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HomeMy WebLinkAboutMinutes 08-16-2010 GREEN CDFI: SOLAR & ENERGY LOAN SUB-COMMITTEE MEETING Minutes of Meeting August 16, 2010 Convened: 1:00 P.M. Adjourned: 3:20 P.M. The meeting of the Green CDFI: Solar & Energy Loan Sub-Committee Meeting was held on Monday, August 16, 2010 in Conference Room 3 of the St. Lucie County Administration Building Annex, 2300 Virginia Avenue, Fort Pierce, Florida. Members in Attendance: Commissioner Chris Dzadovsky, Chairman Aileen Pruitt, Florida Marketing Manager, PNC Community Development Laura Hetherington, IBM SE FCU (via teleconference) John Wakefield, Eco2Asset Solutions (via teleconference) Commissioners, Staff and Guests that were present: Lee Ann Lowery, St. Lucie County Assistant County Administrator Dan McIntyre, St. Lucie County Attorney Terri Ann Palumbo, Exec. Aide to Comm. Dzadovsky Roberta Breene, St. Lucie County Grants Glenn Henderson, St. Lucie County Grants Dan Kurek, Pres. Financial Services John Daly, Innovative Energy Roy Swenson, Solar Energy Solutions and NCI Marty Lavin Amber Franklin, Solar Energy System John Drndak, Climatic Solar ITEM 1 ~ CALL TO ORDER: The meeting was called to order by Commissioner Dzadovsky. ITEM 2 ~ SELF-INTRODUCTIONS: Commissioner Dzadovsky and those in attendance gave self-introductions. It was noted that Laura Hetherington and John Wakefield were joining the meeting via teleconference, and that Aileen Pruitt would be joining in later. He introduced Dan Kurek who said his first task was to work on policies and procedures and that he would be working with the board of directors to move the project forward. ITEM 3 ~ DISCUSSION OF POLICY Commissioner Dzadovsky asked for a motion to approve the minutes. The motion was seconded and approved. Commissioner Dzadovsky then turned the meeting over to Dan Kurek for his presentation on the policy. Dan Kurek said he wanted to go over the talking points on the policy. He went through certain items that are required by the laws of the state of Florida and must be in the policy. There are other things in the law that must be recognized by the policy. A discussion took place regarding the language talking about 3-year time frame regarding delinquencies. There was also discussion about making sure that all work is done by certified contractors. He suggested that those guidelines be refined by one of the committees (marketing, education, etc.) of the board of directors. Commissioner Dzadovsky said he recollected that on Friday’s meeting it was decided that there would be a list of certified contractors. Laura Hetherington brought up the issue of whether or not to regulate people doing their own work and installations. Dan Kurek said that they shouldn’t address that, and should stay with certified contractors instead. John Wakefield discussed auditors and contractors, and retrofitting a basic package that follows guidelines provided by the White House. Roberta Breene reminded that the point of the grant is to increase energy efficiency and conservation. Even if someone has an energy audit and does work him/herself on the home that increases efficiency, that wouldn’t necessarily be covered by the grant – but the committee does need to encourage people to even do the small things so that hopefully they will end up doing the bigger things (such as solar unit installations that would be covered by the grant funds). Commissioner Coward joined the meeting and updated all about his communication with Mr. Abney. He sees dealing with energy efficiency and conservation as prerequisites for people looking to make use of the loan program. Dan Kurek continued with going through the language of the policy. He explained that people have to notify whoever is servicing their loan of the amount of the loan and get written verification to tell the fund that they have notified their mortgagor when they sign up for a loan. Aileen Pruitt joined the meeting via teleconference. Dan Kurek continued with a discussion of Department of Energy “Best Practices” guidelines, saying none of them are required, but are recommended. Lee Ann Lowery asked if audits were required by the grant. Roberta Breene said that the grant does not require an audit, but strongly suggests that one be done. She suggested writing it in the policy that an audit be undertaken or at least that the energy audit be accessible. Commissioner Coward suggested that Dr. Arnold from IRSC was supposed to chair a sub-committee on this issue. Dan Kurek continued with his presentation and started discussing premium packages and solar PV. Commissioner Dzadovsky added that anything that’s in the policy must be adhered to in case of future audits. Commissioner Coward said a minimum standard for energy efficiency should be in place. Glenn Henderson said that the loan must result in net energy savings. Commissioner Coward said that doesn’t mandate efficiency, however, and the question is whether it should be encouraged or required. The conversation on this subject continued, and it was decided that the loan fund board would have to make a policy decision. Lee Ann Lowery suggested that the policy should state the standard but allow exceptions when justified. Commissioner Dzadovsky said it should be made an action item for Dr. Arnold and his group. Dan Kurek continued with his presentation regarding loan terms and the maximum and minimum loan amounts, as well as rebates and tax credits. Aileen Pruitt said that the rebate coming back to the CDFI would be in the loan document. Dan Kurek said if they get a rebate, they can pay that part down, and then have the loan re-amortized. Commissioner Coward said that it throws off the business plan on a house-by-house basis if you essentially put the cash from the rebate back to the homeowner instead of back to the loan to reduce the net amount – it throws off the economics. Dan Kurek said he thinks the third party lender is also a good possibility. Commissioner Coward asked if he could use any of the DOE grant for one-year loans just until someone gets a rebate. Glenn Henderson said it wasn’t part of the grant per se, but they had considered using some of the funds as kind of a bridge. Lee Ann Lowery asked how they could assure that the rebate would come back to the loan fund. Dan McIntyre suggested they could come up with an assignment of rebate document to be signed at closing. Commissioner Coward said that then if they didn’t go through with that, the assessment would be added to the property and they would pay it accordingly. Aileen Pruitt said she thought they should come up with a simple policy that’s easy to follow regardless of what the rebate program is, because they don’t yet know what the rebates are, and what the terms will be, and that having second assessments would scare people off. Commissioner Dzadovsky said it also reduces the amount of work. Laura Hetherington suggested a before-rebate SIR and an after-rebate SIR. Discussions continued regarding rebates and the handling of them. Aileen Pruitt said it came down to who’s going to fund the rebate money – is it the contractor, the owner, or is it the fund? Commissioner Coward said he’d like to find out what the options are. After more discussion, it was found that the Sonoma program creates a net loan – and that the contractor is responsible for getting the rebate. Aileen Pruitt said that that makes the cost to the contractor go up. Commissioner Coward asked why they’d want to go with a loss fund rather than a property assessment. Dan Kurek said putting it on the assessment would be the first thing you’d do – the last thing would be to go to the loss fund. It was decided that Sonoma would be contacted on this issue. Dan Kurek continued with going over the language of the policy. John Wakefield questioned #9 regarding title search and encumbrance. Dan Kurek said it would be something called a “pencil title” search. Teresa Idizer said that would actually cover #9 and #10. The fee should be about $50. Dan Kurek brought up language saying the loan fund should be cautious of people whose houses are “under water” – and that they’d earlier discussed having debt-to- income ratio be 55%. Teresa Idizer said they would have a 125% loan to market value, and that would insure someone’s not under water. Dan Kurek said that if a house went into foreclosure, the loan fund wouldn’t be first in line to be paid. He gave a scenario of a house having a $225,000 mortgage but only being worth $130,000. If it went into foreclosure, the taxes would be paid first, the bank would then sell the property, and whoever buys it would be encumbered with the loan. John Wakefield said that only what’s past due would be paid. Lee Ann Lowery said at that point it would be put into a loss fund. Teresa Idizer said that within the language there is still control. Dan Kurek gave a scenario where someone files bankruptcy, gets discharged, and three years later they have as many credit cards maxed out as they had before the bankruptcy – that’s the kind of situation where you question whether to give them any kind of credit whatsoever. Lee Ann Lowery said that additional requirements may apply if someone’s been in bankruptcy in the last three years. The other bankers agreed with Laura Hetherington’s idea of asking for an explanation of the cause of the bankruptcy when that is an issue for a potential borrower. The interest rate component was then discussed. Teresa Idizer said Seacoast’s policy is that rates themselves are set based on sub-committee involvement, and not the board that approves the policy, so as to not exceed usury limits as required by law. Aileen said the fund would have to have the ability to make changes in rates due to the changes in the economy, and said that the volatile market can require changing the rates. She said she thought the full board should be deciding the rates. Commissioner Coward said he felt the board of directors should set the broad parameters and the committees should work within those. He said he felt they should set the ceiling of zero to six percent and have the committee work within them. Commissioner Dzadovsky said that 7% today may seem high but at some other time it could seem an attractive rate. He said the floor may be 2%, and then the board could set the ceiling that couldn’t be exceeded without board approval. It isn’t a by-law issue, but really more a policy issue. It was agreed to set a floor and a ceiling with the ability to change policy and rates with the board as economics dictate. 2% was decided upon as a floor with 6% as a ceiling. Dan Kurek said the other policies don’t talk about property insurance. Our policy does have it in there – he wanted to know whether we should include title insurance in our policy. Commissioner Dzadovsky said he thought it should be based on the loan amount. Dan Kurek continued the discussion regarding property improvements and using certified contractors, particularly for larger loans/larger installations. Lee Ann Lowery said that the Sonoma program allows people to do their own work, even if they’re not licensed contractors. John Daly said that some rebates require that work be done by licensed contractors. Lee Ann Lowery said that the grant fund allows us to have our own inspector on staff, and all work must be inspected. Commissioner Dzadovsky said that houses would be audited 12 months before (a 12- month history of power bills) and 18 months after so that results could be proven in terms of the money being loaned out having an effect – this is required by the DOE. Application fees were discussed next. Dan Kurek said the amount of the fees could change periodically and asked whether the policy should just say that the application fee could be set at the board of directors’ discretion. Commissioner Dzadovsky said it was incumbent upon the fund to educate the public so that scams can be avoided. It was agreed that a fee should be assessed to even entertain an application. Dan Kurek discussed energy surveys and audits and residential requirements, and said that he thinks some of the things that apply to residential apply to businesses as well. Commissioner Dzadovsky said there had been a great deal of discussion at the board of directors meeting about the business and rental components of the program. There was concern that the program is too onerous and difficult for businesses to participate. Dan Kurek said the reality is that we are trying to do the loans based on net of rebate but for businesses it needs to be net of tax credit. A discussion regarding the policy for businesses ensued. It was decided that changes to the policy would be finalized into a draft document and th presented at the next Sub-Committee meeting on Thursday, August 26 at 1.30 PM Laura Hetherington suggested that it be put in the applicant eligibility field that all parties should be able to pass the OFAC (Office of Foreign Assets Control) screening, as required by the government. Teresa Idizer suggested policy itself should be broader to say the funding complies with all local, state and federal laws as well as the Patriot Act and OFAC language. Dan Kurek also said there needs to be language to comply with consumer privacy laws. Laura Hetherington suggested loosening the requirements in the homeowners section regarding property eligibility, and considering just saying that “all judgments must be paid”. Dan Kurek said that the requirements are found in best practices. Laura Hetherington then said there are no debt to income requirements for businesses and rentals – therefore could they consider making it easier for homeowners as well? Commissioner Dzadovsky said his understanding was that the business and rental documents should emulate the residential policy. He said the board of directors was very clear that the policy needs to be as simple as possible. Aileen Pruitt said that we need to be sure we don’t put people in a more difficult position than they already are. Commissioner Dzadovsky said that the application process needs to be aware of extenuating circumstances and loosening certain requirements when reasonable. Teresa Idizer said from a business perspective it is prudent to look at debt to income ratios and how well people are handling their finances. Dan Kurek said that in the final analysis we will be asking banks to put money into the program, so they all need to be comfortable with the policy and the terms. It was decided that the final Sub-Committee meeting will be held on Tuesday, August st 31 1:30 PM. Laura Hetherington said she would be out of town that entire week but would be looking at and commenting on materials prior to the meeting. There being no further business, the meeting was adjourned. Respectfully submitted by: Terri Ann Palumbo, Executive Aide to Commissioner Chris Dzadovsky