The program provides low cost and flexible financing for energy efficiency and renewable energy projects to help drive down costs for all eligible Bond Bank borrowers from towns to school districts. Eligible loans must demonstrate a minimum of 5% savings of costs spent on energy and/or total energy use.
The Bond Bank's flexible program can be used for the follow purposes, among others:
- Lighting
- Waste Heat Recovery
- Renewable Energy Systems
- Space conditioning including HVAC
- Compressed Air Systems
- Energy Efficient Appliance Upgrades
- Building Envelope Improvements
- Water Heaters
- Motor Systems
- Fuel Switching
- Necessary and incidental activities and investments related to implementation:
Compatibility with Elective Pay
An eligible use of loan proceeds is the bridging of elective pay credits. The Bond Bank engaged Clifton Larson Allen on a fixed fee basis to assist in the filing of elective pay documentation with the IRS for borrowers.
Loan Process
Contact Vermont Bond Bank loan officer, Ken Linge, to start. Potential borrowers will be invited to apply following a preliminary review of proposed project and/or energy audit.
Loan Specs/FAQs
- Eligible borrowers are governmental units including: cities, towns, schools, villages and various districts
- Voter approval and authority or authorization for special financing of assets under Vermont statute
- Legal opinion from local bond counsel
- Annual report for three years or three years of financial audits (preferred)
- Term of financing must not exceed useful life of asset financed
- Lighting
- Waste Heat Recovery
- Renewable Energy Systems
- Space conditioning including HVAC
- Compressed Air Systems
- Energy Efficient Appliance Upgrades
- Building Envelope Improvements
- Water Heaters
- Motor Systems
- Fuel Switching
- Necessary and incidental activities and investments related to implementation
- Contact the Bond Bank with other potential improvements for review
Loans must achieve measurable energy use or cost savings. The target is 15%, although projects above 5% savings will be considered.
- American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Level 2 energy audit
- Energy savings company (ESCO) projection accompanied by guaranteed energy savings contract
- Deemed savings based on Efficiency Vermont’s Technical Reference User Manual
- Other projects following review and approval by the Bond Bank
| Loan Amount | No limit subject to eligibility |
| Term | Up to 10 years |
| Interest Rate* | 2.125% |
| Closing Costs | Pass through of environmental review cost (approximately $3,000) |
| Payment Dates | Monthly repayment following draw down period |
| Drawdown Period | Up to three months subject to commitment fee for unused balance |
| Prepayment | At any time with no penalty |
| Requisition of Funds |
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| Security | General obligation, revenue bond, and authorization for special financing of assets under statue |
| Legal | Local bond counsel opinion |
| Environmental |
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| Covenants |
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| Credit / Underwriting | Bond Bank undertakes credit review followed by board approval prior to issuing loan |
| Other | Contractors must provide an equal opportunity and nondiscrimination certificate |
| * Evaluated monthly based on underlying market conditions |
Approved Loan Bond Counsels
Local bond counsel serves a critical role in confirming the legality of our borrower’s debt issuance. Early engagement of local counsel will ensure that they will be able to provide a preliminary legal opinion alongside a loan application to the Bond Bank. Legal opinions for the Bond Bank require specialized firms that must first be pre-approved.
Energy Program Case Study
The Bond Bank has helped Vermont communities for decades with fuel switching and other energy efficiency programs. See below case study for information on how this experience was put to use with the low cost financing available under the Energy Efficiency and Renewable Energy Program.
