or trade contractors hired to carry out the work.