Michigan Saves president and CEO Chanell Scott Contreras is putting her extensive knowledge of financing and economic equity to work helping community lenders strengthen their green lending programs. In this transformative time of Michigan’s clean energy ecosystem, Scott Contreras, as head of the nation’s first nonprofit green bank, is leading the sustainability caravan, guiding clean energy resources to the underserved communities and people most affected by the climate crisis.
How can Michigan’s lenders fully harness the financial power of the Clean Communities Investment Accelerator (CCIA) program? Scott Contreras explains.
Tell us about your background with community development financial institutions (CDFIs) and the work you’ve done in the community lending environment.
I came to Michigan Saves after working for several years with ProsperUs Detroit, an organization that I helped to spin off into the first Black-led CDFI in Michigan.
ProsperUs Detroit advances economic equity by supporting underrepresented entrepreneurs with opportunities and capital to build businesses, generational wealth, and vibrant neighborhoods. As executive director, my experiences ranged from mobilizing community development partnerships to creating public-private coalitions to securing funds from national donors and delivering microloans.
Just as in business, where systemic issues prevent some entrepreneurs from meeting the requirements of traditional lenders, many homeowners who want to “go green” are left out of the traditional financing system. There are so many people in underrepresented communities who are concerned about the climate crisis and want to support climate resilience by upgrading their houses with electric appliances or HVAC, or energy efficient roofing and siding, who are left out of the equation because of the systemic issues and lack of financing for green projects in their community.
The CCIA brings us halfway to financing projects for those who have previously been ignored or shut out of mainstream financing for clean energy projects. It’s now our turn to grab the baton and help credit unions (CUs), CDFIs, and other community lenders distribute these resources in ways that ensure energy financing is available for everyone.
Why should community lenders get involved with green lending programs?
Community lenders, like CDFIs and CUs, are mission- or member-driven institutions that are committed to providing financial services to uplift their communities. Clean energy lending is another great way for these institutions to meet their missions.
Thanks to the United States Department of Energy, we know that households in low-income communities spend a disproportionate amount of their income on utility bills. This “energy burden,” can significantly reduce a household’s disposable income and ability to afford other basic needs. But with the CCIA and other rebates from the Inflation Reduction Act, community lenders can offer loans with monthly payments lower than the projected energy savings from upgraded utilities. This lowers the energy burden for participating households and means fewer households having to make choices between things like food or hot water.
Besides utility savings, people often also overlook the health benefits of clean energy lending. Increased energy efficiency in our communities helps reduce our need for fossil fuel-based electricity, which reduces the number of harmful pollutants in the air. Energy efficient homes with proper ventilation have better air quality and temperature regulation, leading to healthier residents with lower incidences of heat, respiratory, and allergy conditions.
What concerns do CUs, CDFIs, and other community lenders have about financing clean energy projects or creating green products?
With recent shakeups in financial markets, like the collapse of Silicon Valley Bank and rising interest rates, continued access to affordable capital and borrowers’ ability to repay are on everyone’s mind. CUs and CDFIs might wonder where they can source the capital necessary to integrate clean energy products into their portfolio—and keep rates reasonable enough to serve low-income and disadvantaged communities. Fortunately, the CCIA and the National Clean Investment Fund (NCIF)—two core programs within the Greenhouse Gas Reduction Fund—can help with this.
Community lenders concerned about capital need to know that they can now receive up to $10 million in funding from the CCIA. They also need to know that the national institutions that receive part of the $14 billion NCIF are required to work with CCIA recipients to provide continued liquidity. Some NCIF applicants, for example, are proposing a national green bank that can work to standardize CCIA products, and then bundle and sell them into secondary markets. The national green bank would take on this burden so individual community lenders can continue to do what they do best, which is uplift their communities.
Along with lending capital, other Inflation Reduction Act programs are providing a significant amount of technical assistance to community lenders. Organizations like Michigan Saves, other CDFI and CU networks, or the national green bank can help coordinate and centralize procuring the necessary software to implement these loans and fulfill the reporting requirements to the Environmental Protection Agency. Additionally, community lenders can receive up to $1 million from the CCIA to help fund their technical assistance needs, including staffing.
Hopefully, these programs will ease any administrative burden that community lenders are worried about.
What makes now a crucial time to consider green lending programs?
As we discussed in our previous posts, the CCIA has the potential to transform the green lending ecosystem for Michigan’s community lenders. The Inflation Reduction Act is an unprecedented federal investment in equitably transitioning the United States to a clean energy economy. Between the immediate need to limit the planet’s warming and these federal funding opportunities, the better question is—if not now, when?
How does working with Michigan Saves make life easier for CUs and CDFIs, especially related to the CCIA funds?
The CCIA gives CUs, CDFIs, and other community lenders a unique responsibility to ensure these funds are spent in, and lent to, the communities that need them most. How do these financial institutions quickly build the capacity to handle this historical federal investment, develop specific financial products and programs, and keep an eye on making bigger changes for the environment and community members?
By partnering with Michigan Saves.
We are here to use our experience and expertise to help you avoid the pitfalls and the uncertainty of trying to start these programs on your own. Even before the CCIA, Michigan Saves was dedicated to supporting accessible, equitable, and just investments in carbon reduction strategies throughout Michigan. With over a decade of experience, we’ve built a solid reputation of helping CUs, CDFIs, and other community lenders optimize their programs with our network of experienced contractors, a loan loss reserve, project management software and support, and reliable relationships with other state and national organizations. We know the obstacles you face and the goals you want to reach—join us as we work together to strengthen Michigan’s communities with this influx of equitable green lending.
 U.S. Office of State and Community Energy Programs. n.d. “Low-income Community Energy Solutions.” Energy.gov. Accessed November 29, 2023. https://www.energy.gov/scep/slsc/low-income-community-energy-solutions#:~:text=Energy%20burden%20is%20defined%20as,which%20is%20estimated%20at%203%25
 American Council for an Energy-Efficient Economy (ACEEE) and Physicians for Social Responsibility (PSR). n.d. Energy Efficiency and Health. n.p.: ACEEE and PSR. Accessed November 29, 2023. https://www.aceee.org/sites/default/files/ee-health-1008.pdf
 U.S. Office of Energy Efficiency & Renewable Energy. n.d. “Health and Safety Benefits of Clean Energy.” Energy.gov. Accessed November 29, 2023. https://www.energy.gov/eere/health-and-safety-benefits-clean-energy
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