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Property Tax Assessment Financing

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

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Property Tax Assessment Financing

  1. 1. MUNICIPALITIES: KEYPLAYERS FOR INNOVATIVEFINANCING PROGRAMSBruno Gobeil, Senior ConsultantDUNSKY ENERGY CONSULTING5th Annual GeoExchange Technical & Policy ForumCanadian Geoexchange CoalitionDecember 8, 2011 www.dunsky.ca (514) 504-9030 | www.dunsky.ca (514) 504-9030 | info@dunsky.ca
  2. 2. DUNSKY CLIENTÈLE (samples from among >100 clients)GEOGRAPHIC ORGANIZATIONS ENERGY MIX Canadian emphasis Electric / Gas Utilities Hydro- Hydro-dominated Coast-to- Coast-to-coast coverage Dedicated EE/RE Agencies Fossil- Fossil-dominated Substantial U.S. as well Government departments Mixed fuel Associations & stakeholders (514) 504-9030 | www.dunsky.ca | page 2
  3. 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. 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. 5. HOW DOES IT WORK? Municipality - Owner EE/RE Measures Financed Owner Pays Back Agreement Municipality• Voluntary Participation • Municipal options to raise • Repayment via property tax • Owner: implement funds: (up to 20 years) • Municipality: finance • Bonds, partnership w/ • Verification that measures• EE/RE Measures banks, 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. 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. 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. 8. WHERE HAS IT BEENIMPLEMENTED? sdfs • In place (EUA): Melbourne, Sydney • Under consideration: other towns dsfsdf • Pilots underway (PAYS): Birmingham, Sutton, Sunderland, Stroud, Surrey, Sussex • Under consideration: other towns fdsfg • 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 (514) 504-9030 | www.dunsky.ca | page 8
  9. 9. HOW THESE FINANCING SCHEMESWERE DESIGNED? 3 examples … (514) 504-9030 | www.dunsky.ca | page 9
  10. 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. 11. 1)COMMUNITY SOLAR PROJECT Fund Project RepaymentHALIFAX CITY via Property Tax HOMEOWNER Loan Fund (514) 504-9030 | www.dunsky.ca | page 11
  12. 12. 2) HOME ENERGY LOANPROGRAM 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$/home Eligible measures: EE only (GSHP excluded) Note: grants from ecoENERGY and LiveSmart BC for EE and RE measures still accessible (514) 504-9030 | www.dunsky.ca | page 12
  13. 13. 2) HOME ENERGY LOAN PROGRAM VANCITYVANCOUVER Repayment via Property Tax* HOMEOWNER CITY * Collection is junior to other debts (514) 504-9030 | www.dunsky.ca | page 13
  14. 14. 3) GREEN FINANCE PROGRAM Full scale program launched after pilot (Oct 2011) Commercial buildings only Funds Loan: ~100 M$ from municipal bonds to finance projects Loan loss reserve: municipal service offered to banks 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 (514) 504-9030 | www.dunsky.ca | page 14
  15. 15. 3) GREEN FINANCE PROGRAM BANK Bond Proceeds SAN Finance Project BUILDINGFRANCISCO OWNER CITY Repayment via Property Tax (514) 504-9030 | www.dunsky.ca | page 15
  16. 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 savings minimize costs (514) 504-9030 | www.dunsky.ca | page 16
  17. 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

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