TRAVERSE CITY—Fourteen months after the launch of an innovative, statewide energy efficiency pilot program called BetterBuildings for Michigan, Governor Rick Snyder got his first look at some of its results here last Friday.
He declared it a “great win” for energy and the environment.
The governor, in town at the invitation of the Michigan Land Use Institute, the Traverse City Area Chamber of Commerce, and the Northwest Michigan Council of Governments toured the home of Elizabeth and Chris Kushman, participants in TC Saves, the local version of BBFM.
|Chris and Elizabeth Kushman, pictured with son Matthew, told Governor Snyder that their home efficiency improvements would not have been possible without TC Saves.|
The Kushmans are retrofitting their 118-year-old home in order to make it more comfortable—and cut their annual energy costs by as much as $1,000.
Standing in their dining room, with workmen outside nailing new insulation and Michigan-made siding onto their house, Governor Snyder said he was pleased by the improvements and by the teamwork that made the Kushmans’ project—and close to 200 others in Traverse City—possible.
“You can hear about these programs,” he told the two dozen officials, contractors, and clean energy advocates in the room, “but by coming to this home you get to see a real example about how it impacts real people.”
TC Saves is one of 27 BBFM pilot programs in neighborhoods around the state. Each is testing a different way to convince homeowners or businesses to invest in efficiency—which, earlier, state-sponsored programs found, many homeowners desire, but don’t do for a variety of reasons.
Traverse City’s program, which began last October, sends representatives from MLUI and SEEDS, another local non-profit, door-to-door in two neighborhoods. They offer a $100 basic package that includes a home energy assessment that spots heat leaks and other efficiency problems, plus weather stripping, compact fluorescent light bulbs, and other efficiency measures. A trained contractor uses the assessment to prioritize other, more extensive energy-saving projects, which qualify for zero-percent loans.
Like Michigan’s other BBFM pilots, TC Saves depends on a community team—in this case Traverse City Light & Power and the City of Traverse City, the non-profits; two local contractors; a statewide credit union; and policy groups in Lansing and Ann Arbor that administer different parts of the program.
The governor was effusive about the partnerships.
“By having Michiganders come together and work together and work as a team,” Mr. Snyder said, “everybody wins. That is what is so exciting about this. That is the message. That is why I like it.”
But the governor’s endorsement leaves an unanswered question: With funding for the program fading, how can it become a permanent, jobs-producing part of the state’s clean-energy economy?
Jeff Williams, director of Lansing-based Public Sector Consultants, which administers BetterBuildings for Michigan, told the governor that the program is succeeding. He said Michigan snagged the second-largest chunk of federal American Recovery and Reinvestment Act (stimulus) funds that went to participating states: $30 million.
The money funds administrative and marketing cost, the materials and labor for basic packages, plus interest rate buy downs and some loan capital. Local programs provide the rest.
“One way we won,” Mr. Williams said, “was by finding five times that amount of investment capital in the community through partnerships with utilities and non-profits. It adds up to $180 million in energy efficiency investments in Michigan.”
He said the program has completed more than 2,000 Michigan retrofits and that Michigan Saves, the permanent efficiency program that facilitates 7-percent financing for most homeowners, as well as zero-percent financing in BBFM’s neighborhoods, has provided the pilot program with about 1,000 loans, worth about $6 million.
“We have capital from a dozen participating financing credit unions,” he said, “so it is Michigan money, Michigan lenders, stepping up for Michigan homes.”
He also told the governor that BBFM is finding door-to-door “sweeps” crucial to building momentum for investments in energy efficiency.
“We find homeowners ready to act,” Mr. Williams said of the home visits, “but they sure don’t know who to call. As part of that, we have to make sure that our people are highly trained, certified, and recognizable.”
According to one TC Saves contractor, Jim Anderson, of Anderson Builders Inc., in Traverse City, the combination is working well.
“We’ve seen tremendous interest,” Mr. Anderson said in an interview. “We had to hire additional people to do the energy analyses and install our products, insulation, and air sealing. We are definitely doing some good with this program.”
He estimated that the program created seven or eight new jobs at his firm when it launched last October.
Jason Vanderford, who is managing TC Saves accounts for the other local contractor, Brown Lumber Company, says the program is more effective than an earlier local effort that had no special packages, zero financing, or door-to-door marketing.
“The number one driver is zero-percent financing,” Mr. Vanderford, a veteran of state-funded weatherization programs for low-income families, said of TC Save’s popularity. “The second is building a package that the customer can afford.”
|The Kushmans are using TC Saves’ zero-percent financing to finance top-to-bottom insulation of their century-old home on Traverse City’s near east side.|
In an interview, the Kushmans enthusiastically endorsed TC Saves.
“This is one of the smartest programs I’ve ever heard about,” said Chris Kushman, who’s had some previous experience with efficiency improvements. “It made it feel a lot less overwhelming.
“Part of it was the financing,” he said, “but a big part was also that this team of really experienced, highly motivated professionals came in, with the backing of the non-profits. So we felt really confident that we had smart people to guide us and we could trust that guidance. There was no sales pressure.”
Based on Anderson’s home energy analysis, the couple borrowed $20,000, the BBFM limit, and spent some of their own savings, as well. They insulated their entire house, replaced two large, single-pane windows, installed LED lighting throughout, purchased a hybrid water heater that dehumidifies their basement, and sealed the leaks around dozens of lighting fixtures.
Elizabeth said their loan payback is $187 a month, which she described as both “affordable and definitely worth it.”
“We really love this house and this neighborhood,” she added, “so we look at this as a long-term investment. We see ourselves recovering our investment, investing in the neighborhood, and in our own comfort,” which includes using a previously cold, drafty attic.
Nick Helmholdt, who works with Ann Arbor’s Clean Energy Coalition, which manages one-third of BBFM’s community programs, ticked off the reasons for TC Saves’ success.
“The approach MLUI and SEEDS took to target and refine the message was really well received,” he said. “We’ve gotten a substantial number of homeowners to do enhanced measures. And they did a really good job of selecting installers who are really onboard with the mission.”
Mr. Helmholdt said that the program is learning different lessons in each community, and that Traverse City provided an encouraging surprise.
“Other programs have tried $25 and $50 ‘co-pays’ for different basic packages,” he said, but the Traverse City program tried $100.
“It wasn’t as controversial as we expected,” Mr. Helmholdt said. “People saw a lot of value for the money, and it also helped us find the people who actually were willing to put some money into their homes.”
He indicated that a phone survey of homeowners BBFM contacted would measure their overall experience and gauge how much energy participants are saving. The results go to the U.S. Department of Energy, the national Better Buildings administrator.
“Lessons about trusted messengers, finding homeowners who are ready to invest, and what mix of incentives makes the most sense: That’s what we are all trying to figure out,” he said.
The biggest question facing BBFM and local projects like TC Saves, according to proponents, is how best to grow it when stimulus funds run out later this year.
Mr. Anderson, who said he generally opposes government involvement in the marketplace, agreed that this public-private partnership makes sense.
“If we continue to do this for another half-year or year,” he said, “then I think we are gong to see spin-off. But if I as a private company take my meager ad funds and buy radio and TV, we would not have this type of impact. There are some worthwhile things we just can’t do as a private company.”
Zero-percent financing, which BBFM found to be a strong motivator, requires some sort of government or utility action, ranging from the current program’s interest rate buy down using federal funds, to a locally bonded revolving fund, or direct investments by local utilities. Wherever future financing comes from, however, indications are that it could be fairly risk-free.
Lon Bone, a spokesman for Genisys Credit Union, which is making loans for the targeted BBFM and broad Michigan Saves programs, says his statewide firm likes its new portfolio.
“We love the program,” he said. “It is lowering our members’ utility bills. We have 370 efficiency loans on the books, just under $3 million, with more in the pipeline. And we have not had anybody miss a payment on these.”
Whether Governor Snyder will push for state funding to renew BBFM, expand Michigan Saves, or some other approach, is unknown. Clean energy advocates are awaiting his Special Message to the Legislature about energy; administration officials say that it is scheduled for this fall.
But his comments at the Kushmans’ had a promising tone.
“Energy efficiency is the best place to start,” the governor said, “to see how it can actually help homeowners and people trying to have a great family and career to have more resources. This kind of work does that, and it creates jobs.
“This is something that will spread,” he added. “I hope it spreads around Traverse City, the region, hopefully all across Michigan. Because we all benefit.”
Asked what she would tell Mr. Snyder about BBFM and TC Saves, Elizabeth Kushman was unequivocal.
“The federal incentives, the rebates, they really prompt people to action,” she said. “Stretching the improvements out over four or five years really cuts into their savings. This allowed us to do them all at once, right away, and now we are saving a lot of energy over a longer period of time.
“None of this would have been possible for us without the program,” she emphasized. “It really is a stimulus; it stimulated us to make these investments right now. And we felt really good that we created some work for some people who really need it. This is a stimulus program that led directly to very concrete improvements.”
Jim Dulzo is the Michigan Land Use Institute’s senior editor and writes about energy issues for the organization. Reach him at [email protected].