PA 07-64—sSB 1263

Commerce Committee

Energy and Technology Committee

General Law Committee

AN ACT CONCERNING THE CONSOLIDATION OF ENERGY CONSERVATION LOAN PROGRAM STATUTES

SUMMARY: The act increases the income threshold for receiving lower interest rates on loans from the Energy Conservation Loan Fund (ECLF). It also eliminates one of two largely duplicative statutes governing the ECLF program, thereby resolving conflicts between the two laws and clarifying loan terms and administrative procedures. It incorporates the higher loan limits for multifamily residences with more than four units and the stricter electric heating conversion loan requirements of the repealed statute into the one it retains. Finally, it eliminates the duplicative energy conservation revolving loan account. (The act appears to cover only loans made with state general obligation bonds authorized before July 1, 1992. )

EFFECTIVE DATE: October 1, 2007

INTEREST RATES

The ECLF provides low-cost loans for specified energy conservation improvements for single- and multi-unit residences. For loans for one-to-four unit residences, the State Bond Commission must establish interest rates ranging from zero to 1% above the interest rate on the state's most recently issued general obligation bonds. The interest rate on a loan depends on the borrower's household income. Borrowers with incomes over a statutory income threshold pay the highest rate.

For ECLF loans for one-to-four unit dwellings, the act increases the income threshold at which the highest interest rate applies from 115% to 150% of median area income by household size. Because only borrowers with household incomes at or below the 150% income threshold are eligible for the loans, the act applies the program's maximum interest rate only to those whose incomes are 150% of median area income rather than to all whose incomes are between 115% and 150%. (For FY 08, PA 07-242 establishes a maximum interest rate of 3% for all loans. )

ECLF LOAN LIMITS

In addition to loans for one-to-four unit residences, the ECLF also provides low-cost and deferred repayment loans and loan guarantees for residential buildings with more than four units. Prior laws governing the ECLF program had different loan and loan guarantee limits. The act resolves the conflicting provisions by incorporating higher loan limits from the repealed statute (CGS 32-317) into the remaining law (CGS 16a-40b), as shown in Table 1.

Table 1: ECLF Loan Limits

Limits

Prior Laws

Act

16a-40b

32-317

Loan for 1-4 unit residences

$6,000

$15,000

$15,000*

Per-unit loan for building with more than 4 units

1,000

2,000

2,000

Overall loan for building with more than 4 units

30,000

60,000

60,000

Per-unit loan guarantee for building with more than 4 units but not more than 30 units

1,500

3,000

3,000

(*PA 07-242 increases the maximum loan for a one-to-four unit residence to $25,000, effective July 1, 2007. )

ELECTRIC HEATING SYSTEM CONVERSIONS

The ECLF provides loans for converting heating systems or installing secondary heating systems in one-to-four unit residences built before January 1, 1980 that use electric heat as their primary heating source. The act adopts a requirement in one of the prior statutes that such loans be used only for high-efficiency systems and eliminates the other statute's less restrictive standard that required only that the replacement or secondary system be one that uses a source of heat other than electricity.

ENERGY CONSERVATION REVOLVING LOAN ACCOUNT

The act eliminates the account, which, under prior law, was used for making ECLF loans and loan guarantees and paying the Department of Economic and Community Development's (DECD) administrative expenses. The account was funded by any excess of loan repayments and annual utility assessments that remained after covering the state's debt service payments on outstanding bonds issued for the program and DECD's administrative expenses. The act instead directs this money to the ECLF, which, under both prior law and the act, is also used for making the loans and loan guarantees and paying DECD's program-related expenses.

BACKGROUND

Energy Conservation Loans

Under prior law and the act, ECLF borrowers can use loan funds to buy or install energy conservation material, insulation, replacement furnaces and boilers, and alternative energy devices in a residential structure. Alternative energy devices are woodstoves or solar, wood, wind, water, or geothermal systems for space heating, water heating, cooling, or electricity generation. A residential structure is a building that uses at least two-thirds of its square footage as dwellings (CGS 16a-40).

Related Act

For FY 08, PA 07-242 lowers the interest rate for loans for one-to-four-unit residences under the program to a maximum of 3% and includes siding and replacement roof projects in the interest rate reduction. That act also increases the maximum loan for such a residence to $25,000.

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