PULLING A RABBIT OUT OF THE HAT:INNOVATIVE FINANCING FOR LOW-INCOME CONSERVATION

steven FerreyNational Consumer Law center, Inc@

ABSTRACT

The conservation market fails to reach low-income and rental consumers forreasons related to their dwelling types, incomes and ownership/tax patterns~

Because renters and low-income households constitute almost half of thepopulation, the conservation market fails as often as it works@ The solutionmust be more creative financing and savvy marketing techniques that bridgethese populations into conventional credit markets@

The technical data on low-income conservation retrofits indicates that) it is harder to achieve BTU savings low-income housing, (2) there is

great variation in the amount successfully conserved, (3) these shortcomingsare inherent in the low-income character of the housing, but programdesign, (4) conservation measure selection and co, atrol are crucial to

low-income conservation@

are

third parties;capitalized as an

funds or credi t

o be realized, perhapso future stream energy savings

lump sum to finance conservation;o Program dollars should always leverage

as well as layer multiple subsidiese

author develops seven corollary financing from these threeuse these seven principles is illustrated wi th examples of

use of overcharge refunds, Energy Assistance conservation set-~_",!!o_""._, ana Bank funds~ Strategic allocation of

maximize leverage for the poor is analyzede Financial(as opposed ) are dissected as a strategic financing

dollars conservationemploy Innovative financing techniques s This

techniques and strategies; the author isthose who want to structure sophisticated

FERREY

PULLING A RABBIT OUT OF THE HAT:INNOVATIVE FINANCING FOR LOW-INCOME CONSERVATION

steven FerreyNational Consumer Law Center, Inc@

Ie WHY THE CONSERVATION MARKET FAILS

Low-income housing is physically and financially unique~ Its distinctionsare thoroughly documented in my previous paper for the 1982 ACEEE summer studyand in my articles in the Harvard Journal on Legislation and the New. YorkTimes*l Summarized briefly, these aistinctions fall into three categories:Physical characteristics, income characteristics, and ownership/tax patterns.

Housing inhabited by the low..... income population is distinct from shelterfor the general population because of the following physical dwellingcharacteristics: 2

o It is older and less stanaardized in aesigneo is less well insulated and in less good repair.o It is smaller in square footage of usable floorspaceeo system older and less well maintained0

fromincome characteristics, the poor and their dwellings are------ population following salient regards:

o The on average devote 25-40% of their incomes to household energycosts, compared to about 5-10% for the general populati 0

3o During the ree winter months in 32 states, the average heating bill

per month consumes but $100 per week of the average unemploymentcompensation p ment; ,foco, medical care, transportation andclothing paid for from the remainder@ See Table 104

o single-person elderly household living on social security,after paying the average 1983-84 winter heating bill from their Social

payments states, the elderly have remaining less thanweek other necessities, including food, shelter

H'~~B~~~&~ care~ displayed in Table 1*o 35% of eligi e low-income and elderly population

Energy payments@o modest are less likely take advantage

ownership/tax patterns characterize the poor and

o three-quarters the elderly who own their ownan outstanding property mortgage@

o poor are the only gr by income which more personsdwellings own their dwellings*6

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do not

their

STATES

FERREY

TABLE I: 551 Benefits, Unercploymcnt Benefits and low-Incarc Energy Expenditures

_1IlIIIlillIIII'55I BmEFITS IN'.ET'1PLDYMENT BENEFITS .

-fIIAllIIIUfi 1l0J(TH~~ PCT. IPENT APlTaI LEFT AVG. 10 'CT3 or IENErX,. ART. LEFTS51 8ENEFIT '0 FOft ENERGY II EACH UEEI tENErIT SPENT FOR INERGY IACH WEEK51ltiL.E ELDERLY tdIJTER RODITHS XI WIITER IN WINTER IOITH! XI "liTER

AL.ABAMA 8304 34.9* 84' 8310 2'&" .'3ARIZONA 8304 22.1ts 85S dD439 15.1- s.&ARKANSAS 8304 40.2'& .42 8411 2903- ."CALIFORNIA 8461 11.5- .94 8416 11.1S£ 898

COLORADO 8364 21.11& .'0 ."2 15.6- 1131

CONNECTICUT 1471 41.21& 864 8551 34$1- 884

DELAWARE 8304 S2.~ 833 8456 35.3% .'8DIST or COL 831' 47.01& 839 .'43 23$3- 1114

FL.ORIDA 8304 18.1t; ss, 8409 14.0- 881

GEORGIA 1304 34.41£ 846 8..29 24.4- fIlI75

IDAHO 8317 33.Otx .'0 "01 2501" 188

ILLINOIS 8315 45.21& 840 8595 21.'S£ "104INDIANA 8304 44." 839 8390 34.'- 159

IOWA 8304 460'- 831 11512 2404'& 8102

KANSAS 8304 3681- 844 85'0 20.0- 1103

KENTUCKY 8304 43.'_ 840 8460 21.'. IIB7S

LOUISIANA 8304 30 e 11& 849 .'11 131t't£ 1137RAINE 8314 '1.4- S21 45472 41.'" 8S7

i1ARYLANO 8304 S194% 834 8526 299'- 885

IASSACHUSIT"S 8433 43.8S; "' 1543 35.0- Sel

DlICHICiAN 8321 44&1% 842 "34 23.1- S113

111UI£5011\ .339 SS.1_ 835 .'09 310O- .,97

MISSISSIPPI 8304 33~'" 8 ..6 8313 26.'" 165

RI5S0URI 8304 I'.~ "44 13" 21.4- ."1II0NTANA 11304 31.'- 844 I!>'~ 20.3t£ 8104

IEIRASKA 8397 33.3- .'1 "412 32.1% 865

NEVADA 8341 2'.3% 8'8 1J!J30 1'.'% 1102. Blrw HAMPSlttltE 8331 ".1ti 825 8441 4'e6% -52

lEW JERSEY 8331 S2.'" 836 lIS5' 31.4% 388

BlEW REXXCD S304 13.5- 114' 8..90 20e'% te;o

NEW YORK B3£S 50 .. 0_ 342 IS09 35.9% 1'5ISORTH CARCU•. INA ..304 40 .. '5& 842 8474 2'41 tt& 881

!dORT" DAKOTA S304 57 .. 12£ S30 IS81 30 .. 2- '94

OHIO 83M ~3 .. 41l; 840 8S" 22e2% 8107

OKLAHOMA 8373 13 $ i3t 857 858' 21lbSt S10&

OREGON 8306 320'" 148 8553 1'80- .105

PENNSYL.VANIA 833' 45 .. '- 142 S631 24e4- 8110

IltHODE ISLAJlD 1'355 4' .. '% $41 9414 36 .. 4% 171

SOUTH CAROLXIrSA 8304 l5ol~ S45 &407 26411" 869

IOUTH DAKOTA 8319 41 .. 9fc $38 8512 30.'" 112

TIINESSEE 8304 It. liS 842 8311 31.7- 8'0

fllAS 8304 12.12& 848 8594 1605" S114

UTAH dl314 2t.1Ss 851 8561 J'.7IL 8108

VIII011 ~ 14.75i 829 "" 4101il ~7

VIIGIIIA &Jt04 4' 4I0Si S37 "12 2t. ?Si 87i

IASHIIGTOfl 8343 1O.3Js tJ5S -'01 17 & 1" 8116

tll!T VIRCIIIA 8104 .'.SJs .,35 .'"6 24&5tr& 8107

UISeOIS1" "04 1t.9S& OSb esal 27&1s& 8'7

WI01I DIG lid24 140" .49 11533 21 ..~ 897

Source: l\LC,.L.. C"" ~Cold -- Not By Choice,m April 1984

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a Landlords are not eligible to take the residential conservation oralternative energy tax credits; investment tax credits (10%) forconservation improvements cannot be realized for any improvement toresidential property.7 __

o Tenants have scarce incentive to make permanent conservation capitalimprovements to a landlord's property at their own expense; tenants arenot eligible for assistance under various government andutility-financed conservation incentive programs.

o The 75% of taxpayers who do not itemize deductions on their federal taxforms cannot realize interest deductions on money borrowed to financeconservation.

Analyzed together, low-income dwellings are most need of conservationimprovements but least able to finance these improvements II The immediateenergy cash squeeze on the poor and elderly increases the personal discountrate that they perceive on any investments. Many of these programssystematically exclude effective participation of the poor or renters (credittests, eligibility standards, ownership requirements) $ More creativefinancing and outreach are necessarYe

II@ THE TECHNICAL LESSONS OF LOW-INCOME CON RVATION

There the beginning of a technical track record for low-incomeconservation, based on analysis done at Lawrence Berkeley Laboratory.8 Bothbefore and conservation retrofit, low-income homes on average have ahigher heating energy use per square foot of floor space than do middle-incomehomes @ example, surveyed utilit y--sponsored conservation programs for.

homes, an average of 38e4 TU annu ly were saved, while low-incomehomes participating weatherization Assistance Programs, an average of35@9 MBTU were conserved 0 However, a Tennessee Valley A hority pilot projecttargeted to low-income high-energy consumers realized a savings of 70 MBTUannually at a cost of only $700 per home ~ These extremely cost-effectiveresul ts suggest that may not be low-income units per se, but programdesign, quality control, measures installed that limit actualsavings~

Demonstration Program on averagethe 12 cities in which it operated 0

average of 23 MBTU were saved in thoseand infiltration conservation measures,650 per home~ In those 73 homes that

tern or water efficiency measures at anper home, the average energy consumption savings were

average cost of conservation measures by 50% toaverage savings increased by almost

space heating savingsDemonstration Program,

building

suggests there is a much wider in actualthe low-income weatherization programs than programs

low ncome Weatheriza n Program andProgram, savings are widely

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about the median.9 In fact, 13 of the 69 homes in this Demonstration Projectsaved no energy whatsoever after weatherization to the building structure 6

Therefore, quality control and education are critical@

Despite these variations, the low-income Weatherization Assistance 'Programshows respectable paybacks in energy savings related to the conservationinvestments. Among 27 low-income Weatherization Assistance Projects, themedian simple payback time is 962 years, with a mean simple payback time of11&4 yearse lO Interestingly, of residences within the CSA/NBSDemonstrationProject, those with only builaing shell conservation had a median payback of13 years, while those that in addition retrofit heating systems had a 694-year payback.

These 27 low-income Weatherization Projects had a mean cost of conservedenergy of $6.71/MBTU, with a median value of $4*65/MBTU.ll low-incomeconservation has been cost-effective, but less so than conservationinvestments for the population as a whole@ Not only may low-income dwellingsrequire the expenditure of funds for structural modifications beforeconservation investments, but the success of retrofits low-income homes ismore speculative. For the design and financing of low-income conservation,the technical data suggests that quality control critical from designthrough post-installation inspection, heating system modification is a highpayback measure, and the packaging of conservation measures is integral toprogram success~ All of these elements can add the cost of low-incomeconservation, but should reap benefits overall program cost-effectiveness $

Financing sufficient up-front costs therefore becomes critica10

$ PRINCIPLES FOR CREATIVE FINANe! OF LOW INCOME CONSERVATION

the particular physical, income and ownership/taxlow-income households, financing conservation services for

sector requires more highly subsidized, and more savvy, techniques &

There are three cardinal rules for structuring any financing program:

take advantage of any available taxbenefits negates access to a larger

should be structuredthe use

o

o,

subsidy~

o Financing should future stream of energy saving benefitsas an up-front lump sum to finance purchase of conservation materials$

should leverage other funding sources and be layered withsubsidies wherever possible@

low-income conservation, these rules yield seven corollary

l@ Use third parties creatively. Private or public parties notcan assist in capitalizing a project, but often can realize tax benefitslow-income persons cannot realize, thus lowering net effective financing

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2$ Develop new institutional arrangements. Existing lending institutionshave not reached low-income households. New lending ins>titutions, includingutilities and government-capitalized lending agents, must augment (not replace)existing institutions.

3. Shift and spread program risk. There is inherently more risk in anyprogram that advances debt capital to poor households. Therefore, techniquesto provide unconventional backup security or overcapitalization of private debtare crucial.

4. Bridge to conventional financing programs e There are new innovativeconservation program dollars available to low-income households@ Rather thanuse these innovative collars as a sole financing pool, they should be used tobridge the credit of the poor into conventional credit marketse

5~ Allocate sufficient program dollars to innovative administration andoutreach involving local user groups. One must meet low-income groups on theirown terms, in communities where they live@ To successfully reach the poorrequires that a larger percentage of program dollars be devoted to creativeoutreach, marketing, quality control ana technical assistance, often employingcommunity-based groups@

6~ Use funds in their most flexible modese The most obvious use of fundsoften i.s not the beste For example, three-quarters of the states currentlyuse their 15% conservation set-aside options under the Energy AssistanceProgram in the most, rather than the least, restrictive modes@ They roll thesefunds the existing federal Weatherization Assistance Program~ As aconsequence, some of the most innovative options for low-income conservationare missed (see, infra)@

7$ "Layer,e financing to aeepen subsidies 0 Some sources of financing can"layered ln along with other funding to -deepen the total subsidy $ For

example, carefully structured, Solar ana Conservation Bank financing,business energy tax credits, state tax credits, oil overcharge refunds, utilityfinancing and corporate/foundation grants can be combined0

consideration financing low-income conservation is whetherare available $ Many low-income and elderly households are

from tax benefits. Residential conservation and40%) are not available for rental

are not refundable, but must be carried forward, ifoffset the credit~ The investment tax

business energy tax credits (10-15%) are not available_<I> ~""'Al""o+iII"ll"lo_~"'+- ~ 13 Moreover, the lucrative historic structures

(25%) applies only to certified historic structures,include many of abodes of the poor @ 14 older buildings

tax credits ( ly only to commercial and industrial

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On the face of the matter, the poor and renters appear screened off frommany of the supposedly available tax credits. Interposing a government,charitable or philanthropic agency to assist the poor can have an equallynegative effect on tax credits: Any conservation investments owned, l~ased toor used by any governmental or tax-exempt entity sacrifices all tax creditsexcept for the historic structures rehabilitation tax credit.15 Table IIillustrates these various credits and their limitations.

TABLE lIe Federal tax credits, depreciation and restrictions.

Depreciation RentalCredit Amount Refundable Trade-Off Housin,g Restrictions

Residential 15% No No deprece NoConservation

Residential 40% No No deprec* No Active solarSolar onlye

Business 10-15% Yes Half credit Yes Can't be usedEnergy deducted from w/subsidized

deprec@ basis or tax-ex@ fin@

Investment 6-10% Yes Same as above NoCredit

Historic 25% Yes None Yes Must be certi-fied structure*

Older 15-20% Yes Entire credit Yes Mine investmentBuildings deducted from in rehab* :::

deprec0 basis~ $5,000; must beat least 30years old*

maze of tax-credit leaves three options:

o Forego credits on conservation investments.o Execute conservation programs with preferential financing that

cannot used along with tax credits.o strategically structure conservation financing programs to capture

some of creditse

option a losing strategy, especially given the greater totallow-income conservation* The second option highlights a limitation

that actually can be an avenue to cheaper financinge This is because use ofseveral types of conservation financing cannot be paired with any tax credits:

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a Conservation in rental dwellings is not eligible for credits, unlessthe building is at least 30 years old, historically significant, oradapts renewable energYe

o Specific measures do not qualify for tax credits (specifically _furnacemodi fications, replacement boilers, lighting improvements, loadmanagement devices, heat absorbing or reflecting windows and doors)e 16

o Government financed conservation.o Conservation in buildings owned by tax-exempt owners$

For these categories of conservation, tax-exempt financing, Solar andConservation Bank funds, oil overcharge, or other federal funds can beutilized. This financing can be less expensive to the participant thanconventional financing.

The third option is the greatest challenge; carefully structured financingcan preserve some tax credits for low-income conservation measures. For olderrental housing, the older buildings rehabilitation or historic structures taxcredits can be used. The former requires a minimum of $5,000 of expenditureson total rehabilitation over no more than a 2-year period@ This modest rehab!conservation strategy can be financed with CDBG, UDAG or utility-financedfunds@ For these options, financial "mixers" are key.

80 Financial Mixers

financing subsidies can be done limitedthree types subsidized financing that are universal "mixers 0 "

used in conjunction ..ant other form financing--whetheror governmente three are:

o financing rates.a Oil overcharge refunds0o or corporate grants or loans~

so many forms--used sparingly to leverage,

These can be strapped any,it deepen a loan subsidy, provide a

guarantee a loan, "overcollateralizen

rates. These uses of financial mixershouseholds to private credit markets, (2)

~A~'~~~'U'~ financing, and ) leverage

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IVe INNOVATIVE FlNAf\Clf\G

Despite the diminution of several sources of federal funds, there still isfederal money available through:

o Oil overcharge refunds.a Solar and Conservation Bank.o Energy Assistance conservation set-asides~

o Low-income Weatherization Assistance.o Community Development Block Grants (CDBG).o Urban Development Action Grants (UDAG)$o Public housing Comprehensive Improvement fundseo HUD flexible subsidies, § 8 and § 312 loans@

The amounts of money from these sources are not insignificante There iscurrently more than $2 billion in oil overcharge refunds, about $80 million inSolar and Conservation Bank funds, $190 million in Weatherization Assistance,$3 billion in COSG and UDAG, and $281 million in Energy Assistance conservationset-aside funds 0 Many of these funds are replenished annually @ Below, astrategic analysis of three of these innovative sources funds is sketched*

A~ Oil Overcharge Refunds

Oil overcharge refunds have been created from prosecutions of majorpetroleum refiners who violated the petroleum price control laws between1974-1981 @ Many of these alleged violations were settled out of court, todate yielding more than $1 billion total refunds & More than 100 otheralleged violations are awaiting resolution~ Notably, two pending courtdecisions may return more than $1 billion each to overcharged consumers e 17Currently, the federal Energy Department holds almost $400 million ofovercharges escrow for consumers*

In restitution agreements or orders, more than $300 million in unclaimedovercharge refunds has been returned to the states on behal f of consumers *

Through the so.....called UWarner amendment" returning $200 million, states wererequired spend this money for one purposes: Energy Assistance,Weatherization Assistance, schools and hospitals conservation, Energy Extension

or planning@·

$200 as part of the Warner Amendment wasby states through the Weatherization Assistance Programs@18was subject to all of the restrictions and limitations of this

remainder was split among the other four categories, with Energyreceiving less than 6%e The bulk of states missed opportunities tomoney more creative and flexible ways @ Even for conservationthis money can be passed through the Energy Extension Service and

wider and more cost-effective applications@

Moreover, if a state has not set-aside for conservation a full 15% of itsEnergy Assistance funds, oil overcharge refunds can be cycled through EnergyAssistance; the full amount of this passthrough could be used for conservation.

Energy Assistance program allows conservation funds to be used creatively,

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to a larger population of the poor, with none of the restrictions inherent inthe Weatherization Assistance Program.

Oil overcharge refunds are unique in several very important aspects~

o They are nontaxable (as returns of after-tax income).o There is no requirement to match or repay these amounts.o They are one-time capital.o They can be mixed with any other sources of government or private

funds or with any tax credits.

These characteristics suggest the innovative potential of oil overchargerefund use at the state level. Because refunds are one-time funds, they areideal for innovative, even risky, conservation demonstrations. Oil overchargerefunds can be layered with Solar and Conservation Bank funds to provide the50% match on a conservation grant, or to guarantee private sector loanssubsidized by the Bank, employed along with tax-exempt local or stategovernment debt financing (without sacrificing the tax-exempt character of thenote), or combined to deepen the subsidy on a utili ty-financed conservationprogram@ But few states have seen or utilized these potentials@

B* Energy Assistance as Conservation Financing

Assistance federal government's largest ongoing committmentenergy policy$ For this purpose 82 appropriated $874

FY 83 $1.975 billion and in FY 84 $1~875 billion. These funds arethe states as block grants, then distributed to low-income

households as supplemental winter assistance payments@ There are three waysassistance money, usually not associated with conservation, can be

conservation:

o A can elect aside" up to 15% of its annual allocationto finance conservation activities.

o payments are made to individual low-income households,payments can finance a conservation package@

o When household provided as a vendor payment theapply this payment secure

conservation financing.

FY 84) thanSolar and

aboutin FY 83

Energystates

FERREY

future years or rolling out into other HHS block grants $291 million, or 15%of the total. 20

Correspondingly, no states or utilities currently provide any programs touse Energy Assistance payments received by energy vendors or consumers tocapitalize conservation investments. Only six states have elected to supplyEnergy Assistance totally as cash grants to the household; the others usevendor paymentsG utilities, admittedly, are anxious to devote the fullpayments to large arrearages that low-income consumers accumulate $ But forthe approximately 40 utilities which provide utility-financed conservationservices, these Energy Assistance vendor payments could be used to securesubsidized conservation assistance for the households on whose behal f thefunds are received. When used to finance conservation, Energy Assistanceset-aside funes have several distinctive characteristics:

o They reach a larger group of low-income and elderly households than ispossible with Weatherization Assistancee 21

a Conservation measures not eligible under Weatherization Assistance canbe fundeo@

o Significant structural repairs can be financed $

Ce ?olar and Conservation Bank Financing

The Solar and Conservation Bank (the "Bank") was enacted in 1980 to providefinancing for conservation and solar energy investments by those of low andmoderate incomeQ The Bank provides some of the only innovation financing fortenants multifamily buildings and for low-income owners. While low-incomeWeatherization Assistance can reach only those earning below 125% of federalpoverty guidelines (about $12,000 annually for a family of four), the Bank canassist those earning up to 150% of median income (about $35,000 annually)@ TheReagan Administration impounded the funds for this program, which were rescuedby the first successful impoundment suit against a sitting President since theWatergate days of Richard Nixon~22 Successive attempts by the Administration

eliminate appropriations Bank have been rebuffed through85$

are 82, $20 million 83, $25and $15 85 ~ These Bank funds are used to

subsidize of improvments for consumers in the form of50% conservation grants (for those earning below approximately $20,000

a 50% subsidy financing cost of a conservation loan (20%buildings), or a 60% subsidy in the financing cost of a solar

loan$ Bank funds leverage private or public capital, thuseffective amount conservation financing delivered by the

initially allocatee $30.43 million to 45 states and several@ Of this amount, the states devoted 53.5% to low-income

households, 2763% to moderate-income households and 19.2% to upper-incomehouseholds. 77@7% of the funds are devoted to 1-4 family conservation, 1302%

multifamily (5+) conservation (representing only 11 states), and 9.1% for

FERREY

passive solar applications. Only 27.4% of the funds (representing only 24states) are devoted to conservation grants; the bulk of the funds (70.1%) aredevoted to conservation loan subsidies.

A variety of states are using innovative outreach techniques to· promoteBank assistanceo23 Foundation or corporate support as well as utility­financed assistance for promotion, marketing and administration can financethe introduction of innovative program design. Slow delivery at both thefederal and state levels has left almost the entire four-year appropriation of$80 million still available.

When the Bank generates conservation grants, then Energy Assistance set­aside funds, oil overcharge refunds, utility financing, CDBG or UDAG grants,or the proceeds from local tax-exemPt debt can be used to match the other halfof a 50% Bank conservation grant024 In addition, there are means to deepenthe loan subsidies for low-income persons beyond what is contemplated in theBank statute and regulations. The Bank allows a maximum subsidy of 50% of theamount of the conservation packag~1L. If Bank funding is blended with othersubsidized funding, the effective subsidy supplied by the Bank can be muchgreater@ *

For example, a $1000 conservation package financed exclusively bythe Bank, can reduce the financing cost by 50% of the cost of the package,or $5000 Where the same investment is financed half with Bank funds and half

overcharge refunds, the Bank can subsidize the financing as areduction principal the amount of 50% of the cost of the conservationpackage, or $500@ This covers the entire half of the investment to be financedby the Bank, ren ring the Bank-subsidized loan effectively a grant. 25 Theother $500 supplied by overcharge refunds--the entire package is free tothe. low-income recipient $ This type arrangement requires cooperation ofboth a local lender (which can be a government or nonprofit entity) andinnovative state program officials@

These examples illustrate the innovative finance design that is possiblelow-income conservation programs. There are

whose ng would exceed the length limitations ofdemise of federal tax credits and increasing restrictions

must become more creative and sophisticated 0

anyone responsible for structuring anprogram for conservation to design a

NOTES

FERREY

4~ National Consumer Law Center, "Cold--Not By Choice," April 1984~

5. Technical Development Corporation, "Making RCS Work."6& UoS@ Bureau of the Census, 1976 Annual Housing SUrvey, at Table U-53-40(1976)$7. 26 U.S.C. 44C(b)(2)-(c)(3), 48(a)(3).8. Much of this data is taken from eGA. Goldman, "Technical Performance andCost-Effectiveness of Conservation Retrofits in Existing U.S. ResidentialBuildings: Analysis of the BECA-B Data Base," October 1983, Lawrence BerkeleyLaboratory@ Data for the low-income weatherization retrofit homes is derivedfrom the retrofit of 602 low-income single-family homes under the Departmentof Energy Weatherization Assistance Program, 242 homes under the CSA/NBSWeatherization Demonstration Research Project, and 210 home oil-heated retrofitpilot projects funded primarily by the low-income Energy Assistance ProgrameThese retrofits were performed between 1977 and 1983. 47% of the low-incomehomes required window glass replacement or repair.9. This is probably explained by the fact that decentralized operators selectfrom a wide range of installed conservation measures e Lipshutz, Diamond &Sonderegger, "Energy Use in a High-Rise Apartment Building--A Progress Report,"lBL-16366 , Lawrence Berkeley Laboratory, Septe 1983@10e Goldman, supra, note 8, at 45~

ll~ Id@ at 51@12~ 26 U.SeC@ 44C(b)(2)-(c)(3)$13@ 26 U$S~C. 48(a)(3)@14& 26 U@S@C@ 48(g)(3).

$ 26 UeS.C. 48(s)@16~ 26 u. $ 44Ce

@ Re: Stripper Well Litigation, MDL-378 (0* Kane Sept@ 13, 1983); U0S~

v~ Exxon Carpe, CeA@ No* 78-1035 (O$O@C@ March 25, 1983)018$ Source: National Governors' Associatione19@ July 25, 1983 HHS Telephone Survey of FY 83 LIEAP program@20. Id@210 Energy Assistance can reach those earning up to 175% of federal povertyguide nes; Weatherization Assistance only up to 125% of poverty guidelines@220 bney v@ ~eagan, 542 F@ SUPPe 756 (S~D0N*Y@ 1982)@23@ These include using as referrals those households turned down forlow-income weatherization Assistance, neighborhood-based or block-basedmarketing, targeting those without electric or gas heat, interfacing with

utility or Neighborhood Housing Service programs, and bringing in theprivate sector with energy service company involvement@24 @ The regulations disallow use of the following federal sources: § 85ubsta ial abilitation, HUD flex Ie subsidies, § 312 rehab loans, § 515FA, Weatheri Assistance, federal schools and hospitals funds @

@9865 (r@ , 1984)@ of tax-exempt local debt is no longer

der approach, Bank must prepay principal on the loan becausesubsidies cannot exceed total interest owed@ Lenders have this

of prepayment@

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