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MUNICIPALITIES: KEY MUNICIPALITIES: KEY PLAYERS FOR INNOVATIVE PLAYERS FOR INNOVATIVE FINANCING PROGRAMSFINANCING PROGRAMS
(514) 504-9030 | www.dunsky.cawww.dunsky.ca
(514) 504-9030 | [email protected]
Bruno Gobeil, Senior ConsultantDUNSKY ENERGY CONSULTING
5th Annual GeoExchange Technical & Policy ForumCanadian Geoexchange Coalition
December 8, 2011
DUNSKY CLIENTÈLEDUNSKY CLIENTÈLE (samples from among >100 clients)(samples from among >100 clients)
(514) 504-9030 | www.dunsky.ca | page 2
GEOGRAPHICGEOGRAPHIC
�� Canadian emphasisCanadian emphasis
�� CoastCoast--toto--coast coveragecoast coverage
�� Substantial U.S. as wellSubstantial U.S. as well
ORGANIZATIONSORGANIZATIONS
�� Electric / Gas Electric / Gas UtilitiesUtilities
�� Dedicated EE/RE Dedicated EE/RE AgenciesAgencies
�� Government Government departmentsdepartments
�� Associations Associations & stakeholders& stakeholders
ENERGY MIXENERGY MIX
�� HydroHydro--dominateddominated
�� FossilFossil--dominateddominated
�� Mixed fuelMixed fuel
RATIONALE FOR FINANCING RATIONALE FOR FINANCING INITIATIVESINITIATIVES
� Unprecedented energy saving goals
� e.g. ~25% by 2020 in Ontario (peak demand)
� Unprecedented level of capital required
� Incentive programs alone insufficient
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� Incentive programs alone insufficient
� Innovative financing solutions needed in the toolbox
� One financing option
� Property tax assessment financing
QUESTIONSQUESTIONS
� How does the property tax assessment financing work?
� What are the benefits for building owners and municipalities?
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municipalities?
� Where such financing scheme has been implemented?
� How these financing schemes were designed? Examples?
HOW DOES IT WORK?HOW DOES IT WORK?
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Municipality - Owner Agreement
• Voluntary Participation
• Owner: implement
• Municipality: finance
• EE/RE Measures
• Energy Star Windows, insulation, GSHP, solar …
EE/RE Measures Financed
• Municipal options to raise funds:
• Bonds, partnership w/ banks, reserve losses ...
• Verification that owner paid property taxes
• Owner installs measures
Owner Pays Back Municipality
• Repayment via property tax (up to 20 years)
• Verification that measures are installed (inspection, receipts)
BENEFITS TO OWNERS?BENEFITS TO OWNERS?
� Investment in EE/RE even if sale planned in short term
� Financing tied to property and transferable
� Payback within 1 year
� Energy cost savings > Increase in property tax
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� Energy cost savings > Increase in property tax
� Better financing conditions
� Longer period and lower borrowing rate
� Increase in comfort
� Raise property value (mid to long-run)
BENEFITS TO MUNICIPALITIES?BENEFITS TO MUNICIPALITIES?
� Stimulate local economy « green jobs »
� Contribute to EE targets and GHG reduction
� Demonstrate environmental leadership
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Demonstrate environmental leadership
� Improve quality of life
� Expand revenue base (mid to long-run)
� Higher value of retrofitted properties
WHERE HAS IT BEEN WHERE HAS IT BEEN IMPLEMENTED?IMPLEMENTED?
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• In place (EUA): Melbourne, Sydney
• Under consideration: other towns
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• Pilots underway (PAYS): Birmingham, Sutton, Sunderland, Stroud, Surrey, Sussex
• Under consideration: other towns
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• Under consideration: other towns
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• Legislations adopted in 27 states (PACE): California, New York…
• FHFA 2010 directives brought PACE residential programs to standstill (seniority of lien, risks)
• Programs gradually reintroduce as states address FHFA concerns
• Pilot underway: Vancouver • Pilot under development: Halifax• Under consideration: Toronto, Ottawa, NFLD
HOW THESE FINANCING SCHEMES HOW THESE FINANCING SCHEMES
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3 examples …
HOW THESE FINANCING SCHEMES HOW THESE FINANCING SCHEMES WERE WERE DESIGNED?DESIGNED?
1) COMMUNITY SOLAR 1) COMMUNITY SOLAR PROJECTPROJECT
� Pilot goal
� 500-700 homes with hot water solar systems (HWS)
� Fund
� ~ 5 M$ budget financed through various means (under
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� ~ 5 M$ budget financed through various means (under
consideration)
� Preferred loan
� Loan conditions/terms under development
� Note: grants from various programs would be integrated to
the extent possible
1)COMMUNITY 1)COMMUNITY SOLAR SOLAR PROJECTPROJECT
Fund Project
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HOMEOWNERHALIFAX CITY Repayment via Property Tax
Loan Fund
2) HOME ENERGY LOAN 2) HOME ENERGY LOAN PROGRAMPROGRAM� Pilot goal
� 500 homes retrofitted through ecoENERGY audit process
� Funds
� Loan: Vancouver City Savings Credit Union (Vancity) = 5 M$
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� Loan loss reserve: Vancouver City = 500 k$, Vancity Foundation = 1 M$
� Preferred loan
� Vancity: 10-yr term, 4.5% interest rate, 4-16 k$/home
� Eligible measures: EE only (GSHP excluded)
� Note: grants from ecoENERGY and LiveSmart BC for EE and RE measures still accessible
VANCITY
2) HOME ENERGY LOAN 2) HOME ENERGY LOAN PROGRAMPROGRAM
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HOMEOWNERVANCOUVER
CITYRepayment
via Property Tax*
* Collection is junior to other debts
3) GREEN FINANCE PROGRAM3) GREEN FINANCE PROGRAM� Full scale program launched after pilot (Oct 2011)
� Commercial buildings only
� Funds
� Loan: ~100 M$ from municipal bonds to finance projects
� Loan loss reserve: municipal service offered to banks
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� Loan loss reserve: municipal service offered to banks
� Preferred loan
� Owner seeks bank consent for PACE financing and negotiates arrangements
� Maximum: 10% of assessed value of property, 20-yr term
� Eligible measures: EE, RE, water
� Note: participants strongly encouraged to seek grants from other programs
3) GREEN 3) GREEN FINANCE FINANCE PROGRAMPROGRAM
BANK
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BUILDING OWNER
Bond Proceeds Finance ProjectSAN
FRANCISCO CITY Repayment
via Property Tax
CONCLUSIONSCONCLUSIONS
� Property tax assessment financing
� Transferable financing = innovative approach
� Win-Win approach
� Future programs
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� Future programs
� No need to reinvent the wheel
� Work with and alongside other EE/RE programs to ...
� maximize savings
� minimize costs
QUESTIONS?
BRUNO GOBEILDUNSKY ENERGY CONSULTING
(514) 504-9030 | www.dunsky.ca | page 17
514.504.9030 [email protected]
www.dunsky.ca