Council split on energy loans

For Charleston residents who would like to make energy-saving home improvements, but haven't done so because of the up-front costs, a city initiative aimed at creating a revolving loan fund might sound appealing.

Supporters, such as Mayor Joe Riley, say that such a fund could leverage private investment, create jobs and reduce energy consumption and energy bills in Charleston. A nonprofit group could be created to run the operation.

Some City Council members, however, say the plan sounds financially risky and would be best left to the private sector.

The idea is to create a one-stop-shop for energy-efficiency, where city residents could get a home energy audit, arrange for reputable contractors to make improvements, such as upgrading insulation or replacing windows, and then pay off the costs over time with the money saved on power bills.

One recommendation calls for adding the loan payments to customers' water bills, to simplify the billing.

The initiative is the keystone in the city's plan to address climate change and is the main recommendation of the city's Green Committee, but it has hit growing opposition on City Council.

"I think that if people were concerned about being energy-efficient to save money, they would have done it," said Councilman Gary White. "I don't think that giving them an inexpensive financing option, and assuming risk on the city's part, will make them more likely to do it."

Other municipalities, including Babylon, N.Y., and Cambridge, Mass., have claimed some success with their own revolving fund programs, but neither program is exactly like what's been proposed in Charleston. Babylon's plan, for example, used local government funds to create the program, and the state of New York has cleared the way for other towns there to emulate Babylon's program.

Green Committee Chairman James Meadors said there's no example of a successful program exactly like the one Charleston is considering, because the city's program would be cutting-edge.

"It's state of the art," he said. "I think it's critical to our short- and long-term success."

So far, four of the city's 12 council members have cast votes against pursuing federal grants that would pay a consulting company to work out the details. Others have expressed reservations, but are holding judgment because for now, there's no detailed plan to consider and no city funding at risk.

White and council members Aubry Alexander, Tim Mallard and Larry Shirley opposed a July grant application. White, Mallard and Alexander voted against a second grant application this month.

"I think this council would like to see more of a free-market system, rather than the government," said Alexander at a meeting last week.

The main sticking point driving the opposition is a recommendation by the consulting group Serrafix that the city would essentially guarantee repayment of any money borrowed from the proposed revolving fund, by agreeing to use its authority to put liens on the properties of those who don't make their payments.

There's a stark difference of opinion about whether city funds could be put at risk.

"There is no risk," Riley said. "There is no downside right now. Zero."

Riley made those comments at a City Council meeting Aug. 18, while defending the city's attempt to win federal grant money. Mallard challenged him to explain where the required matching funds for the grant would come from, and Riley said they would come from private donations the city would help to raise.

"It's very easy to understand," the mayor said.

"No, it isn't," Mallard said.

While the city may risk nothing by applying for a grant, White is looking ahead to the initiative the city hopes to create.

White said that if the city were to create the proposed Charleston Energy Efficiency Partnership, then there could be "significant financial risks."

The discussion at the last council meeting took a turn into analogies about swimming, as council members sought to understand the level of commitment the city already has made.

Councilman Larry Shirley compared the situation to venturing into the ocean but not wanting to get in too deep. How deep, he wanted to know, has the city gone already?

Riley said that what the city is doing right now is more like looking for money to pay for swimming lessons.

"We don't even have our bathing suits on," he said, to laughter from the room.

White offered a much different analogy.

"My problem is that we're spending $600,000 to build a pool that we may or may not put water in," he said.

The $600,000 is the cost of hiring Boston-based Serrafix to develop the initiative and deliver it as a turn-key operation to the city. A small part of that cost, about $60,000, was for developing initial recommendations delivered to the city in June and was paid for with private donations.

The city hopes to use federal grant funds and more private donations to pay the remaining cost of the consulting work.

Andrew Gottlieb, project manager for Serrafix, said the proposed revolving fund would be very much like a private business.

"The business plan will have to make good economic sense, in order for us to recommend it," he said Thursday. "We see the entity being essentially back-stopped by the city's lien ability but not necessarily using the city's bond rating."

Riley is urging council members to remain open-minded until they see a final plan. Meanwhile, the city is seeking $540,000 in federal grants and private donations to pay for the creation of that plan.

Reach David Slade at 937-5552 or dslade@postandcourier.com.