Download pdf - Property Tax Assessment Financing

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


� 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?


municipalities?

� Where such financing scheme has been implemented?

� How these financing schemes were designed? Examples?

HOW DOES IT WORK?HOW DOES IT WORK?


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


� 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


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




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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


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


� ~ 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


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$


� 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


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


� 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


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


� 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 [email protected]

www.dunsky.ca