Innovative Program Encourages Savings for Energy Efficiency Improvements and Home Maintenance

July 10 , 2006—When energy prices rise, low-income homeowners are hit the hardest. They must devote a higher percentage of their already-stretched incomes to utility bills than homeowners who earn more. As a result, these cash-strapped homeowners may not be able to afford home maintenance expenses or improvements to increase energy efficiency. The higher utility bills, as well as the unexpected and expensive repairs that often result from neglected home maintenance, leave these homeowners with even heavier financial burdens and at greater risk of losing their homes to foreclosure.

An innovative program created by Neighborhood Housing Services of New Haven, Connecticut, a member of the NeighborWorks® network of community development organizations, seeks to prevent low-income homeowners from getting caught in this vicious cycle. The organization was awarded a $300,000 grant from the State of Connecticut to fund a new initiative, the Home Maintenance and Energy Conservation Individual Development Account (IDA) program, developed through the Connecticut Housing Trust Fund.

NHS of New Haven’s program will provide matching funds of up to $10,000 to new homebuyers and existing homeowners in New Haven who make less than 120 percent of the area median income (with a special set-aside for very low income families). The funds provided by NHS of New Haven must be used for home maintenance expenses or energy conservation measures. Additional funds are available through the state of Connecticut’s low-interest energy conservation loan program.

“There are too many people who can’t afford to make their homes energy-efficient or to properly maintain their homes,” said Jim Paley, executive director of Neighborhood Housing Services of New Haven. “Here’s an opportunity for people to save money and to get that money matched dollar-for-dollar.”

NHS of New Haven’s program might be the first of its kind in the country. “We don’t know of any other IDA programs that work with existing owners,” said Paley. Most IDA programs are set up to support low-income families who are saving to purchase their first home. New Haven’s program supports existing homeowners who, due to rising energy prices, may be having serious problems paying to heat their homes in the winter while remaining current on their mortgages. New homebuyers who participate in the program will receive matching funds to help undertake necessary repairs and energy conservation measures prior to moving in.

The program is set up to encourage homeowners to create a habit of saving money—as Paley says, “it’s not for those seeking immediate gratification.” After participating in the program for 18 months, the homeowners will receive matching savings. Paley estimates that participants will participate in eight to 12 hours of post-purchase education while in the program.

“As an IDA program, we are interested in developing lasting savings habits that will continue well past the period of being awarded matching funds for undertaking the work that will be sponsored by this program,” said Paley. “I am extremely excited about this innovative program, and I believe that it could possibly become a model for other NeighborWorks programs and community development organizations all across the country.”