Presented By: Matt Bell Partner, Viridian

Buildings and the Environment Buildings account for 36% of greenhouse gas emissions Buildings account for 72% of the electricity use Existing Buildings today will still account for the majority of buildings in the year 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 Districts Property Assessed Clean Energy (PACE) Sustainable Energy Financing Clean Energy Assessment Districts (CEAD) Contractual Assessments Special Tax Districts

Barriers to energy efficiency and renewable energy installation Lack of Information by consumers Uncertainty of savings Split incentives Transaction Costs Initial Capital Investment Length of payback

EFD Benefits to the Homeowner Little or No upfront cost to the homeowner Longer repayment periods Interest payments are tax deductible Easy application process Improved property value Immediate energy savings Repayment obligation is transferred when the property is sold

EFD Benefits to the Local Government Assists 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 renters Expected 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 EFD Pass enabling legislation Develop a management team to administer and manage the program Design a program that meets the specific goals Secure Funding Formally create a Special Tax District or tax assessment district Launch the program

Pass Enabling Legislation Arkansas 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 Team Local government will need to hire a management team and seek partnerships to develop and manage the program Legal and Bond Council will be required Financial consultants Sustainability program manager Staff 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 Funding Can be financed through general funds as part of their investment portfolio strategy Issue bonds and determine market through consultation with bond council Possible use of EECBG (Energy Efficiency and Conservation Block Grants)

Create the Special Tax District Will require several steps by the City Council or County Board for district approvals Determine the boundary of the district

Examples of EFDs Berkley, CA: Berkley First Boulder County, CO: ClimateSmart Program Palm Desert, CA: (EIP)Energy Independence Program Babylon, NY: Long Island Green Homes Program States that are pursuing enabling legislation: Colorado, Louisiana, Maryland, Nevada, New Mexico, Ohio, Oklahoma, Oregon, Texas, Vermont, Virginia, and Wisconsin.

Berkley First Program Pilot Started November 2008 Property 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 Smart November 2008 voters passed enabling legislation establishing $40 million in bonding capacity Allows 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, CA Managed by the city of Palm Desert Office of Energy Management Goal of reducing energy use by 30% in five years Funds projects for residential, commercial and industrial customers Allows energy efficiency measures as well as renewable energy projects Initial Investment of $7.5 million funded 205 projects with an average cost of $36,000

Long Island Green Homes Project Babylon, NY Adopted a green building code in 2006 Requires 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 $7100 Measures are predicted to save 28% on energy bills

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