HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 04/17/2012 - FIRST READING OF ORDINANCE NO. 033, 2012, AMENDINGDATE: April 17, 2012
STAFF: John Phelan
Mike Beckstead
AGENDA ITEM SUMMARY
FORT COLLINS CITY COUNCIL 24
SUBJECT
First Reading of Ordinance No. 033, 2012, Amending Chapter 26 of the City Code to Allow for On-Bill Utility Financing.
EXECUTIVE SUMMARY
This Ordinance revises language in Chapter 26 of the City Code to enable Utilities to provide financing and on-bill
servicing of loans for energy efficiency, water efficiency and renewable energy projects. Utilities is proposing to pilot
a new program element for 2012, providing on-bill financing for residential customers participating in the Home
Efficiency Program, the Solar Rebate Program and for customers who need to repair or replace a water supply line.
The primary goal of the on-bill financing pilot is to facilitate more efficiency upgrades in the residential sector. These
upgrades reduce our need for future energy resources, reduce our environmental footprint, promote local economic
health by investing in our built environment and improve the health, comfort and safety of our homes.
Council approved a budget exception in fall 2011 for the 2012 budget to provide $300,000 for on-bill financing, subject
to bringing the necessary changes in the City Code and additional details of the pilot program. Funding for subsequent
years will be addressed through the Budgeting for Outcomes process.
BACKGROUND / DISCUSSION
Policy Alignment
The proposed pilot On-Bill Utility Financing Program supports the policy goals of Plan Fort Collins, the Climate Action
Plan, Energy Policy and Water Conservation Plan. The Program will be a valuable addition to Utilities’ efficiency and
renewable energy programs which foster sustainability through energy and water use reductions, local contractors and
investment in the built environment and improved home comfort, health and safety.
Specific Council Policy references:
• Development of On-Bill Financing is a near-term priority action item (#35) within Plan Fort Collins.
• Energy Policy objectives which align with On-bill Financing include:
N Promote sustainable practices in homes and businesses by supporting increased efficiency in existing
buildings.
N Strive to invest climate improvement monies locally in programs that have long-term positive impacts.
History
Fort Collins Utilities has offered the Zero Interest Loan Program (ZILCH) since the early 1980s. The Program was very
successful for many years. However, in recent years the Program saw relatively little activity. The recent national
mortgage crisis resulted in changes to the requirements for local government entities to be able to originate loans for
home improvements. As a result, the Zero Interest Loan Program was suspended in early 2011. The Program
restarted in fall 2011 under a model where the loans are unsecured. The On-Bill Financing Program will supersede
the energy and water efficiency aspects of the Zero Interest Loan Program. The air quality related aspects of the Zero
Interest Loan Program, with funding from the Environmental Services Department, will be continued under a revised
administrative model that is currently being developed.
Home Efficiency Program Description
Utilities began offering the Home Efficiency Program to customers in 2010, with a goal of providing a comprehensive
and best practices approach to improving the performance of existing homes. The Home Efficiency Program elements
guide homeowners with:
April 17, 2012 -2- ITEM 24
• Low-cost audits which prioritize home improvement measures to address the barrier of “what to
do”
• Participating contractor lists which address the barrier of “who to call”
• Rebates which partially address the “first cost” barrier
• Installation standards and verification which address the barrier of “is it done right”
Since January 2010, the Home Efficiency Program has:
• Completed over 1,100 audits
• Supported efficiency improvement projects in over 375 homes
• Trained over 100 individuals from 40 contracting companies
• Received ratings from customers of over 95% “extremely satisfied” with the audit, contractor and
rebate aspects of the Program
The On-Bill Financing Program will be integrated into the Home Efficiency Program and provide the financing
mechanism for homeowners to implement recommendations from the audit using the established contractors and
installation standards of the Home Efficiency Program.
Pilot Program Summary
The objective of the On-Bill Financing Program element is to increase the number of residential efficiency and
renewable energy projects by addressing the up-front cost barrier via on-bill financing. Key aspects of the Program
include:
• Simple application and approval processes
• Financing 100% of project costs
• Repayment of loans on the utility bill
Specific elements of the Program include:
• Eligible properties are single family homes and townhomes, both owner occupied and rental properties
with the owner as applicant.
• Project types are based on existing definitions within utility programs and include energy efficiency (e.g.,
insulation, furnace, AC, windows), water supply line replacement/repair and renewable energy (e.g., solar
PV and wind)
• Direct Program expenses will be recovered via fees and interest rates
• On-Bill Financing will replace the existing Zero Interest Loan Program.
The proposed Program is based on selecting best practices from on-bill programs in Kansas, Kentucky, South Carolina
and Oregon and loan parameters from a successful Fannie Mae and Pennsylvania energy improvement loan program.
Together with the proven components of Fort Collins Home Efficiency Program, an On-Bill Financing Program element
will further support customers who choose to improve the efficiency of their homes.
Pilot Program Details
Description Details
Customer
eligibility
Energy projects – Utilities electric customer
Water projects – Utilities water customer
Project eligibility Home Efficiency Program
• 23 types of projects based on rebate categories
http://www.fcgov.com/utilities/residential/conserve/energy-efficiency/home-efficiency-
program/rebates
Renewable energy rebate requirements
• http://www.fcgov.com/utilities/residential/conserve/renewables/solar-rebates
Water supply line replacement/repair (similar to Zero Interest Loan Program)
Not carried over from Zero Interest Loan Program
• Air quality projects, high efficiency clothes washers
April 17, 2012 -3- ITEM 24
Description Details
Rental
properties
Owner is applicant and note holder
Owner options for payment mechanism:
• Owner receives separate loan payment bill from Utilities, or
• Tenants may make payments depending on lease type and if utility account is in
tenant’s name (requires notification and acknowledgement by tenant)
Applicant
qualification
Varies with loan amount and credit score (2 tiers)
• Utility bill payment history
• Credit score
• Income
Loan details Amount: $1,000 to $15,000
Term: 3 to 10 years
Interest: prime plus 2-5%
Application fee ($25)
Origination fee ($150)
Risk mitigation
and security
Chapter 26 utility service – permanent lien and disconnect provisions
Recorded lien (provides notification for title search)
Loan qualification track record
Payments and
Payoff
Payments on utility bill
Payoff on loan completion or property sale
Pilot Program Administration
The pilot program will be administered collaboratively by Utilities staff and a third party (to be selected). Due to the
state and federal requirements related to mortgage origination, Utilities will seek a third party to complete several of
the steps in the loan process. The table below represents a simple overview of steps and likely split of responsibilities
between Utilities and the third party.
Loan Process
Responsible Party
Utilities 3rd Party
Efficiency Audit required X
Application: project approval based on preliminary rebate application and
contractor estimate XX
Application: Bill payment history, credit score, income X X
Project verification X
Loan origination X
Contractor payment X
Set up loan within billing system X
Recording of obligation X
Loan payment servicing X
Pilot Program: Next Steps
Utilities has several tasks that need to be completed prior to being able to offer the pilot On-Bill Financing Program
to customers. The goal is to be ready to offer this service to customers by June 1. These steps include:
• Finalize testing of billing system
• Document/finalize internal business processes and 3rd party resources
• Document accounting procedures
• Integrate financing options with existing Home Efficiency Program outreach and marketing plans
April 17, 2012 -4- ITEM 24
On-bill financing has great potential to increase efficiency and renewable energy projects in the community. It is the
intent of this 2012 pilot program to prove the concept in Fort Collins with a limited scope of building, project types and
available funds. Future expansion of the Program could include the small commercial sector and additional projects
types (e.g., expanded water conservation measures, both indoor and outdoor).
The structure of the pilot, especially the loan parameters, is based on successful programs with extended track
records. This structure was chosen because it is scalable, both in administrative and financial terms. The long-term
vision is to attract capital to the loan fund so that the funding is not limited to what Fort Collins Utilities can provide,
either through reserves or ratepayer funds.
FINANCIAL / ECONOMIC IMPACTS
Council approved a budget exception in fall 2011 to provide $300,000 for on-bill financing, subject to bringing the
necessary changes in City Code and additional details of the pilot program, which are presented here. This funding
for the 2012 pilot is coming from Utilities reserves. Utilities expects to also have available approximately $30,000 in
remaining Zero Interest Loan funds from the 2012 adopted budget which can be utilized by the pilot program. Based
on 2011 efficiency project rebate requests, it is expected that this level of funding will support 50 to 75 efficiency
projects.
The On-Bill Financing Program element will add to the positive economic impact of the Home Efficiency Program.
There are currently 40 participating contractors working with the Program, with over 100 individuals going through
training for best practices installation standards. Retrofit projects in 2011 represented an investment (by homeowners,
supported by rebates) of approximately $1.2 million towards improving existing home efficiency. Utility bill savings from
improved homes also results in additional spending on local goods and services.
ENVIRONMENTAL IMPACTS
The On-Bill Financing Program supports the City’s goals for energy use reduction through efficiency, carbon emissions
reduction from improving the efficiency of the built environment and increasing local renewable energy production.
Homes are seeing 5-50% (15% on average) energy reductions as a result of improvements made through the Home
Efficiency Program. The opportunity for on-going participation in the Program is many thousands of homes. The On-
Bill Financing Program is expected to be a very effective approach to reaching these homes in the coming years.
The Home Efficiency Program also directly addresses indoor environmental air quality. The audit, installation
standards and project verification testing specifically address combustion safety of natural gas appliances and educate
homeowners on other aspects of indoor air quality.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BOARD / COMMISSION RECOMMENDATION
Staff presented information related to the On-Bill Financing Program and proposed pilot program at the February 27,
2012, meeting of the Council Finance Committee. A summary of the discussion is included as Attachment 2.
At its March 1, 2012 meeting, the Energy Board passed a motion unanimously stating the Energy Board endorses
expanding the role of Utilities as the financing agent for energy reduction projects. A memo from the Energy Board
is included as Attachment 3.
April 17, 2012 -5- ITEM 24
At its March 15, 2012 meeting, the Water Board unanimously voted to endorse the proposed pilot program. An excerpt
from the unapproved Water Board meeting minutes is included as Attachment 4.
PUBLIC OUTREACH
Staff met with representatives from the Community for Sustainability, Fort Collins Sustainability Group and other
community stakeholders on March 5, 2012 to receive feedback on utility financing in general and the proposed pilot
program.
Staff has discussed the pilot program with several community members who are rental property owners and property
managers, seeking feedback related to the Program in general and the provisions for accommodating rental properties
in particular.
Notice of the proposed change to City Code to include this type of program was published in the Coloradoan on March
18, 2012, and a mailing was sent to City electric customers outside of the city limits.
ATTACHMENTS
1. Council Finance Committee minutes, February 27, 2012
2. Water Board minutes, March 15, 2012
3. Energy Board memo, April 5, 2012
4. Powerpoint presentation
ATTACHMENT 1
Page 1 of 2
Utilities
electric · stormwater · wastewater · water
700 Wood Street
PO Box 580
Fort Collins, CO 80522
970.221.6700
970.221.6619 – fax
970.224.6003 – TDD
utilities@fcgov.com
fcgov.com/utilities
Memorandum
DATE: February 28, 2012
TO: City Council
THRU: Darin Atteberry, City Manager
Brian Janonis, Utilities Executive Director
FROM: John Phelan, Energy Services Manager
Mike Beckstead, City Finance Director
Patty Bigner, Utilities Customer and Employee Relations Manager
RE: Council Finance Committee Summary – February 27, 2012
re: On-bill Efficiency Financing Program discussion
On February 27, 2012, the Council Finance Committee (Mayor Weitkunat, Councilman Manvel)
discussed with staff the proposed structure for an On-Bill Efficiency Financing Program. John
Phelan presented the information with support from Mike Beckstead, Patty Bigner, Brian Janonis
and Darin Atteberry.
The Finance Committee members supported moving ahead with the general approach proposed
by Staff and to proceed with discussing the item and related ordinances at the March 20 Council
meeting. There was discussion and clarification on a number of aspects of the proposed program
and related issues. Major points of discussion were:
Benefits. The purpose of an On-Bill Financing Program Element is to facilitate more efficiency
upgrades in the residential sector. These upgrades reduce our need for future energy needs, reduce
our environmental footprint and promote local economic health by investing in our built
environment while improving the health, comfort and safety of our homes.
Need. Utilities Home Efficiency Program provides the core elements to promote efficiency
improvements in existing homes (low-cost audits, participating contractors, rebates, quality
assurance). However, the up-front cost to complete improvements is still a barrier for many
customers. Private sector options for financing include home equity loans, second mortgages and
credit cards. While these may be appropriate for some customers, each has significant barriers in
terms of cost, interest rates or qualification requirements. The proposed On-bill Financing
Program will provide a simple, quick, low-cost option to facilitate projects moving forward.
Research. One of the presentation slides included information related to other on-bill financing
programs around the country. The definitions and data within the table will be clarified in the
Page 2 of 2
March 20 Agenda Item Summary. The primary conclusion related to this information is that
Utilities Home Efficiency Program is already out-performing other programs. An On-bill
Financing Program Element will provide another tool to improve this performance (in terms of
projects completed).
Rental Properties. There was extensive discussion on potential issues related to providing on-bill
financing for rental properties. Utilities is committed to having a clear path for rental properties
to take advantage of the Home Efficiency Program and On-bill Financing. The general direction is
to develop disclosure and notification tools for owners and tenants that can be used at the time of
loan origination and for future tenants of properties which have utility bill loan payments. The
owner will be the originator and note holder for loans on rental properties. Staff and Council
members discussed potential issues related to having tenant consent as part of the process.
Percentage of projects financed. There was discussion about whether providing 100% project
financing is appropriate for a local government financing program. On one hand, there were
concerns that this does not have enough customer “buy-in” for the use of Utility funds. However,
the program design is intended to be self-funded (interest rates and fees cover the cost of program
administration and capital return) so that the funds will be paid back by those using the program.
In addition, the risk of loan losses is mitigated by the qualification requirements, Chapter 26 lien
and turn-off provisions and a recorded lien on the property.
Scope. The On-bill Financing Program is not specifically targeted at the low income sector of
customers. Qualification requirements are based primarily on bill payment history and credit
score. Targeted low income assistance programs are under development by Utilities.
Solar loan efficiency requirements. The question was raised as to whether Utilities should
require solar funding recipients to meet minimum efficiency thresholds in order to promote the
principle of “efficiency first.” Staff clarified that existing solar rebates require customers to
receive an energy audit so that they have the information about their own efficiency level prior to
receiving funding.
Next Steps
Continue development of the On-Bill Efficiency Financing Program.
Present the program, and related ordinances, as a discussion item for the Council meeting on
March 20, 2012.
Reach out to community stakeholders, including property owners, on the proposed program
structure.
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Excerpt from Unapproved Water Board Meeting Minutes, March 15, 2012
On-Bill Utility Efficiency Financing Program
(Presentation available upon request)
Chief Financial Officer Mike Beckstead and Energy Services Engineer Norm Weaver presented
this agenda item on behalf of Customer and Employee Relations Manager Patty Bigner and
Energy Services Manager John Phelan. $300,000 was set aside in the budget for this type of
program (conditionally approved for 2012), but before staff can spend it, a program must be
presented to Council. This is a residential “pilot” program and meant to integrate with our
existing efficiency programs. The item went to Council Finance Committee in February, and
staff has worked to respond to feedback given there.
This program is about both energy and water efficiency. A group has been working on the
concept for several months. Financing is key to getting a homeowner to move forward with
efficiency upgrades. The home energy audit is the starting point for homeowners to know what
is recommended for improving the efficiency of their home, and they receive a list of contractors
who are trained in efficiency upgrades.
Eligible project types would include renewable energy options (solar photovoltaic and wind).
Loan repayments are designed to replenish the funding in order to continue offering more loans.
Mr. Beckstead noted it will take a long time for the fund to become self-sustaining. This is not
designed for low-income and low-credit-tier populations. A lien would be placed on the
property to secure the loan, and the loan would be offered at a very competitive rate. The
simplicity of the payment process is also very advantageous.
Board member questions:
Where do interest monies go? If the customer falls in arrears on their bill, can their utility
services be jeopardized? Interest goes to replenish the fund for more loans. It’s also important
to note that you have to be a customer of the utility related to the type of repair being planned,
i.e. a water customer in order to receive funding for a water efficiency project.
What makes this program more attractive than other programs that had funds left over? The
Utilities’ efficiency initiatives are a multi-year proposition. If the initial $300,000 in funding is
not used, Utilities can continue to promote all types of energy and water efficiency projects.
There was $30,000 left in the existing ZILCH Program, which will be rolled in with the
$300,000. We anticipate that all funding for the pilot program will be used each year by linking
it into the energy efficiency audits.
What are the administrative costs to the City? The City incurs a cost of $150 for loan processing
and $25 for the application fee. The third party’s processing fees will be within the $150 fee
structure. This is not staffed by the City, and no FTEs will be added to support the program.
However, managing delinquencies could create administrative costs.
Is this financing option something that the private sector can do, and the City is considering
doing this to get our message out about efficiency programming? The City’s focus is on
conservation and trying to make it easier for homeowners to implement home conservation
projects. Certainly, anyone can obtain a third-party loan at a bank.
ATTACHMENT 2
2
Are the suggested projects from the energy audit prioritized for the homeowner? To some
extent, the suggestions are prioritized. Utilities hopes these audits offer a non-biased approach.
Staff is still considering guidelines to influence using the loan for the priority projects.
Are wind projects allowed in the city? Yes, they are allowed, with some height restrictions.
Utilities recommends consulting the wind study before considering a wind system.
“Payback” guidelines would be helpful. Service professionals can’t always speak to that. Mr.
Beckstead believes that the savings calculation and impact on utility bills is included in the
energy audit.
What makes it more attractive to use this financing? How are standards established? It’s not
compelling, other than 100 percent financing is offered and the interest rate is designed to be
lower than bank financing. The ease of having it on your utility bill is also an advantage. There
is also flexibility on the loan term, given what the savings are estimated to be.
Home equity may not be available for traditional financing, so basing it on credit score apart
from equity considerations widens the pool of eligible applicants.
How will we convince a customer to use the contractors on our list? An inspection process post-
completion would have been necessary, and we elected not to pursue that option. We have an
approved and trained list of contractors.
How will we audit that the contractors are giving a fair market price for the work? If someone
is participating in the efficiency program, we hope the marketplace works and the customer
seeks competitive quotes from more than one source. Our contractors have gone through
mentoring and training, and specific, random follow-up quality checks are performed. If an issue
is found, a contractor can be put on probation. Audits are subsidized. In many cases, residential
efficiency progress is less expensive than investing in another coal plant, for example. Utilities
is invested in insuring the contractors do quality work.
The federal credits for home improvements were based on a do-it-yourself approach. It would
be helpful to have contractors that could consult with “do-it-yourselfers” and check their work
for a fee. A local rebate is offered by this Utility for specific incentives which are part of the
home efficiency program. Our local utility dollars are at stake to get an optimal result. There are
options in the community for energy conservation assistance such as the Extension Services, the
Sustainable Energy Alliance, etc. Utilities staff also field questions and provide what
information they can. Mr. Beckstead noted we may entertain something like that in the next
version. The pilot program was designed to keep it simple.
Is there a defined success or failure barometer that would negate the pilot becoming a
permanent program? It will take a couple of years to determine if we have a delinquency issue.
Meanwhile, success means the funding is used quickly and there is a citizen demand for it.
Language may need to be more inclusive of water projects. There are also reductions in homes
such as low-flow toilets or converting a lawn to xeriscape. Citizens may desire to amortize the
costs of those types of projects. Replacing a water line has minor positive impact. How do we
use this to focus on primary water conservation opportunities? We started this to be centric to
structural improvements, but landscaping and other ideas are worth exploring in the future.
3
Since this appears on the bill, it’s difficult to believe that there will continue to be third-party
costs. Is there anything in place to ensure that the administrative costs won’t trickle onto all
customer bills, including those who aren’t in a loan? Once the set-up is done, provided the bill
is paid every month, it shouldn’t add any administrative costs to the system. Intent is not to add
additional utility costs to other customers due to this program.
This doesn’t assist small businesses. Small businesses are on the radar, and staff may go into
that sector in the next version.
Deputy City Attorney Carrie Daggett reviewed the wording of the public notice that has gone out
to electric customers.
Chairperson Balderson thinks a pilot program is a good idea and is willing to recommend the
program to Council.
Board Member Garner would like to include conservation language.
Board Member Brown feels it’s too premature to mention the other alternatives such as
coaching, funding for xeriscaping, and other types of efficiency projects. This program gives a
mechanism to accomplish the projects.
Board Member Garner suggested a friendly amendment to remove the word “Efficiency” from
the title of the program. Board Member Phelan approved the friendly amendment.
Vote on the motion: It passed unanimously.
Board members considered the draft memorandum to Council and provided suggestions for edits
to Chairperson Balderson around the inclusion of conservation language and removal of the term
“efficiency” throughout the memorandum. A statement will be added encouraging the
application of this program to water-related projects in addition to the focus on energy-related
projects.
Vote on the motion: It passed unanimously.
Motion: Board Member Phelan moves that the Water Board endorses the proposed
pilot program and will transmit a memo to Council encouraging the Council to adopt
the On-Bill Utility Efficiency Financing Pilot Program and to adopt Chapter 26
Municipal Code updates to enable the Program. Board Member Garner seconded the
motion.
Motion: Board Member Brown moved that the Water Board approve the
memorandum as adjusted. Board Member Brunswig seconded the motion.
Utilities – Energy Board
700 Wood St.
PO Box 580
Fort Collins, CO 80522
970.221.6702
970.416.2208 - fax
fcgov.com
DATE: April 5, 2012
TO: Mayor Weitkunat and Councilmembers
FROM: Ross Cunniff, Energy Board Chairperson
RE: On-bill Utility Financing
On April 17, 2012 City Council will consider an ordinance to amend City Code Chapter 26,
adding financing to Utility services.
If approved, this change will allow Utilities to offer financing for water and energy efficiency
projects to Utilities residential customers. Customers will also have the convenience of
repaying loans with their utility bills.
On-Bill Utility Financing will support the existing energy and water efficiency audit and rebate
programs. It provides a low-interest, simple financing structure for qualified efficiency
improvements. The qualifiers are that the improvements be completed by Utilities-approved
contractors and include only pre-approved projects. Examples include air sealing and insulation,
efficient appliances, heating and air conditioning units.
The program is designed as a pilot and incorporates what staff and their consultants believe are
the best practices of other programs offered by other utilities.
Staff has presented information on the proposed pilot and answered questions from Energy
Board members.
Based on the information presented to the Fort Collins Energy Board, we support the proposed
Ordinance. We believe On-Bill Utility Financing will address an unmet community need by
reducing the financial barrier to participation in energy and water efficiency programs.
Community participation is vital to achieving Climate Action Plan, Energy Policy and Water
Conservation Plan goals.
ATTACHMENT 3
1
1
On-Bill Utility
Financing Pilot Program
Fort Collins City Council
April 17, 2012
Presenter
John Phelan, Utilities Energy Services Manager
Staff present
Mike Beckstead, Chief Financial Officer
Patty Bigner, Utilities Customer and Employee Relations Manager
Carrie Daggett, City Attorney
Consultants:
Matthew Brown, Harcourt, Brown and Carey
ATTACHMENT 4
2
2
• Present the parameters of a pilot
On-Bill Financing program for 2012
• Council adoption of Revisions to Chapter 26 of the
municipal code to authorize the pilot program
Purpose for Council Discussion Item
Background
Council appropriated $300,000 in funding during the 2012 budget exception process (fall
2011) for an on-bill utility financing pilot program, pending a proposed structure and
details.
Tonight we are
1) describing the parameters for the proposed pilot, and
2) Seeking Council action making revisions to Chapter 26 of the
municipal code to establish financing and servicing of loans as a utility service
3
3
Efficient Built Environment
Fort Collins has policies in place which seek outcomes in the 2050 timeframe. One of
these outcomes is a highly efficient built environment. We accomplish these goals
through several avenues for both new and existing buildings: planning, codes and
voluntary programs.
Fort Collins accrues the following benefits of a highly efficient built environment
Environmental Health
Reduced energy and water use, renewable energy
Economic Health
Lower community energy bills, investing in our built environment with
local contractors
Social Health
Improved comfort, health and safety in our homes
Related Policies
Plan Fort Collins
Climate Action Plan
Energy Policy
Water Conservation Plan
4
4
Reducing Barriers to Efficiency
Our vision is that all Fort Collins citizens live in highly efficient, comfortable and healthy
homes.
There are barriers to accomplishing these outcomes.
Let me introduce you to Mrs. Jones:
She wants to save money on utility bills and make her house more comfortable.
She can get a comprehensive energy audit for $60 through Fort Collins Utilities
(information barrier).
She can find and choose qualified and trained contractors through Fort Collins Utilities
(“who to call” barrier).
She can receive rebates based on the contractor’s estimate (financial barrier).
She still needs $4500 to complete the project. She doesn’t have $4500.
On-Bill Financing will address the up-front cost barrier to making existing home
efficiency improvements.
5
5
• Addressing the up-front cost barrier to increase
the number of residential efficiency projects
• Key elements for success
– Simple application and approval processes
– Finance 100% of project cost
– Repayment of loans on the utility bill
On-Bill Financing Pilot
“in a nutshell”
6
6
• Scope
• Project types
• Qualification
• Loan details
Pilot Program Details
This is a high level summary of the pilot program details. More information is available
in your Agenda Item Summary.
Scope
Single family and townhomes
Owner occupied and rental properties
Project types
Energy efficiency, water supply line, renewable energy
Qualification
Bill payment history, credit score, income (secondary)
Loan details
Interest rate, term, fees, security, due upon sale
7
7
• First Reading of
ordinance to establish
financing and servicing of
loans as a Utility service
Recommended Council Action
8
8
1. Present the parameters of a pilot
On-Bill Financing program for 2012
2. Council adoption of Revisions to Chapter
26 of the municipal code to authorize On-
Bill Utility Financing
Purpose for Council Discussion Item
Tonight we are
1) seeking your feedback on the parameters for the proposed pilot On-bill
Utility Financing Program, and
2) recommending Council action making revisions to Chapter 26 of the
municipal code to establish financing and servicing of loans as a utility service.
ORDINANCE NO. 033, 2012
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AMENDING CHAPTER 26 OF THE CODE OF THE CITY OF FORT COLLINS
TO ALLOW FOR ON-BILL UTILITY FINANCING
WHEREAS, Utilities has proposed to pilot a new program element for 2012, providing on-
bill financing for residential customers participating in the Home Efficiency Program and the Solar
Rebate Program, and for customers who need to repair or replace a water supply line (the “On-Bill
Utility Financing Program”); and
WHEREAS, the primary goal of the On-Bill Utility Financing Program pilot is to facilitate
more efficiency upgrades in the residential sector in order to reduce the need for future energy
resources, reduce the community’s environmental footprint, promote local economic health by
investing in the built environment, and improve the health, comfort and safety of homes in the Fort
Collins community; and
WHEREAS, in the fall of 2011, the City Council approved a budget exception for the 2012
budget to provide $300,000 for the On-Bill Utility Financing Program, subject to bringing the
necessary changes in the Code and additional details of the pilot program; and
WHEREAS, funding for subsequent years will be addressed through the Budgeting for
Outcomes process; and
WHEREAS, the proposed pilot On-Bill Utility Financing Program supports the policy goals
of Plan Fort Collins, the Climate Action Plan, Energy Policy and Water Conservation Plan; and
WHEREAS, the program will be a valuable addition to Utilities’ efficiency and renewable
energy programs, which foster sustainability through energy and water use reductions, local
contractors and investment in the built environment and improved home comfort, health and safety;
and
WHEREAS, Fort Collins Utilities has offered the Zero Interest Loan (ZILCH) program since
the early 1980s, but after many years of success, in recent years the program has seen relatively little
activity; and
WHEREAS, in order to update the model for providing this type of support to residential
customers, staff has proposed that the On-Bill Utility Financing Program replace the ZILCH
program for Utilities-funded loans; and
WHEREAS, the Council has determined that it is desirable to establish an appropriate range
of interest rates for loans in the On-Bill Utility Financing Program, while providing some flexibility
for administration of specific loans based on administrative procedures and standards to be adopted
by the Financial Officer pursuant to existing authority under Section 26-720 of the City Code; and
WHEREAS, on March 1, 2012, the Energy Board voted unanimously to recommend
expansion of the role of Utilities as the financing agent for energy reduction projects, and on April
5, 2012, the Energy Board voted unanimously to recommend adoption of the proposed Ordinance;
and
WHEREAS, on March 15, 2012, the Water Board voted unanimously to recommend the
adoption of the proposed On-Bill Utility Financing Program; and
WHEREAS, in accordance with the foregoing, the Council is adopting revisions to Chapter
26 of the City Code, as set forth herein.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
Section 1. That, for the reasons stated above, the City Council hereby finds and
determines that the On-Bill Utility Financing Program as described herein will be for the betterment
of the affected Utilities, and will be beneficial to the ratepayers of those Utilities.
Section 2. That Section 26-129 of the Code of the City of Fort Collins is hereby amended
by the addition of new subparagraphs (f) and (g) which read in their entirety as follows:
Sec. 26-129. Schedule D, miscellaneous fees and charges.
. . .
(f) The interest rate for water service-related loans shall be no less than the most
current U.S. prime lending rate at the time of loan origination plus two percent (2%)
and no more than the most current U.S. prime lending rate at the time of loan
origination plus five percent (5%), per annum, with the interest rate for each loan to
be set in accordance with the administrative rules and regulations of the Financial
Officer pursuant to §26-720.
(g) Loan-related fees for water service-related loans shall be as follows:
(1) For loan application: $25.00
(2) For loan origination: 150.00
Section 3. That Section 26-130 of the Code of the City of Fort Collins is hereby amended
to read as follows:
Sec. 26-130. Agreements for special water services.
(a) Special services or complex service arrangements that are beyond those
required for basic water service may be arranged by a written services agreement
which the Utilities Executive Director may negotiate and enter into on behalf of the
water utility. Said agreement shall establish the terms and conditions for any such
special services or arrangements and shall incorporate by reference the requirements
of this Chapter, as applicable.
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(b) Special services in the form of loans for water service-related improvements,
conservation measures or efficiency enhancements shall be documented on forms
determined by the Utilities Executive Director and the Financial Officer. Any such
loans shall be made consistent with the applicable program requirements, credit and
risk standards, and interest rates provisions as set forth in this Article and in the
administrative rules and regulations adopted by the Financial Officer pursuant to §
26-720. Obligations for repayment of any such loans are subject to the provisions of
Article XII of this Chapter.
(c) Any special services agreement modifying the rates, fees or charges for said
services from those set forth in this Article shall be subject to approval by the City
Council in accordance with § 6 of Article XII of the Charter.
Section 4. That Section 26-289 of the Code of the City of Fort Collins is hereby amended
to read as follows:
Sec. 26-289. Miscellaneous fees and charges.
The following is a schedule of miscellaneous fees and charges:
Description Amount
(1) Connection fees and service
charges
Fees shall be set forth as in § 26-
712(b)
(2) Industrial discharge permits
a. Administration $76.00 annually
b. Surveillance Determined for each user
annually, based on direct cost
plus 15% indirect costs, billed
monthly
(3) Laboratory support services Determined on a case-by-case
basis based on direct cost plus
15% indirect costs
(4) Materials and labor provided
by City
Determined on a case-by-case
basis based on direct cost plus
15% indirect costs
(5) Charges for disposal at the
Fort Collins Regional Sanitary Waste
Transfer Station:
a. Septic tanks, vaults, privies,
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portable toilets:
Generated within Larimer
County
$0.071 per gallon
Generated outside Larimer
County
$0.108 per gallon
b. Recreational vehicle sanitary
waste holding tanks:
Residential customers of the
City of Fort Collins
Wastewater Utility
No charge for individual
disposal at Transfer Station
Others $2.35 base fee plus $0.071 per
gallon
(6) Interest rate for wastewater
service-related loans:
No less than the most current
U.S. prime lending rate at the
time of loan origination plus two
percent (2%) and no more than
the most current U.S. prime
lending rate at the time of loan
origination plus five percent
(5%), per annum, with the
interest rate for each loan to be
set in accordance with the
administrative rules and
regulations of the Financial
Officer pursuant to § 26-720.
(7) Loan-related fees for wastewater
service-related loans:
a. For loan application: $25.00
b. For loan origination: $150.00
(78) Miscellaneous fees Determined on a case-by-case
basis based on direct costs plus
15% indirect costs
Section 5. That Section 26-290 of the Code of the City of Fort Collins is hereby amended
to read as follows:
Sec. 26-290. Agreements for special wastewater services.
(a) Special services or complex service arrangements that are beyond those
required for basic wastewater service may be arranged by a written services
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agreement which the Utilities Executive Director may negotiate and enter into on
behalf of the wastewater utility. Said agreement shall establish the terms and
conditions for any such special services or arrangements and shall incorporate by
reference the requirements of this Chapter, as applicable.
(b) Special services in the form of loans for wastewater service-related
improvements, conservation measures or efficiency enhancements shall be
documented on forms determined by the Utilities Executive Director and the
Financial Officer. Any such loans shall be made consistent with the applicable
program requirements, credit and risk standards, and interest rates provisions as set
forth in this Article and in the administrative rules and regulations adopted by the
Financial Officer pursuant to § 26-720. Obligations for repayment of any such loans
are subject to the provisions of Article XII of this Chapter.
(c) Any special services agreement modifying the rates, fees or charges for said
services from those set forth in this Article shall be subject to approval by the City
Council in accordance with § 6 of Article XII of the Charter.
Section 6. That Section 26-464 of the Code of the City of Fort Collins is hereby amended
by the addition of a new subsection (p) which reads in its entirety as follows:
Sec. 26-464. Residential energy service, schedule R.
. . .
(p) Loans. Special services in the form of loans for electric service-related
improvements, conservation measures or efficiency enhancements shall be documented
on forms determined by the Utilities Executive Director and the Financial Officer. Any
such loans shall be made consistent with the applicable program requirements, credit and
risk standards, and interest rates provisions as set forth in this Article and in the
administrative rules and regulations adopted by the Financial Officer pursuant to § 26-
720. The interest rate for such loans shall be no less than the most current U.S. prime
lending rate at the time of loan origination plus two percent (2%) and no more than the
most current U.S. prime lending rate at the time of loan origination plus five percent
(5%), per annum, with the interest rate for each loan to be set in accordance with the
administrative rules and regulations of the Financial Officer. Obligations for repayment
of any such loans are subject to the provisions of Article XII of this Chapter.
Section 7. That Section 26-465 of the Code of the City of Fort Collins is hereby amended
by the addition of a new subparagraph (r) which reads in its entirety as follows:
Sec. 26-465. Residential demand service, schedule RD.
. . .
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(r) Loans. Special services in the form of loans for electric service-related
improvements, conservation measures or efficiency enhancements shall be documented
on forms determined by the Utilities Executive Director and the Financial Officer. Any
such loans shall be made consistent with the applicable program requirements, credit and
risk standards, and interest rates provisions as set forth in this Article and in the
administrative rules and regulations adopted by the Financial Officer pursuant to § 26-
720. The interest rate for such loans shall be no less than the most current U.S. prime
lending rate at the time of loan origination plus two percent (2%) and no more than the
most current U.S. prime lending rate at the time of loan origination plus five percent
(5%), per annum, with the interest rate for each loan to be set in accordance with the
administrative rules and regulations of the Financial Officer. Obligations for repayment
of any such loans are subject to the provisions of Article XII of this Chapter.
Section 8. That Section 26-712(b) of the Code of the City of Fort Collins is hereby amended
to read as follows:
Sec. 26-712. Utility bill and account charges authorized; procedures.
. . .
(b) The following account and miscellaneous fees and charges shall apply to all
City utility customers receiving service pursuant to the terms of Chapter 26, whether
within or outside of the corporate limits of the City, except as otherwise expressly stated:
Fees and Charges Amount
Service connection fee for account with one or more
metered services (including nonmetered services for
the same account)
$19.65
Customer-initiated rate change (after 90 days of new
service)
19.65
Service connection fee for account with only
nonmetered services (stormwater, wastewater, wind,
flat commercial electric, sprinkler clocks, cable
towers and floodlights)
10.00
Service fee to reinstate an account to the
owner/property manager between tenants
10.00
Meter reading charge, per month, for those customers
who request the option of mechanical electric meter
and/or a mechanical water meter instead of the
standard advanced metering equipment
11.00
per month
Turn-off notice fee 10.00
Reconnect fee per service for water or electric 20.00
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following disconnection for delinquency
Trip charge for special services requested by
customer during normal service hours
19.65
After-hours reconnect or after-hours trip charge for
special service requested by customer - Water (after
5:00 p.m. weekdays or weekend/holiday)
85.35
After-hours reconnect or after-hours trip charge for
special service requested by customer - Electric (after
5:00 p.m. weekdays or weekend/holiday)
85.35
Return item fee (check, electronic fund transfer,
credit card, etc.)
25.00
Owner-requested repair disconnect fee, per trip 20.00
Research/document fee per hour 20.00
Interest rate for utility service-related loans: No less than the most current U.S.
prime lending rate at the time of
loan origination plus two percent
(2%) and no more than the most
current U.S. prime lending rate at
the time of loan origination plus
five percent (5%), per annum,
with the interest rate for each loan
to be set in accordance with the
administrative rules and
regulations of the Financial
Officer pursuant to § 26-720.
Loan-related fees for utility service-related loans:
a. For loan application: $25.00
b. For loan origination: $150.00
Other miscellaneous charges will be based on direct cost plus fifteen percent (15%)
indirect costs.
. . .
Section 9. That Section 26-720 of the Code of the City of Fort Collins is hereby amended
to read as follows:
Sec. 26-720. Administrative rules and regulations.
The Financial Officer may formulate and promulgate rules and regulations for the
administration of this Article, not inconsistent with the provisions of this Article, with
respect to the billing and collection of utility fees and charges, credit and lending
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standards and rates and administrative practices for utility loan programs, and other
matters relating to the administration of customer accounts. Said rules and regulations
may regulate without limitation, the forms and procedures for giving notice to customers;
policies for adjusting billed amounts as necessary to correct errors or for administrative
efficiency or to achieve equity; procedures for appeals; and procedures for the
documentation of liens. Any rules or regulations promulgated by the Financial Officer
hereunder shall be effective upon the Financial Officer's filing of the same with the City
Clerk.
Introduced, considered favorably on first reading, and ordered published this 17th day of April,
A.D. 2012, and to be presented for final passage on the 1st day of May, A.D. 2012.
_________________________________
Mayor
ATTEST:
_____________________________
Interim City Clerk
Passed and adopted on final reading on the 1st day of May, A.D. 2012.
_________________________________
Mayor
ATTEST:
_____________________________
Interim City Clerk
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