The Lineup: Vermont

Gov. Peter Shumlin in June signed legislation establishing a pair of energy-efficiency loan participation programs, along with a related loan-guarantee program to be administered by the Vermont Economic Development Authority (VEDA). VEDA can borrow as much as $10 million from Vermont’s State Treasury to fund activities associated with the new Vermont Clean Energy Loan Fund, which aims to facilitate 90 percent funding.

The Commercial Energy Loan Program and Small Business Energy Loan Program allow VEDA to lend as much as 40 percent of project costs for energy retrofits or on-site generation at non-residential properties. Participating banks and other lenders are to provide 50 percent loans, with borrowers contributing 10 percent cash.

The VEDA debt can be as much as $2 million under the commercial program. Term lengths and amortizations can run to 20 years, with interest on the VEDA tranche floating at VEDA’s prime rate – currently 2.75 percent.

The structure is similar with the small business program, but VEDA’s portion of the loan maxes out at $350,000. For the first five years the rate is fixed at 150 basis points below VEDA’s Small Business Index, switching to the adjustable Small Business Index thereafter.

The legislation also establishes the Energy Loan Guarantee Program guaranteeing 75 percent of energy-efficiency bank loans – but with a guarantee cap of just $250,000 – thanks to cash-reserve contributions from VEDA as well as non-profit Efficiency Vermont and the state-sponsored Clean Energy Development Fund. Financial modeling indicates this fund has the capacity to guarantee approximately $10 million in loans from participating lenders.

– Brad Berton

View information on how other states have approached green retrofit financing.