I. Purpose The River Falls Renewable Energy Finance Program Loan Fund is established by River Falls Municipal Utilities ( RFMU ) to financially assist customers of the Utilities with the cost of purchasing and installing qualified renewable energy systems and efficiency improvements on their properties. To accomplish this goal, the RFMU hereby establishes a loan pool to offer low cost financing to its residential customers. The length of each loan will depend upon the nature, expense, and projected energy savings of the individual project. Annual installment payments toward the total amount of each loan will be collected by means of being added to the annual property tax bill, together with all general taxes, special assessments, and other special charges levied against the real estate. To this effect, the annual installments will be treated as special charges for current services rendered in favor of the owner s real estate in accord with 66.0627, Wis. Stats. Each customer desiring to participate in this program shall be required to execute a contract for this purpose, a condensed version of which will be recorded against title to the real estate being benefited by the installation of the qualified renewable energy system. II. Qualified Improvements A. The following projects are currently eligible for financing: 1. Solar Photovoltaic panel systems (connected to the RFMU distribution system); 2. Solar hot water; 3. Solar thermal heating; 4. Geothermal heating and cooling systems; 5. Wind Turbines (connected to the RFMU distribution system); 6. Major energy efficiency projects in connection with a renewable energy project (renewable portion must be approximately 50%). B. The program administrator reserves the right to change the list of eligible projects as renewable energy technology and costs evolve. A customer may seek financing for a renewable energy project not listed above subject to the approval of the program administrator in his or her sole discretion. In general, the criteria used for the approval of a non-listed project include renewability, environmental impact, and payback period. III. Program Eligibility A. The property of the applicant must be in the city limits of River Falls. The applicant must be a customer of RFMU and the owner of the property upon which the project shall be installed. If there is more than one owner, all owners must agree to be bound by the loan agreement with RFMU. B. Each applicant must complete a financing application and pay an application fee (see section on Application and Installation for applicable fees). S:\Leading by Example\Renewable Energy Finance Program\2010\1-1-Program Guidelines.doc Page 1 of 5
C. Each applicant must have a good payment history with the City of River Falls and the RFMU (i.e., no outstanding current balances, no disconnects for non-payment, and no delinquencies within the last five years). In addition, a minimum one-year payment history with RFMU is required. The program administrator may authorize, as an exception to this requirement, new owners who purchase a home with an existing system currently being financed under this program (see below under Funding Level and Terms). D. Each participant must have a Home Performance with ENERGY STAR evaluation to help identify any energy efficiency improvements that can be made to the home. E. Each applicant must have a project analysis conducted by a Focus on Energy full service installer. The full service installer s analysis will help us determine if the proposed energy project is likely to result in an actual energy savings of at least 75% of the principal and interest costs over the life of the loan based upon current energy prices. This analysis is required to ensure that you are receiving the correct renewable energy application for your home and site, and to allow us to analyze the economics of your project. All assessments must quantify the project costs, energy savings, and annual cash flow of the proposed improvements. This analysis will provide you with a clear understanding of the economics of the project that you have chosen to install. F. The project must meet program rules, state statutes, and municipal ordinances. The customer must agree to the terms and conditions of the financing proposal. G. An applicant may seek financing for more than one project on a given property if the total cost does not exceed the maximum allowable financing. Subsequent applications for the same property may be accepted and approved if the balance on the then existing project together with the cost of the new project do not exceed the maximum allowable financing. IV. Funding Level and Terms A. The program may fund up to 100% of the cost of a qualified improvement up to a maximum of $50,000.00 per property. The minimum loan shall be $2,500.00. No project cost shall be approved for financing if it exceeds 125% of the average cost of similar improvements, is as determined by the project administrator. B. Loan terms will range from a minimum of five years to a maximum of twenty years, subject to the ability of a customer to opt for a loan period shorter than that authorized by the program administrator. Loan balances may be paid back early without penalty. The term of each loan shall be set by the program administrator based upon the calculated pay-back period of the improvement(s). The pay-back period is defined as being the time it will take for the energy savings to equal the cost of the improvement at the applicable interest rate, using current energy prices at the time the loan is made (current generally meaning the day the contract is signed). The projected energy savings S:\Leading by Example\Renewable Energy Finance Program\2010\1-1-Program Guidelines.doc Page 2 of 5
cannot be less than 75% of the cost of the improvement with interest over the term of the loan. If more than one project is being considered, the program administrator will determine pay-back by combining the projects. C. Interest on the unpaid balance will be charged at the applicable lending rate in effect at the time of financing. D. Payment of principal and interest shall be added to the annual property tax statement, and the original loan agreement be recorded as a security interest against the property. The total principal value of the loan shall be divided by the number of years of its term with the resulting dollar amount being used as the annual principal repayment, to which interest and the service fee shall be added. Failure to make the required principal and interest payment will cause the property taxes to be delinquent and subject to a future tax deed and sale by the county. E. In the event the property is sold or transferred by the original owner, the remaining balance shall be immediately due and payable on the date of sale. The new owner may, however, seek approval from the program administrator to continue with the program by assuming the existing terms, conditions, and loan balance. Transfer to the new owner shall be freely given unless the administrator determines, based upon the new owner s payment history to RFMU or his or her previous utility providers, that the new owner would not qualify for this program as an original applicant. V. Application and Installation A. Each customer shall complete a written application and pay a non-refundable application fee as follows: (1) $25 for any projects whose principal value is $2,500 - $10,000; (2) $50 for any projects of from $10,0001 - $25,000; and (3) $100 for any projects of more than $25,000. B. Each customer must arrange for and have completed at his or her expense an energy analysis as well as a post-installation analysis by an approved auditor. The energy analysis is often done by the contractor. If the customer needs financial assistance to pay for an energy audit, he or she may contact the program administrator who may discretionarily obligate RFMU to pay those costs from the loan fund, in which event they shall be added to the principal amount of the loan. If a loan is not granted, the applicant shall be obligated to repay RFMU in the manner specified in IV.D., above. C. Once completed, the energy analysis will be provided to the program administrator who will then meet with the customer and discuss the various options recommended in the energy analysis. The program administrator will make recommendations as to the types of renewable and energy conservation projects, if any, that would have the most benefit to the customer, including projects other than those specified under II.A., above. The administrator will provide the customer with information on grants, tax credits, and S:\Leading by Example\Renewable Energy Finance Program\2010\1-1-Program Guidelines.doc Page 3 of 5
other subsidies from the federal or state government, RFMU, and other sources available to offset the cost of improvements; as well as inform the customer of any other programs that may be available which may assist in financing installation of energy-related improvements. The customer is not bound by the program administrator s recommendations but may choose any renewable energy/insulation project that otherwise meets financing criteria. D. Once the improvement(s) is (are) chosen, the program administrator will provide the customer with a list of approved installers. To secure a loan the customer will then contact at least two installers for a bid on the project, including at least one from the list provided by the program administrator. The customer will then choose a bid and provide a written estimate from the installer to the project administrator for a bid review. The program administrator will review the bid for compliance with the program rules and if in compliance, will determine the length, terms, and amount of financing to be extended to the customer. If the customer agrees with the proposed terms, a written contract and promissory note will be signed by the customer and the program administrator. The program administrator will then provide the customer with a Notice to Proceed. E. Once the Notice to Proceed is issued, the customer may commence with installation. The work must be completed within 6 months of the Notice to Proceed unless an extension is granted by the program administrator, but in no case shall the time of completion exceed 12 months from the date of the Notice to Proceed. The customer must notify the program administrator once the work is completed. A post-installation inspection will then be conducted by a City Building Inspector as well as by an approved energy auditor. The customer shall be responsible for all costs associated with the inspection. Once the installation is approved by the City building Inspector and the energy auditor, payment will be made directly to the installer in the pre-approved amount. Customer repayment will commence with the next annual property tax statement. If a contractor requires a down payment before work begins, the program administrator must approve of such down payment. In the event that upon postinstallation inspection it is determined that the work has not been satisfactorily completed in accord with the program rules, payment may be withheld pending correction of all defects in performance to the extent necessary to protect the interests of the RFMU. F. This is strictly a financing program. The program administrator may assist the customer by providing him or her with a sample installer s contract and will work with the installer to achieve compliance with program rules and building code standards. The customer, however, is ultimately responsible for choosing the installer, negotiating warranties and completion dates, complying with all building codes and applicable permits, as well as for the quality of the installer s work and its compliance with the program rules. Neither the program administrator nor RFMU are responsible for any disputes between the customer and the installer. S:\Leading by Example\Renewable Energy Finance Program\2010\1-1-Program Guidelines.doc Page 4 of 5
G. The customer may withdraw from the program at any time up until the time payment is made to the installer. The application fee, however, is non-refundable. The customer is also responsible for any outstanding payments to the contractor for material or services rendered prior to the date of withdrawal. H. While most customers will have the renewable energy or conservation project installed by a contractor, with the approval of the program administrator, a property owner may be his or her own general contractor. The program administrator must be contacted in advance for specific guidance and approval. Each customer who acts as a general contractor shall be required to comply with the same standards and specifications that are required of participating contractors. I. The decisions of the program administrator are final unless appealed within 30 days to the designated Appeals Committee. The program administrator or RFMU will provide information for filing an appeal upon request. VI. Definitions Improvements means fixtures or modifications made to an existing home or a home under construction. Applicable Lending Rate means the interest rate to be assessed against renewable energy systems loans, as determined and annually re-determined by the Utility Commission. Utility Commission means the statutory commission which manages RFMU. Property means a legally-described, recorded parcel of real estate. Program Administrator means the manager of RFMU or his or her designee. VII. Ineligible Activities The loan fund will not be used to refinance existing debt or expenditures pertaining to qualified renewable energy systems and efficiency improvements made prior to loan approval. VIII. Conflicts of Interest/Self-Dealing No member of the governing body, Loan Committee, or any other official of the City who exercises decision-making functions or responsibilities in connection with the implementation of this program is eligible for financial assistance under this program. S:\Leading by Example\Renewable Energy Finance Program\2010\1-1-Program Guidelines.doc Page 5 of 5