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Cascade: No. 74, Spring/Summer 2010

TRF Manages Three New Energy Loan Funds

Nearly $100 million in financing is available for energy conservation and renewable energy projects from three new loan funds managed by The Reinvestment Fund (TRF). The three loan funds, which use substantial amounts of federal energy dollars, are the Pennsylvania Green Energy Loan Fund, the Philadelphia Greenworks Loan Fund, and a planned fund to expand Greenworks to Bucks, Chester, Delaware, and Montgomery counties in Pennsylvania.

TRF, a community development financial institution formed in 1985, has provided loans and investments of $949 million for the development of 18,860 housing units; charter schools attended by 29,000 children; and 8.3 million square feet of commercial space, including supermarkets and child care facilities. TRF staff also provides comprehensive policy and market analysis. Since 1993, TRF has been structuring below-market-rate loans with other financing to offer incentives to developers of charter schools, affordable housing, and commercial real estate to incorporate clean energy and high-performance building measures.

Robert G. Sanders, managing director of energy finance at TRF, said, “We tell our borrowers, ‘if you do anything with real estate, think about financing energy efficiency. The cheapest kilowatt is the kilowatt never used.’ Similarly, renewable energy fixes your costs, while conventional energy sources are subject to substantial price increases in coming years.

“There is a critical need for predictable access to capital for clean energy and energy-efficiency projects. Conventional lenders are reluctant to lend, or when they do lend, it is on terms that incorporate very high-risk premiums. Projects that were feasible and ready to go a year ago still cannot obtain financing on commercially reasonable terms, if at all. Many entities have no ability to take advantage of grants or rebates, since they are unable to finance the balance of the project costs.”

In the Pennsylvania Green Energy Loan Fund, TRF is leveraging $12 million in federal funds authorized under the American Recovery and Reinvestment Act (ARRA) with $36 million in commitments from private and public sources. In this fund, TRF is underwriting, originating, and servicing loans and lease financing to commercial, nonprofit, government, multifamily residential, and industrial entities throughout Pennsylvania.

The $9 million Philadelphia Greenworks Loan Fund, which also uses ARRA funds, will support energy-efficient building retrofits, machinery and equipment, and building practices in new construction projects, as well as renewable energy systems and combined heat-and-power systems. Financing of $100,000 to $1 million will be available to building owners, developers, or tenants of commercial, industrial, institutional, mixed-use, or cultural facilities. TRF is originating and servicing loans and verifying energy savings, while the Philadelphia Industrial Development Corporation (PIDC) is using ARRA funds to buy participations and ensure regulatory compliance. TRF and the PIDC are working closely with the city of Philadelphia in managing this fund.

In the fund targeted to Bucks, Chester, Delaware, and Montgomery counties, TRF has been awarded a $6.75 million sub-grant through the city of Philadelphia’s successful energy-efficiency and conservation block grant application to the U.S. Department of Energy. The PIDC is providing an additional $5 million in ARRA loan capital, which TRF will leverage to attract private and other loan capital for building-related energy-efficiency projects.

Roger E. Clark, manager for energy technology and policy at TRF, added that nonprofits ought to pay more attention to their energy costs because those costs have a significant impact on their operating expenses. Energy-efficiency improvements can extend the life cycle of buildings and increase cash flow, he said.

TRF had $7,912,000 in energy-related loans outstanding as of December 31, 2009, and all of its outstanding energy loans are current and paid as agreed, according to TRF. The loans include financing for wind farms, university and hospital energy conservation projects, and solar installations. Since 1993, there has been only one energy loan net charge-off of $211,500, TRF said.

For information, contact Robert G. Sanders at 215-574-5850 or rob.sanders@trfund.com E-mail Address, or Roger E. Clark at 215-574-5814 or roger.clark@trfund.com E-mail Address; www.trfund.com External Link.