Helena homeowners who are interested in installing alternative energy systems will be able to borrow up to $12,000 from a newly created city fund.
City Manager Ron Alles said about a month will be needed to create the paperwork that will be needed to apply for loans.
He also noted he anticipated advertising the program once it's available, which could be mid-November.
The city’s resolution that created the program called for a 10-year repayment plan through property tax bills although loans would come with no interest.
Loans will be made for the purchase and installation of energy efficiency upgrades and renewable energy systems by residential property owners. Residential property is defined as three dwelling units or less on a city lot.
While an array of energy efficiency upgrades is listed in the resolution, such as solar photovoltaic systems, wind turbines and ground-source heating, the city manager has authority to approve the use of the program’s funds for other upgrades that meet the intent of the resolution.
However, the resolution specifically excludes funding the purchase of energy-saving appliances.
The commission’s action on Monday to create the program tapped the city’s share of a statewide telecom tax settlement for the $200,000 that funds the program.
Use of this money prompted Commissioner Dan Ellison to dissent in the 4-1 vote creating the program.
Ellison said that when the commission was initially advised of the tax settlement, both he and Mayor Jim Smith favored a discussion on the disposition of the funds that began with the city departments that would have received the funds had they not been withheld through the tax protest.
Helena received about $1.94 million in 2014 as its share of the settlement, and the commission began planning how to allocate the money.
Some of it is being directed toward railroad crossing improvements that will eliminate the need for trains passing through town to use their horns. Some is being put toward future replacement of city equipment and facilities.
The city has been challenged lately to find money for all of its needs.
Before Tim Magee retired as the city’s administrative services director, he noted in June that the city had only $525,400 available to fund slightly more than $4 million in this year’s scheduled replacement of equipment and facilities as proposed by the city’s comprehensive capital improvement program.
The commission was advised a year ago that there are more than $18 million's worth of failed streets in Helena requiring reconstruction. When the cost for curbs and gutters is included, the cost exceeds $24.6 million.
Using the tax settlement money to fund the loan program concerned Ellison, who said, “We’re diverting $200,000 tonight away from police, fire and parks.”
He later said he supported the program and applauded Commissioner Andres Haladay for proposing it, although he remained opposed to funding it through the telecom tax settlement.
“I just wish we could have found a different funding source,” Ellison said.
Commissioner Matt Elsaesser explained his support for the alternative energy loan program, saying it is a community investment, and energy represents a large cost for many households.
Commissioner Katherine Haque-Hausrath said the loan program was both good for the environment and makes good financial sense.
Smith, who had sought support for a new parks department maintenance building, seemed resigned to the commission’s direction and said he was going to trust the process and the commission.
Haladay defended the program and said it will be another attribute that will give Helena recognition and be a selling point for the city.
Ben Brouwer, policy director for the Montana Renewable Energy Association, said on Tuesday that he recalculated what a $12,000 loan through the city program would purchase compared to what he told the city commission during its public comment period on the resolution.
His calculations, he wrote in an email, are estimates and system costs and outputs are based on a long list of variables.
A federal tax credit program, which sunsets at the end of 2016, currently provides a 30 percent tax credit toward the purchase of a system and the state of Montana offers a tax credit of up to $1,000, Brouwer said.
The installed costs of a 4.9 kilowatt solar system would be $18,375. This is using an average installation cost, although ground-mounted systems are more expensive than mounting the system to a home’s roof, he said.
When the tax credits are applied to the total cost, the actual cost to the homeowner for the solar system is $11,863, Brouwer said.
The average monthly solar output from the system is figured at 530 kilowatt hours, he said, noting that a typical NorthWestern Energy customer uses, on average, 750 kilowatt hours a month.
In figuring the payback for the investment, Brouwer said he assumed a 0.6 percent annual increase in energy prices, which comes from the U.S. Department of Energy.
Also factored into his calculations is a 0.5 percent loss of solar panel efficiency annually, he added.
Another factor in determining how long a system takes to pay back its cost is the home’s increase in value by adding a solar system.
According to the Department of Energy, a solar system increases a home’s value by $14,700, he said.
That 4.9 kilowatt solar system, he said, would pay for itself in 15 to 16 years and have a life expectancy of typically 25 years.