Local Option - Municipal Alternative Energy Revolving Loan Program

Summary

Ohio enacted legislation (S.B. 232) in June 2010 that authorizes cities and counties to establish revolving loan programs to finance renewable energy and energy efficiency projects that are permanently affixed to residential, commercial or other real property. A revolving loan program generally refers to a loan fund, where the loan repayments and interest are fed back into the fund. In this way, the loan can, in theory, continue indefinitely. By law, the resulting loan programs may only charge interest rates below the prevailing market rate.

SB 232 allows municipalities to establish an alternative energy revolving loan program that assists property owners (not just residents) with installing on their property:

1. Solar photovoltaic projects, solar thermal energy projects, geothermal energy projects and customer-generated energy projects (wind, biomass or gasification facilities for the generation of electricity)
2. Energy efficiency technologies, products and activities that reduce or support the reduction of energy consumption, allow for the reduction in demand or support the production of clean, renewable energy

Municipal Ordinance Procedure
In order to establish an alternative energy revolving loan program, a municipality needs to adopt an ordinance that:

1. Creates an alternative energy revolving loan fund in the municipal treasury
2. Provides a source of money to seed that fund
3. Establishes facilities criteria, procedures and terms and conditions for making loans from that fund
4. Specifies that property owners may repay loans in installments, which may be paid and collected as if they were special assessments; specifies that loan repayments and investment earnings are credited to that fund
5. Establishes other measures that are necessary for the proper operation of the program to encourage alternative energy and energy efficient technologies

Alternative energy revolving loan programs must submit a quarterly report to related distribution utilities detailing loan supported energy projects and provide additional information as necessary for utilities to count energy efficiency and demand reduction credits.