Property Tax Assessment Financing

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Overview of an innovative financing approach aimed at fostering energy conservation and renewable energy

Text of Property Tax Assessment Financing

  • 1. MUNICIPALITIES: KEYPLAYERS FOR INNOVATIVEFINANCING PROGRAMSBruno Gobeil, Senior ConsultantDUNSKY ENERGY CONSULTING5th Annual GeoExchange Technical & Policy ForumCanadian Geoexchange CoalitionDecember 8, 2011www.dunsky.ca (514) 504-9030 | www.dunsky.ca(514) 504-9030 | info@dunsky.ca

2. DUNSKY CLIENTLE(samples from among >100 clients)GEOGRAPHIC ORGANIZATIONS ENERGY MIXCanadian emphasisElectric / Gas UtilitiesHydro- Hydro-dominatedCoast-to-Coast-to-coast coverageDedicated EE/RE AgenciesFossil- Fossil-dominatedSubstantial U.S. as well Government departmentsMixed fuel Associations & stakeholders(514) 504-9030 | www.dunsky.ca | page 2 3. RATIONALE FOR FINANCINGINITIATIVES Unprecedented energy saving goals e.g. ~25% by 2020 in Ontario (peak demand) Unprecedented level of capital required Incentive programs alone insufficient Innovative financing solutions needed in the toolbox One financing option Property tax assessment financing (514) 504-9030 | www.dunsky.ca | page 3 4. QUESTIONS How does the property tax assessment financing work? What are the benefits for building owners and municipalities? Where such financing scheme has been implemented? How these financing schemes were designed? Examples? (514) 504-9030 | www.dunsky.ca | page 4 5. HOW DOES IT WORK? Municipality - OwnerEE/RE Measures Financed Owner Pays BackAgreement Municipality Voluntary Participation Municipal options to raise Repayment via property tax Owner: implementfunds: (up to 20 years) Municipality: finance Bonds, partnership w/ Verification that measures EE/RE Measuresbanks, reserve losses ...are installed (inspection, Energy Star Windows, Verification that owner paid receipts)insulation, GSHP, solar property taxes Owner installs measures (514) 504-9030 | www.dunsky.ca | page 5 6. 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 Better financing conditions Longer period and lower borrowing rate Increase in comfort Raise property value (mid to long-run) (514) 504-9030 | www.dunsky.ca | page 6 7. BENEFITS TO MUNICIPALITIES? Stimulate local economy green jobs Contribute to EE targets and GHG reduction Demonstrate environmental leadership Improve quality of life Expand revenue base (mid to long-run)Higher value of retrofitted properties (514) 504-9030 | www.dunsky.ca | page 7 8. WHERE HAS IT BEENIMPLEMENTED? sdfs In place (EUA): Melbourne, Sydney Under consideration: other townsdsfsdf Pilots underway (PAYS): Birmingham, Sutton, Sunderland, Stroud,Surrey, Sussex Under consideration: other townsfdsfg Legislations adopted in 27 states (PACE): California, New York FHFA 2010 directives brought PACE residential programs tostandstill (seniority of lien, risks) Programs gradually reintroduce as states address FHFA concerns Pilot underway: Vancouver Pilot under development: Halifax Under consideration: Toronto, Ottawa, NFLD(514) 504-9030 | www.dunsky.ca | page 8 9. HOW THESE FINANCING SCHEMESWERE DESIGNED?3 examples (514) 504-9030 | www.dunsky.ca | page 9 10. 1) COMMUNITY SOLARPROJECTPilot goal 500-700 homes with hot water solar systems (HWS)Fund ~ 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(514) 504-9030 | www.dunsky.ca | page 10 11. 1)COMMUNITY SOLAR PROJECT Fund ProjectRepaymentHALIFAX CITY via Property Tax HOMEOWNERLoanFund(514) 504-9030 | www.dunsky.ca | page 11 12. 2) HOME ENERGY LOANPROGRAM Pilot goal500 homes retrofitted through ecoENERGY audit process FundsLoan: Vancouver City Savings Credit Union (Vancity) = 5 M$Loan loss reserve: Vancouver City = 500 k$, Vancity Foundation =1 M$ Preferred loanVancity: 10-yr term, 4.5% interest rate, 4-16 k$/homeEligible measures: EE only (GSHP excluded)Note: grants from ecoENERGY and LiveSmart BC for EE and REmeasures still accessible(514) 504-9030 | www.dunsky.ca | page 12 13. 2) HOME ENERGY LOANPROGRAM VANCITYVANCOUVER Repayment via Property Tax*HOMEOWNER CITY* Collection is junior to other debts (514) 504-9030 | www.dunsky.ca | page 13 14. 3) GREEN FINANCE PROGRAM Full scale program launched after pilot (Oct 2011)Commercial buildings only FundsLoan: ~100 M$ from municipal bonds to finance projectsLoan loss reserve: municipal service offered to banks Preferred loanOwner seeks bank consent for PACE financing and negotiatesarrangementsMaximum: 10% of assessed value of property, 20-yr termEligible measures: EE, RE, waterNote: participants strongly encouraged to seek grants from otherprograms (514) 504-9030 | www.dunsky.ca | page 14 15. 3) GREEN FINANCE PROGRAM BANKBond Proceeds SANFinance ProjectBUILDINGFRANCISCOOWNER CITYRepaymentvia Property Tax (514) 504-9030 | www.dunsky.ca | page 15 16. CONCLUSIONS Property tax assessment financing Transferable financing = innovative approach Win-Win approach Future programs No need to reinvent the wheel Work with and alongside other EE/RE programs to ...maximize savingsminimize costs (514) 504-9030 | www.dunsky.ca | page 16 17. QUESTIONS? BRUNO GOBEIL DUNSKY ENERGY CONSULTING 514.504.9030 x26 bruno.gobeil@dunsky.ca www.dunsky.ca(514) 504-9030 | www.dunsky.ca | page 17