Columbus City Council Holds Hearing on R-PACE Loan Program
Columbus City Council held a public hearing to consider legislation on an energy efficient renovation financing program for Columbus homeowners on October 24, 2019. This is another monumental step in making Columbus a greener city. The program, Residential Property Assessed Clean Energy (R-PACE), is a residential financing program that incentivizes homeowners to complete energy-efficiency renovations in their homes by providing low-interest loans repaid on the resident’s property tax bills.
If the bill passes, Columbus residents will be able to reap the benefits of the R-PACE program within the city. The United States Department of Energy reported that as of 2019, over 200,000 homeowners have made $5 billion in energy efficiency and renewable energy improvements to their homes through PACE financing.
During the hearing, the City Council, the Development Department, and Renovate America representatives outlined the details of the R-Pace program and responded to questions and concerns from Ohio residents.
What Is R-PACE?
Residential Property Assessed Clean Energy (R-PACE) is a loan financing program led by the City of Columbus and Renovate America. Renovate America is a financing organization focused on helping homeowners invest in environmentally sound, energy-efficient upgrades to their property. R-PACE loans are repaid on the resident’s property tax bills over a specific time period, typically over 5 to 20 years at a fixed, low interest rate. Renovate America has financed energy-saving, water-saving, and renewable energy-generating improvements in more than 126,000 homes across America. This has led to nearly 30,000 blue collar jobs created and $3.6 billion dollars saved by homeowners while averting over 5 million tons of carbon emissions-- equivalent to taking over 1,000,000 cars off the road for a year.
A similar program for commercial property (C-PACE) was adopted in Ohio in 2009 and last year the program saw 31 commercial properties make $79.1 million in energy efficient investments. Columbus authorized C-PACE in 2016 and has since seen 27 projects and $76 million financed through the program. In downtown Columbus, a historic property acquired $4 million in C-PACE financing for upgrades to the buildings’ lighting, heating, ventilation, and air conditioning system (HVAC), and elevators. The lending company for this project, Greenworks Lending, stated that “energy upgrades will make a big difference for this building” and “it'll be a good chance to show how some of this technology has evolved, and using PACE is going to simplify the capital stack. It's a no-brainer project."
C-PACE in Columbus is on track to finish 20-22 additional projects for 2019, a huge success for the program. The achievements of the C-PACE program lay an important foundation for the R-PACE program to build on once passed.
The US Department of Energy outlines several advantages of adopting an R-PACE program:
- Allows for secure financing of comprehensive projects over a longer term, making more projects cash flow positive.
- Spreads repayment over many years, seldom requires an upfront payment, and removes the requirement that the debt be paid at sale or refinance.
- Can lead to low interest rates because of the high security of loan repayments attached to the property tax bill.
- Helps some property owners deduct payments from their income tax liability.
- Allows municipalities to encourage energy efficiency and renewable energy without putting general funds at risk.
- Taps into large sources of private capital.
What Does This Mean for Columbus Residents?
Columbus homeowners will be eligible to receive financing on projects like installing solar panels, upgrading to energy efficient heating and cooling systems, purchasing ENERGY STAR appliances, doors, windows, and roofing, adding air sealing and insulation to the home, and other energy-efficient upgrades. Residents will have the opportunity to pay back improvement costs slowly at fixed low rates, while simultaneously reducing the burden of expensive utility bills. Furthermore, bulk surveys from states with R-PACE programs implemented reported that most appealing aspect of the loan installment is that they know how much they owe and when which make makes borrowing more reliable.
The implementation of an R-PACE program is vital to making energy efficient improvements that will benefit homeowners, Ohio residents, and policymakers working to reduce the city’s environmental footprint. Councilmember Emmanuel V. Remy spoke on this policy stating "This is a new concept for Columbus that could have the dual impact of reducing residents' utility bills and our impact on the environment. With the added benefit of creating new jobs in the future-facing energy efficiency industry, we're helping move Columbus forward." R-PACE serves as an important option in home improvement financing because it meets the needs of homeowners who would choose less efficient home upgrade options without financing programs like R-PACE.
"We are committed to strengthening our neighborhoods and bringing jobs to the City. This program would help some of our homeowners make long-term upgrades to their property while saving money today," Remy continued. "The public hearing will introduce residents and small businesses to this concept and gather their feedback."
Mark Lundine of the City’s Development Department sat on the panel of the public hearing and spoke of the policy stating “The City of Columbus has been thrilled with the success of C-PACE both in Columbus and throughout the Columbus region. We have seen many building owners invest in energy efficiency and realize savings for their tenants. We look forward to exploring how this successful program may translate to homeowners throughout the City.”
If legislation passes, the program is set to launch January 2020. Watch the full hearing online.