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Presented By: Matt Bell
Partner, Viridian
Buildings and the EnvironmentBuildings account for 36% of greenhouse gas
emissionsBuildings account for 72% of the electricity
useExisting Buildings today will still account for
the majority of buildings in the year 2050.A focused effort must be given to making
existing buildings more efficient to make even modest reductions in GHG emissions.
What is an Energy Financing District? EFDs enable local governments to raise money
through the issuance of bonds to fund energy efficiency projects and renewable energy projects.
The bonds are repaid through a “special tax” or “assessment” property tax bill for only those property owners who choose to participate.
Financing is secured by a lien on the property and like other taxes is paid prior to other claims in the event of foreclosure.
Energy Financing DistrictsProperty Assessed Clean Energy (PACE)Sustainable Energy FinancingClean Energy Assessment Districts (CEAD)Contractual AssessmentsSpecial Tax Districts
Barriers to energy efficiency and renewable energy installationLack of Information by consumersUncertainty of savingsSplit incentivesTransaction CostsInitial Capital InvestmentLength of payback
EFD Benefits to the HomeownerLittle or No upfront cost to the homeownerLonger repayment periodsInterest payments are tax deductible Easy application processImproved property valueImmediate energy savingsRepayment obligation is transferred when the
property is sold
EFD Benefits to the Local GovernmentAssists local government in reaching reduced
GHG emission goals.Stimulates the economy with local green job
creation through energy retrofitting and renewable energy installation
Provides a secure financing mechanism with a low risk of default with loans secured by property liens
Positive Publicity for the local communities participating in EFDs.
Limitations of Energy Financing Districts Available only to homeowners and not
rentersExpected life of the improvements must be at
least as long as the repayment period.Cannot be used for transferable items such
as refrigerators and light bulbs. Set up and administration cost
How to form an EFDPass enabling legislationDevelop a management team to administer
and manage the programDesign a program that meets the specific
goalsSecure FundingFormally create a Special Tax District or tax
assessment districtLaunch the program
Pass Enabling LegislationArkansas currently doesn’t have legislation
that will allow for the special improvement assessments to prime a previously recorded mortgage.
It requires State Statutory authorization as well as approval by the local government entity
Developing Management TeamLocal government will need to hire a
management team and seek partnerships to develop and manage the program
Legal and Bond Council will be requiredFinancial consultantsSustainability program managerStaff from County Recorder / Tax Collecting
body
Design a program Establish a goal of energy reduction targets,
GHG reduction targets, economic development, renewable energy production
These targets must be developed with a team of advisors to evaluate cost and benefits of measures
Develop eligibility properties and eligible improvements
Secure FundingCan be financed through general funds as
part of their investment portfolio strategyIssue bonds and determine market through
consultation with bond councilPossible use of EECBG (Energy Efficiency
and Conservation Block Grants)
Create the Special Tax DistrictWill require several steps by the City Council
or County Board for district approvalsDetermine the boundary of the district
Examples of EFDsBerkley, CA: Berkley First Boulder County, CO: ClimateSmart ProgramPalm Desert, CA: (EIP)Energy Independence
ProgramBabylon, NY: Long Island Green Homes
ProgramStates that are pursuing enabling legislation:
Colorado, Louisiana, Maryland, Nevada, New Mexico, Ohio, Oklahoma, Oregon, Texas, Vermont, Virginia, and Wisconsin.
Berkley First ProgramPilot Started November 2008Property owners reserved $1 million in
funding in the first 10 minutes of program launch
38 projects with average cost of $28,000 each
Pilot program only allowed for PV Solar installations
Boulder County, Climate SmartNovember 2008 voters passed enabling legislation
establishing $40 million in bonding capacityAllows for various energy efficiency measures: air
sealing and ventilation, insulation, space heating and cooling, lighting retrofits, water heating, windows and doors, solar PV, solar hot water, etc.
First application process had 393 applicants with $7.5 million in projects
Boulder is tracking utility data on all applicants to compare dollars invested and dollars saved
Energy Independence Program Palm Desert, CAManaged by the city of Palm Desert Office of
Energy ManagementGoal of reducing energy use by 30% in five
yearsFunds projects for residential, commercial
and industrial customersAllows energy efficiency measures as well as
renewable energy projectsInitial Investment of $7.5 million funded 205
projects with an average cost of $36,000
Long Island Green Homes Project Babylon, NYAdopted a green building code in 2006Requires Energy Star for homes and LEED
certification for commercial buildings over 4000 sf.Financed through the classification of CO2 as a
solid waste and use $2.5 million from the city’s solid waste reserve fund
Funds cost effective energy efficiency measures and solar but must meet Energy Star
Funded 169 projects with an average cost of $7100Measures are predicted to save 28% on energy bills
Resourceswww.climatesmartloanprogram.orgwww.cityofpalmdesert.orgwww.berkleyfirst.renewfund.comwww.thebabylonproject.com
Questions