Reinventing The WHEEL: How Securitization Can Bolster The Market For Residential Energy Efficiency Loans

Currently, one of society’s greatest goals is the reduction of greenhouse gases. This goal is generally accepted worldwide, as evidenced by the Paris Climate Agreement, the parties to which agreed to establish frameworks for adopting clean energy and reducing greenhouse gases. After the United States’ controversial decision to withdraw from the Paris Agreement, the federal government’s future in reducing greenhouse gases remains uncertain. Despite this setback, there are existing programs aimed at reducing greenhouse gases in the United States that the government should ensure succeed. One such program is the Warehouse for Energy Efficiency Loans (“WHEEL”). WHEEL operates as a multistate public-private partnership, sharing resources to provide “unsecured loans to single-family homeowners with credit-score based underwriting and public credit enhancement.” WHEEL’s goal is to “increase the rate of retrofitting of the nation’s single family housing stock” in order to bolster home efficiency and thus reduce greenhouse gases. Such retrofitting includes the replacement and upgrade of energy-efficient heating and cooling systems. To achieve this, WHEEL relies on securitization, tapping into the secondary markets to bolster investments in residential energy efficiency loans. Despite the benefits of WHEEL, the program has been slow to launch. One major problem hindering WHEEL’s potential is the Credit Risk Retention Rule (the “Rule”) promulgated under Section 15G of the Securities Exchange Act of 1934. The Rule requires WHEEL sponsors to maintain a 5% minimum credit risk interest in any asset they convey to a third party. As a result of this requirement, private WHEEL sponsors will stop providing capital, due to increased risk exposure, and public WHEEL sponsors will continually use their Program Income from WHEEL to ensure that they have adequate capital to meet the risk-retention requirement. This will hinder the growth of energy efficiency loans because WHEEL sponsors would otherwise be able to recycle program income back into WHEEL, ultimately growing the program. Loans secured under the WHEEL program should be exempted from recent Dodd-Frank Risk Retention requirements for three main reasons: (1) WHEEL does not require an additional monitoring incentive; (2) WHEEL meetsthe rationale for exemption under 15 U.S.C. § 78o-11(e)(2); and (3) advanced institutional investors do not require additional protection

Reinventing The WHEEL: How Securitization Can Bolster The Market For Residential Energy Efficiency Loans

Currently, one of society’s greatest goals is the reduction of greenhouse gases. This goal is generally accepted worldwide, as evidenced by the Paris Climate Agreement, the parties to which agreed to establish frameworks for adopting clean energy and reducing greenhouse gases. After the United States’ controversial decision to withdraw from the Paris Agreement, the federal government’s future in reducing greenhouse gases remains uncertain. Despite this setback, there are existing programs aimed at reducing greenhouse gases in the United States that the government should ensure succeed. One such program is the Warehouse for Energy Efficiency Loans (“WHEEL”). WHEEL operates as a multistate public-private partnership, sharing resources to provide “unsecured loans to single-family homeowners with credit-score based underwriting and public credit enhancement.” WHEEL’s goal is to “increase the rate of retrofitting of the nation’s single family housing stock” in order to bolster home efficiency and thus reduce greenhouse gases. Such retrofitting includes the replacement and upgrade of energy-efficient heating and cooling systems. To achieve this, WHEEL relies on securitization, tapping into the secondary markets to bolster investments in residential energy efficiency loans. Despite the benefits of WHEEL, the program has been slow to launch. One major problem hindering WHEEL’s potential is the Credit Risk Retention Rule (the “Rule”) promulgated under Section 15G of the Securities Exchange Act of 1934. The Rule requires WHEEL sponsors to maintain a 5% minimum credit risk interest in any asset they convey to a third party. As a result of this requirement, private WHEEL sponsors will stop providing capital, due to increased risk exposure, and public WHEEL sponsors will continually use their Program Income from WHEEL to ensure that they have adequate capital to meet the risk-retention requirement. This will hinder the growth of energy efficiency loans because WHEEL sponsors would otherwise be able to recycle program income back into WHEEL, ultimately growing the program. Loans secured under the WHEEL program should be exempted from recent Dodd-Frank Risk Retention requirements for three main reasons: (1) WHEEL does not require an additional monitoring incentive; (2) WHEEL meetsthe rationale for exemption under 15 U.S.C. § 78o-11(e)(2); and (3) advanced institutional investors do not require additional protection

Application Of Alternative Hydrograph Separation Models To Detect Changes In Flow Paths In A Watershed Undergoing Urban Development

Runoff characteristics in a low-gradient central-Florida watershed were analysed using environmental δ18O and a series of conservative-tracer mass-balance models applied to a storm event (109 mm over approximately 30 h) monitored in May and June 1993 on the Econlockhatchee River, Florida. The assumption of steady-state conditions implicit in the widely used two-component mixing model was tested by applying steady-state and non-steady-state models for a subcatchment (215 km2) of the river. Both models indicated that about 76% of the resulting river flow was composed of pre-storm water. A third mass-balance model (steady-state) was developed to separate pre-storm from storm-event runoff over a discrete reach of the river, which had a contributing area of 135 km2. This model indicated that approximately 47% of the water entering the reach could be attributed to pre-storm water. The greater proportion of event water entering the reach was attributed to suburban development in the watershed and indicates that urbanization in watersheds not only affects the timing, peak and total runoff, but also may change flow-paths for runoff, and may significantly affect downstream water quality. Copyright (C) 2000 John Wiley and Sons, Ltd