Property Assessed Payments for Energy Retrofits

Associating financing with properties not the owners

Sonja Persram, BSc., MBA, LEED AP Sustainable Alternatives Consulting Inc.

Presentation to

Project Neutral Neighbourhood Summit

June 9, 2012

Property Assessed Payments for Energy Retrofits: PAPER Program

Easy for municipalities to facilitate Delivered at no cost to municipalities

The problem:
High energy use & high GHG emissions In 2005, Canada ranked 9th out of 137 countries in per capita energy use outranked by Qatar, Bahrain, Kuwait, & UAR* Ontario will be 29% short of its 2014 GHG emissions reduction target. And, 44% short of its 2020 target.**
* http://earthtrends.wri.org/text/energy-resources/variable-351.html ** Environmental Commissioner of Ontario, Rethinking Energy Conservation in Ontario: Annual Energy Conservation Progress Report 2009 (Volume 1) 2010 Images by nvtech.com (unless otherwise credited) 3

The challenge:
Buildings/homes are key to reducing Ontarios energy use and GHG emissions
In 2007, the building sector was responsible for 33.4 Mt or 17% of Ontarios emissions. * Housing is responsible for 17% of all energy used & 15% of GHG emissions in Canada.**
*Environmental Commissioner of Ontario, Rethinking Energy Conservation in Ontario: Annual Energy Conservation Progress Report 2009 (Volume 1) 2010 4 **Natural Resources Canada, Office of Energy Efficiency, Energy Efficiency Trends in Canada, 1990-2005

Solutions gaps:
No higher level government energy retrofit programs
The federal ecoENERGY incentive program ended March 31, 2012 Ontarios Home Energy Savings Program ended March 31, 2011
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LICs: allocate improvement costs to properties of benefitting owners Infrastructure development for community enhancement / public benefit Uses to date: sidewalks, street lights, sewers, curbs & gutters, local park
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Image: Ian Jacobi

Local Improvement Charges:

Financing Benefits
longer terms recourse: overdue payments (only) are attached to property via priority lien new owner assumes payments & benefits on sale General obligation bond adjusted from municipalitys debt totals (O. Reg. 403/02 4.
(2))
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Solutions gaps:
Existing financing options dont address key barriers to energy retrofits High up-front retrofit costs People plan to move before recouping investment Low interest loans not available to all Lack of security for banks making retrofit loans Knowledge gaps about energy savings Lenders are not focused on energy savings Uncertainty about workforce capability Complexity of retrofit process
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7 Goals of the PAPER Program

1. It must be easy for homeowners to use the program. 2. Financing is accessible to fiscally responsible homeowners at all income levels. 3. A simple and secure way for municipalities to encourage energy saving retrofits. 4. Delivered at net zero cost to municipalities. 5. Focus on measures for net savings to homeowners. 6. Economic stimulus, & benefits to every sector. 7. Societal benefits to every sector and future generations.

Image: graur codrin http://www.freedigitalp hotos.net/images/view _photog.php?photogid =982

7 Goals of the PAPER Program

1. It must be easy for homeowners to use the program. Turnkey program Deeper retrofits Protects homeowners from rising and spiking energy prices Neighbourhood approach

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7 Goals of the PAPER Program

2. Financing is accessible to fiscally responsible homeowners at all income levels.
Upfront Terms Amounts Rates
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7 Goals of the PAPER Program

3. A simple and secure way for municipalities to encourage energy saving retrofits.
Collaboration among sectors LIC easier to set up and administer Priority lien in case of defaults provides security for municipality and lower interest rates General obligation bond adjusted from municipalitys debt totals

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7 Goals of the PAPER Program

4. Delivered at net zero cost to municipalities
Program costs payable only by owners who opt in (not all taxpayers) Multi-sectoral collaborations higher level government, utilities, industry, labour, NGOs reduce program and project costs make program revenue neutral to municipalities
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7 Goals of the PAPER Program

5. Focus on measures for net savings to homeowners.

Highly skilled practitioners Longer terms, lower interest rates Economies of scale
neighbourhood approach

Focus on energy-saving energy efficiency measures

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7 Goals of the PAPER Program

6. Economic stimulus, & benefits to every sector
Highly skilled jobs: 14-70 jobs / $1 million spent on energy efficiency.1 2 Local economic multiplier: People with local jobs spend locally Import substitution: $ for local jobs replaces gas bills: $ stays in
province

Industry stimulus Homeowners & banks: Financial sector involved in energy efficiency
retrofits providing economies of scale. Mortgage default rates of PACE-financed homes 1/30th that of non-PACE-financed homes.*
1

Demerse, Clare, reducing pollution, creating jobs: The Employment Effects of Climate Change and Environmental Policies, The Pembina Institute, March 2011 2 ICLEI, Profiting from Energy Efficiency: 2.0 Why Invest in Energy Efficiency?
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7 Goals of the PAPER Program

6. Economic benefits to every sector (contd). Governments (taxpayers):
Lower energy infrastructure costs, lower health care costs, higher income taxes, lower unemployment costs. US PACE study*:
$21,000 investment: $61,000 economic gain

Canadian study:
Major economic impacts in 2026 when energy efficiency improvements natural gas use by 15 % by 2026**

* ECON Northwest Study Economic Impact Analysis of PACE, May 2011 ** Stokes, Dr. Ernie, The Economic Impacts of Reducing Natural Gas Use in Ontario, The Centre for Spatial Economics, prepared for the Ontario Clean Air Alliance, and Ontario Clean Air Alliance Research Inc., April 2011

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7 Goals of the PAPER Program

7. Societal benefits to every sector and future generations.
Enhanced quality of life Healthier and more comfortable homes Reduced illness costs of air pollution* Social equity

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Image by Digitalart

* CMA Illness Costs of Air Pollution, 2008

Property-Assessed Payments for Energy Retrofits

PAPER Program Features

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Home Ownership

Home Stewardship*

Definition of stewardship:
careful and responsible management of something entrusted to ones care
Merriam-Webster.com

Torontonians tend to move every 8-10 years

Image: IdeaGo Bill Johnston, immediate past President Toronto Real Estate Board

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* Concept suggested by Bob Baser, P Eng., Ottawa

Eagles insulation
Eagles nests: Eggs & eaglets are insulated by dried grasses, moss & the eagles feathers & bodies.
See: www.hancockwildlife.org live webcams
also:www.firstlightpower.com/eagles/default.asp

Sidney nest, Vancouver Island, 2011

Nestorations by Pa & Ma Sidney, 2011

Images: Hancock Wildlife Foundation, 20 screenshots. Used with permission

Who has been considering this concept? Bipartisan supporters

Yukon: legislation in place Nova Scotia: Act amendment is at Third Reading. Halifax Regional Municipality Charter. Vancouver. Ministry of Energy & Mines: LICs for energy retrofits compatible with on-bill financing Ontario: Notification of regulatory change posted. 19 municipalities discussed PAPER, 14 more are interested. Resolutions: City of Windsor, King Township, Town of East Gwillimbury. Letters of support: City of Guelph, AMO, NGOs. Alberta, other provinces/territory USA: Property Assessed Clean Energy (PACE): 28 states legislated; 53 Republicans/Democrats in House of Representatives
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* See pacenow.org

Long Island Green Homes Town of Babylon, New York State

Source: Dorian Dale, April 2012. Used with permission

830 projects, 3,934 tons of CO2e emissions saved annually Maximum: $12,000; $15,000 with special permission Interest rate 3% 12% admin costs (2009), 10% (2010); $0 muni cost (estimated) Savings > payments on annualized basis; 1.80 SIR

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Next steps
Provincial government: MMAH Regulatory change: new LIC for PAPER should have key similarities to old LIC Municipality: Council: vote. Requires bipartisan support Develop a pilot Partnering: Collaboration to lower costs: all levels of government, utilities, industry, NGOs, labour Reduces costs for municipality and 23 homeowners

The program is a winner for citizens, governments, and future generations.

Bill Johnston Immediate Past President Toronto Real Estate Board

Bizarro Cartoon by Dan Piraro

Used with permission

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Thank you!

Sonja Persram, BSc., MBA, LEED AP

Sustainable Alternatives Consulting Inc. T: 416.324.9388
sonja@sustainable-alternatives.ca www.sustainable-alternatives.ca

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