Title 9 Part 7910

This Part establishes the rules governing the Energy Investment Loan Program. The program provides interest subsidies and loan guarantees on loans written by financing institutions for eligible energy conservation improvements. The sectors served by the program are commercial and industrial businesses, pursuant to Energy Law, section 5-127, and multifamily housing buildings and agri-businesses, pursuant to chapter 645 of the Laws of 1986.

The amount of the interest subsidy shall be the difference between the total interest due on a program loan over the life of the loan, calculated at the financing institution's lending rate at the time of closing, and the interest due on such loan over such period, calculated at the program rate, multiplied by a fraction equal to the subsidy period divided by the life of the loan. The total amount of the interest subsidy will be discounted to reflect the payment of interest subsidies in advance of their becoming due.

For variable rate loans, the amount of the interest subsidy will not change during the term of the loan, regardless of fluctuations in the financing institution's lending rate on that loan, except in cases where the financing institution's lending rate drops to a level where the interest subsidy would result in the approved applicant receiving a negative net interest rate. In such cases, the amount of the interest subsidy will be reduced accordingly.

Interest subsidies will be limited to a period of 10 years or the life of the loan, whichever is less.

The initial program rate will be five percent for all program loans. At the end of three months following the effective date of this Part and from time to time thereafter, the program rate will be reviewed by the commissioner and may be changed for new loans being issued under the program in accordance with subdivision (f) of this section.

At the discretion of the commissioner, the program rate may be adjusted, and different program rates may be established for different sectors or audiences, to reflect market changes, loan demand, and the possible need to stimulate participation in the program by certain audiences. Revised program rates will be at least 25 percent below the prime interest rate. Notice of any revised program rates will be published in the State Register.

The following are eligible to participate in the program:

An energy conservation improvement project must:

In addition to meeting the requirements of subdivision (a) of this section, the following special provisions shall apply:

Submetering projects are eligible energy conservation improvements.

The following energy conservation improvements are not eligible for interest subsidies:

An energy audit or technical feasibility study must have been performed or updated within one year of the date of submission of a program application to the Energy Office. Updates need address only energy conservation improvements for which a interest subsidy is being requested. Updates must include a recalculation of the paybacks of the original energy audit's or technical feasibility study's proposed energy conservation improvements, based on current fuel costs.

Energy audits which will be accepted by the Energy Office include Energy Office-sponsored audits, apartment building conservation service audits, other government-sponsored and utility company energy audits as approved by the Energy Office, and private audits stamped with the seal and signature of a registered architect or professional engineer.

Technical feasibility studies must be prepared under the supervision of and stamped with the seal and signature of a registered architect or professional engineer in order to be accepted by the Energy Office.

An energy audit or technical feasibility study must contain the following information regarding each energy conservation improvement for which an interest subsidy is being requested:

The interest rates on loans proposed to be made by a financing institution shall be reviewed by the Energy Office. The Energy Office, in its discretion, may refuse to issue interest subsidies on loans which are proposed to be made at rates determined by the Energy Office to be unreasonably high after considering prevailing market rates, interest rates on other program loans, and the class of the loan.

Program loans shall contain one of the following types of payment schedules:

Payment of the loan, including principal and interest, is made in equal installments.

The Energy Office, in its discretion, may agree to issue interest subsidies on loans which contain alternative payment schedules. Interest subsidies on loans with althernative payment schedules shall be calculated in accordance with section 7910.3(c) of this Part.

Applicants may apply for interest subsidies under the program in connection with more than one eligible building. The total of all loans subsidized under this program for any single applicant may not exceed $1 million; provided, however, that any amount in excess of $500,000 must be attributable to the implementation of an onsite power production project.

For construction loans in which the principal amount is paid to the applicant by the financing institution in installments as work progresses, the interest subsidy will not be paid for any period of time prior to the payment by the financing institution of the final installment.

Work on energy conservation improvement projects which receive an interest subsidy must be completed within six months of the program loan closing. The Energy Office may extend this period on a case-by-case basis where the applicant has demonstrated reasonable cause for the delay.

Program loans shall be made by a financing institution only after the applicant and financing institution receive written notification from the Energy Office approving both the application and the terms of the financing institution's loan commitment, and stating the amount of the interest subsidy which will be paid by the Energy Office.

The commissioner may, in his discretion, use monies appropriated to the program for the purpose of providing principal reductions on program loans, where the terms and conditions applicable to such appropriated funds allow for such use.

Except as otherwise provided for in this subdivision, where a borrower defaults on a program loan, interest subsidies will be terminated and any interest subsidy payments being held by the financing institution will be returned to the Energy Office. The financing institution shall notify the Energy Office of the default within 30 calendar days of its occurrence. The Energy Office may, in its discretion, authorize the financing institution to continue to receive interest subsidies on behalf of the borrower for an agreed-upon period of time while the financing institution works out a revised payment schedule with the borrower. If continued interest subsidies are authorized by the Energy Office and loan payments are not resumed by the borrower within 90 days of the initial default, then all subsidy payments will be terminated immediately. Where a new payment schedule is established between the banking organization and the borrower within the designated time period, the total interest subsidy originally approved by the Energy Office will remain unchanged. However, the Energy Office may establish a revised schedule of interest subsidy payments on behalf of the borrower.

In the event of the prepayment of a program loan, the financing institution will be required to promptly return any unapplied portion of the interest subsidy being held by the financing institution to the Energy Office.

The applicant shall promptly provide written notice to the Energy Office of any changes in energy conservation improvements to be implemented which differ from the program application submitted to the Energy Office. Loan subsidies will not be provided by the Energy Office unless such changes are approved by the Energy Office.

The applicant shall promptly provide written notice to the Energy Office of any change in the cost of an energy conservation improvement project which differs from the selected contractor's cost estimate, or the applicant's schedules and selected estimate in the case of an in-house project submitted to the Energy Office, by either more than 10 percent or $20,000. Based on such changed costs, the Energy Office may adjust the interest subsidy as follows:

The approved applicant shall promptly provide written notice to the Energy Office of its receipt of a financial incentive from its utility company for the energy conservation improvements funded under this program. The amount of any incentive received shall be deducted from the project cost to arrive at a net project cost, and the amount of the interest subsidy shall be recalculated based on the net project cost.

The Energy Office, in addition to any other rights and remedies it may have pursuant to law, may instruct the financing institution to withhold, rescind, or adjust payment of an interest subsidy or any portion thereof for good cause. As used in this section, the term good cause shall include, but not be limited to, the following:

The approved applicant must use the program loan proceeds to finance the implementation of the energy conservation improvement projects approved by the Energy Office.

The approved applicant must complete the approved energy conservation improvement project within six months of the program loan closing. The Energy Office may extend the deadline for completion of the project where the applicant has demonstrated reasonable cause for the delay.

Within 45 days of completion of the energy conservation improvement project, the approved applicant must provide the Energy Office with a certificate of completion signed by the approved applicant and the contractor certifying that the energy conservation improvement project was completed in accordance with the descriptions and cost estimates provided to the Energy Office.

The approved applicant must provide the Energy Office, or its designated agents, with reasonable access to the project site before, during, and after the construction phase of the energy conservation improvement project in order to monitor and inspect the work being undertaken with the program loan proceeds.

The approved applicant must perform all work in compliance with all applicable Federal, State, and local laws, rules and regulations. Prior to the commencement of work, the approved applicant must obtain all permits, certificates and approvals which may be required in connection with the performance and completion of the work.

The approved applicant must retain for a period of three years after the date of closing on the program loan all cancelled checks, receipts, and contracts used in connection with the work on the energy conservation improvement project, and must produce them at the request of the Energy Office for the purpose of verifying the cost of the energy conservation improvement project.

If the approved applicant fails to comply with the requirements of this Part, the approved applicant may be disqualified from participating in the program and may be required to reimburse the Energy Office for all or a portion of the interest subsidy which the Energy Office determines has been applied against the approved applicant's program loan.