The Farmers Home Administration, an Agriculture Department agency that makes low-interest loans for construction projects in rural areas, is refusing to help finance solar energy systems on the grounds that they are still too experimental. The agency's stand comes at time when the carter administration is working to promote the use of alternative forms of energy.
The Department of Housing and Urban Development, through the Federal Housing Administration, and the Veterans Administration have been helping finance solar heating projects since 1975. But Farmers Home Administrator Gordon Cavanaugh said his agency is precluded from financing solar systems because they are not covered by Federal Housing Administration's minimum property standards, the quidelines used to qualify projects for federal mortgage insurance and public housing assistance.
These standards include specifications for insulation, site design, room size, materials, construction methods and heating systems.
The Farmers Home Administration makes low interest loans for public or non-profit construction projects in rural areas. They review about 200,000 requests a year, granting $5.4 billion in loans for construction or repair of anything from courthouses to farmhouses.
In Maryland alone, FmHA in the past year funded 2,452 projects with $65.9 million.
But none of it has financed solar energy systems. In April, FmHA Maryland state director Morris Monesson rejected an application for a solar loan for the Calvert County Nursing Center. Monesson's letter stated, "Present policy, nationally, does not permit the use of either FmHA loan funds or FmHA grant funds for the purpose of constructing solar systems."
Characterizing solar systems as "innovative," he continued, "Our loan and grant authorities were not intended for such uses." Monesson said solar hot water and space heating systems fall into a research and development category as far as "their cost effective feasibility is concerned," which disqualifies them for financing consideration.
Several years ago, HUD put out a preliminary report on solar energy systems and in early 1975, FHA began making solar loans based on that report. Last year HUD issued an interim report, and FHA field offices were told they could rule directly on solar hot water system applications without higher approval, using the interim study. HUD's final supplemental report is due to appear in the Federal Register within a month.
To date, FHA has approved the 75 to 85 requests it received in Florida for solar hot water system loans, along with three homes with solar water and space heating systems in California and two projects, involving 60 units, in Hawaii.
The VA has approved at least 100 loans for purchases of homes with solar hot water systems in the "Sunbelt" stretch of the South and [WORD ILLEGIBLE] 18 loans for solar space heating have been made in Denver.
Despite the fact that FHA and VA are reviewing solar loan applications about the early reports, Farmers Home officials maintain that there are insufficient guidelines to protect the public.
In correspondence with applicants for such loans, FmHA officials have characterized solar energy systems as "experimental" and "innovative," and had turned the applications down.
When told of the FmHA policy, David freeman of the White House Energy Office said the situation would be investigated. While "we don't dictate agency activities," he said, "We are going to stamp out the obstacles (to the Carter energy program) as they are discovered."
One Farmers Home official told an applicant that if he could afford an innovative system like solar, heating, it was an indication that the applicant didn't need FmHA funds.
Jennings Orr, the Farmers Home Administration's deputy assistant administrator for housing programs, contends that his agency's loans "are only for low and moderate-income families. Solar equipment is expensive," he said. "As such it is not appropriate for this type of housing."
Low- and moderate-income familes, however, are least able to cope with rising energy bills from conventional systems.
FmHA policy is somewhat more liberal on solar systems for institutions. The agency claims that any institutional solar project that is proven, workable, economically feasible and meets state engineering standards can qualify for a loan.
In order to prove economic feasibility, the project must be proven to be cost effective. That is, it must be able to pay for itself over the life of the mortgage. And it must have a useful life equal to the length of the mortgage.
To show that it is a workable system, there must be a similar project in the same general climatic area which can provide data for FmHA to compare and analyze, according to Monesson. Then the agency's solar consultant must approve the project.
To data no application has been processed as far as the national office, much less approved.
The Quaker-run Friends Home in Sandy Spring, Md., is still fighting to win approval of its solar heating plan. Sen Charles Mathias (R-Md.) and his staff have gone to work to help get approval for the nursing home expansion.
In a letter to the architect for the projects, W. McNeill Baker of Edmunds and Hyde in Baltimore, acting administrator Denton E. Sprague wrote: "We have no authorization . . . to use community facility loan funds for experimental projects."
An FmHA official said the agency is involved in several solar projects on an experimental or demonstration basis. But while FmHA has made loans to some projects that have solar hot water or space heating systems with conventional back-up systems, all the funding for the solar hardware has come from sources other than FmHA.
One, in Quakerstown, Pa., is still under construction. It is a 152-unit senior citizens housing complex of rental apartments. Fifty of these units are to be heated (water and space) with solar systems. The solar hardware is funded by the Energy Research and Development Administration and the Pennsylvania Department of community Affairs.
Another solar project in Greeley, Colo., has been completed. It is a low-income, self-help (labor furnished by the owner) housing project with 22 single-family homes using solar space heat with back-up forced air heat. The money for the solar equipment came from the Community Services Administration and the Colorado Division of Housing.
Orr insists that Farmers Home "has a positive attitude toward these systems and hopes to finance them in the future." But Orr said that won't be until solar has passed the experimental stage.
In contrast, HUD is making a concerted effort to promote solar systems. Memos have been sent to all field offices alerting them to the new emphasis on solar energy.
FHA is sending its employees to school in groups of 50 to learn about solar systems. As their training is completed, field officers are permitted to make final decisions on all solar systems without review by the national office.