Capital for Change, Amalgamated Bank, Connecticut Green Bank team up to boost successful loan program
WALLINGFORD, Conn. (May 8, 2020) – An innovative collaboration among three financial entities has set the stage for more Connecticut homeowners to gain access to energy-efficiency loans while reducing costs up to 20 percent for many utility ratepayers.
The collaboration is among Capital for Change Inc., Connecticut’s largest full-service, nonprofit community development financial institution; Amalgamated Bank; and the Connecticut Green Bank.
“This new financial model is one of the few – if not the only – such arrangements in the United States helping to boost the growth of unsecured loans supporting consumer energy-efficiency and solar loans,” said Bert Hunter, Chief Investment Officer and Executive Vice President at the Green Bank.
“The model has proven to be a unique means of maximizing the leverage of ratepayer capital in achieving the state’s energy goals,” Hunter said.
“We’re deeply pleased to participate in what we believe is a new financial model for positive community development,” said Calvin B. Vinal, President and CEO of Capital for Change Inc., Connecticut’s largest full-service, nonprofit community development financial institution.
“This will allow us to make more funds available for energy-efficient and solar housing improvements in Connecticut,” Vinal said. “Participating utility ratepayers will see savings on their energy bills of 10 to 20 percent, depending on the energy measures installed and fuel source.”
“We are proud to join the Connecticut Green Bank and Capital for Change Inc. in providing energy efficiency loans to Connecticut residents,” said Keith Mestrich, president and CEO of Amalgamated Bank.
“As America’s socially responsible bank, we believe that our deposits can be used for creating a more sustainable planet and this collaboration affords us an opportunity to expand our impact,” Mestrich said.
The partnership has made available a $27 million line of credit for the Connecticut Energy Efficiency Finance Company (CEEFCo) leveraged by CEEFCo’s ratepayer funding and unsecured loan portfolio, allowing CEEFCo’s portfolio to grow to $36 million. CEEFCo is a nonprofit subsidiary of Capital for Change.
The new model allows CEEFCo to continue to grow its loan portfolio while minimizing the need for additional ratepayer capital, Hunter and Vinal said.
Financing arrangements closed in late December 2019 and took effect in February, Vinal said. At CEEFCo’s inception in 2011, initial funding was provided through legislative mandate by Connecticut energy utility Eversource, using approximately $17 million collected from ratepayers over 10 years.
With $12.1 million of this capitalization remaining, ratepayer funding has leveraged production of 6,000 loans for $51 million of capital funding at a cost of $5 million. In the past several years, this portfolio of unsecured loans went from $12 million to $24 million, and their earlier financial partner stopped lending.
“We required a different financing model to accommodate the need, which the Green Bank understood and so introduced us to Amalgamated Bank,” said Vinal.
“We’re extremely grateful that Amalgamated appreciates the quality of our portfolio and the impact we’re having on households throughout Connecticut, and that the Green Bank responded with its own support to make it work,” Vinal said.
“In the past several years, our portfolio of unsecured loans went from $12 million to $24 million, and our earlier financial partner stopped lending,” Vinal said. “We required a different financing model to accommodate the need, which the Greenbank understood and so introduced us to Amalgamated Bank.
Amalgamated is providing $22.5 million of funding and the Connecticut Green Bank $4.5 million, with the funding secured only by CEEFCo’s assets.
“This model has proven to be a unique means of maximizing the leverage of ratepayer capital in achieving the state’s energy goals,” Vinal said.
“It’s a great collaboration with financing institutions that support community development and energy sustainability,” Vinal said. “It provides us the liquidity needed to continue to grow that portfolio and provide Connecticut residents more opportunities to save on their energy costs.”
The concept also has broad positive implications for the state’s economy, he said.
“Nationwide, the energy sector is providing jobs in numbers that are similar to those in the automotive industry, led by solar and energy efficiency,” Vinal said. “By promoting energy efficiency, proactive financial models such as this one are helping to improve the environment, create local jobs and save homeowners money. ”
An extensive resource focusing on energy efficiency in Connecticut – including loan options – is maintained by the utility partnership Energize Connecticut at its website, EnergizeCT.com.