HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 07/02/2019 - FIRST READING OF ORDINANCE NO. 084, 2019, APPROPRIAgenda Item 6
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AGENDA ITEM SUMMARY July 2, 2019
City Council
STAFF
John Phelan, Energy Services Manager
Sean Carpenter, Climate Economy Advisor
Cyril Vidergar, Legal
SUBJECT
First Reading of Ordinance No. 084, 2019, Appropriating Unanticipated Grant Revenues From Bloomberg
Philanthropies and Authorizing Transfers of Appropriations in the Light and Power Fund for Residential
Efficiency Project Loans.
EXECUTIVE SUMMARY
The purpose of this item is to appropriate $193,650 of $682,000 in grant award revenues from Bloomberg
Philanthropies, as part of the Bloomberg Mayor’s Challenge, into the Fort Collins Utilities Light and Power fund
and Economic Health Office for the purposes of ongoing project management and operations of Epic Homes
and a sub-grant to Colorado State University for indoor air quality research. The remaining $488,350 of the
2019 balance of funds will be appropriated for Epic Loan capital in alignment with pending third-party capital
agreements.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
Bloomberg Mayors Challenge
In October 2018, Fort Collins became a winner of the 2018 Bloomberg Philanthropies Mayors Challenge and
the associated $1 million prize. The 2018 Bloomberg Mayors Challenge involved over 300 cities proposing
ideas to address important issues in their communities. Fort Collins focused its idea on the “climate economy”,
presenting an idea to address energy efficiency and health and wellbeing in rental housing, specifically for low-
to-moderate income residents, through the “Epic Homes” program.
The Bloomberg grant supports a three-year performance period through the end of 2021. The project includes
a semi-annual review of the budget categories with an opportunity to revise the amounts, subject to the
approval of Bloomberg.
Bloomberg Philanthropies works in over 120 countries around the world to ensure better, longer lives for the
greatest number of people. The organization focuses on five key areas for creating lasting change: Arts,
Education, Environment, Government Innovation, and Public Health. In 2016, Bloomberg Philanthropies
distributed $600 million. For more information, go to https://www.bloomberg.org/.
Epic Homes
Epic Homes was selected as a winner in the Bloomberg Mayors Challenge for its innovative approach to
providing health and equity benefits for low-to-moderate income renters by improving the energy efficiency of
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rental homes, as 96% of Fort Collins’ low-to-moderate income residents live in rental homes. Residential
property owners can take advantage of Epic Homes to make their homes more comfortable, healthy and
efficient. Partnering with Colorado State University, Fort Collins is also establishing a research program which
links the health and wellbeing benefits of improved indoor air quality over time.
The winning idea was developed through extensive prototyping and testing with property managers, low-
income residents, and other stakeholders. It combines four main structural elements (Attachment 1):
• Leverages the existing Efficiency Works Homes program for energy efficiency assessments and upgrades
• Revitalizes an on-bill financing option for addressing financial barriers to energy efficiency upgrades
utilizing third party capital providers to increase funding capacity
• Focuses on renters and low-to-moderate income residents to target a historically underserved population
in energy efficiency programs, and
• Incorporates rigorous monitoring of indoor air quality, and health and wellbeing impacts from energy
efficiency projects through a partnership with Colorado State University.
Fort Collins is the first city to combine these aspects into one program for residents. This will be a multi-year
process of innovation and continual iteration to refine ideas and processes. The program team will be working
to streamline the program and loan servicing processes, continually develop new capital sources, implement
protocols for monitoring indoor air quality and energy efficiency impacts, successfully communicate internally
and externally and engage with others working to accomplish similar goals.
The Bloomberg Mayors Challenge award has a three-year performance period, though the program team
plans to continue this program into the future. Goals for 2021 include:
• Epic Homes will upgrade 2,000 homes, including 360 rental properties
• Documented indicators of home performance and indoor environmental quality that are associated with
improved health and wellbeing
• Savings from reduced energy use and lower utility bills will be available for other family priorities, and
• Rental property owners will report financing is not a barrier to energy efficiency upgrades.
Approximately 50% of Fort Collins’ overall housing stock and 25% of single-family homes, are renter-occupied.
Rental housing, property owners and property managers are an underserved market for energy efficiency
upgrades. During the Champions Phase of the Bloomberg Mayors Challenge, the team discovered that many
rental property owners are interested in a program to upgrade rental properties if it makes sound business
sense, provided simple processes and ensured high quality work. The streamlined upgrade process and
attractive on-bill financing option appealed to these rental property owners. Epic Homes will be available for
any single-family home in Fort Collins, with a focus on reaching rental properties.
Health and wellbeing is another key aspect of Epic Homes. The City is partnering with Colorado State
University to implement rigorous indoor air quality monitoring, as well as study the impacts of energy efficiency
upgrades on overall health and wellbeing. The intent of this monitoring is to change the dialogue around
energy efficiency from being about “the building” to being about “the people that live in the building.”
Epic Loans
The Epic Loan program was established in August 2018 as a part of the Champions Phase of the Bloomberg
Mayors Challenge. Epic Loan has also been referred to as On-bill Financing 3.0 (OBF 3.0). The programmatic
and implementation structure is substantially similar to the OBF 1.0 program managed by Utilities from 2013
through 2016. The primary differences are that the Epic Loan program is utilizing third-party capital from a
variety of sources, and that the Bloomberg Mayors Challenge project will focus on implementing efficiency
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upgrades in rental properties and the measurement of indoor air quality effects. Epic Loan includes loan terms
up to 15 years and attractive interest rates. Epic Loans are repaid on the property owner’s Fort Collins Utilities
monthly bill.
The Home Efficiency Loan Program (HELP, aka OBF 1.0) operated from January 2013 through early 2017
when the Council-approved maximum outstanding loan balance of $1.6 million was reached. Elevations Credit
Union was selected through an RFP process for energy loan financing in 2017, which offers energy efficiency
loans for credit union members through loan origination and servicing independent of Utilities billing. Uptake of
the program has been minimal, with an average of three to five loans issued per month, outlining the customer
desire for a revitalized on-bill financing option. With the implementation of Epic Loans, Elevations loans will
continue to be an option for interested customers.
Third-party capital is a critical piece of the revitalized on-bill financing to bring in additional capital to the Epic
Loan program. The program will mix market capital with low- and no-cost capital to create attractive retail rates
for customers; therefore, increasing the number and comprehensiveness of energy efficiency projects
completed that would not have occurred without an easy financing option. Expected sources of third-party
capital include the Bloomberg Mayors Challenge award, the Colorado Energy Office, national and regional
banks, foundations, and impact investors.
The program team is currently in conversations and negotiations with third-party capital providers. After a
review of the final lending agreements with the Council Finance Committee on July 15, 2019, the program
team will provide additional details about the Epic Loan and request approval via ordinance from Council for
third-party capital agreements (currently scheduled for August 20, 2019).
Epic Homes and Bloomberg Mayors Challenge Funding
The first tranche of the Bloomberg Mayors Challenge award was received in early March 2019 and
appropriated via Ordinance No. 046, 2019. The $100,000 tranche was appropriated as Epic Loan capital.
The program team submitted a detailed budget for the $1 million award to Bloomberg Philanthropies in late
March 2019. (Attachment 2) The remainder of the year 1 budget (submitted budget, minus the $100,000
already awarded) was received in early June. The majority of this second tranche ($488,350 of $682,000) will
go towards Epic Loan capital and will be appropriated for Epic Loan capital in alignment with pending third-
party capital agreements. The remainder of the 2019 funds ($193,650 of $682,000) will support a subgrant to
Colorado State University to establish the indoor air quality and health/wellbeing study, project costs for Fort
Collins Utilities (indoor air quality monitoring equipment, staff, supplies, travel, efficiency contractor and advisor
trainings, etc.), and project costs for Economic Health. Table 1 summarizes the appropriation.
Table 1. 2019 Bloomberg Mayors Challenge Funding Summary
Description Amount Appropriated To Status/Notes
Epic Loan capital $488,350 L&P balance sheet To be appropriated in
alignment with pending
third-party capital
agreements
Colorado State University
indoor air quality and
health research subgrant
$100,000 Operating business unit
of L&P
Scope of work and
CSU grant sub-
agreement under
development
Grant project management
and operating expenses
(staff, supplies, travel,
trainings, etc.)
$79,130 Operating business unit
of L&P
Ensure grant
performance and
activities through 2021
Light and Power Fund
Subtotal
$667,480
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Description Amount Appropriated To Status/Notes
Grant project management
for Economic Health Office
$14,520 Operating business unit
of EH
Ensure grant
performance and
activities through 2021
Economic Health Subtotal $14,520
Total $682,000
Appropriation July 2 $193,650
CITY FINANCIAL IMPACTS
The funds for this appropriation have been received and are being held in Electric Utility reserves awaiting the
appropriation ordinance. The appropriation of these funds will enable Utilities and Economic Health to move
forward with the next phases of the project.
Third-party capital sources and lenders for the Epic Loan program will be reviewed and approved by Council
Finance Committee and Council before integration into Epic Homes. Therefore, there is no financial exposure
to the City.
ATTACHMENTS
1. Epic Homes Background Brief July 2 2019 (PDF)
2. Epic Homes 3-year Fort Collins Bloomberg Budget (PDF)
11
July 2, 2019
Epic Homes and Bloomberg Mayors Challenge Background
ATTACHMENT 1
2018 Bloomberg Mayors Challenge
• 300+ cities participated
• 9 winners selected
• Each awarded $1M to implement their
winning idea
• Cities identified innovative solutions to solve
challenging issues facing their community
2
Winning Idea – Epic Homes
Epic Homes
Comprehensive, streamlined energy efficiency upgrade
program with attractive financing
Efficiency Works Homes
Existing energy efficiency assessment and
upgrade program for residential homes
Epic Loan
No money down, low interest loan through the
revitalized on-bill financing option
Bloomberg Project
Focus on renters and LMI residents with indoor
air quality and health/wellbeing monitoring
3
Renters
&
LMI Residents
All
Residents
Programmatic History
• 2010: Home Efficiency Program (now Efficiency Works Homes) launched
• 2013: Original on-bill financing approved by Council
• 2017: Transitioned to external financing option through Elevations Credit
Union (after reaching Council approved $1.6M from L&P reserves for on-bill
loans)
• August 2018: Revitalized on-bill financing Epic Loan as part of Bloomberg
Mayors Challenge
• October 2018: Won Mayors Challenge for Epic Homes combining energy
efficiency, on-bill financing and health/wellbeing
• February/March 2019: Bloomberg Philanthropies grant agreement signed
and initial $100k tranche awarded
4
Three Year Project Goals
Epic Homes will upgrade 2,000 homes, including 360 rental properties
Documented indicators of home performance and indoor environmental
quality that are associated with improved health and wellbeing
Savings from reduced energy use and lower utility bills will be available
for other family priorities
Rental property owners will report financing is not a barrier to energy
efficiency upgrades
5
Simultaneous Solutions
6
Indoor air
quality/health
Energy
efficiency
Rental split
incentive
On-bill
financing
3rd
party
capital
Partnerships
Innovation
Epic
Program
Project Workstreams
7
Continuously iterate and improve Epic Homes program process
Continuously iterate and improve Epic Loan origination and servicing processes
Build durable capital management system for Epic lending
Project Workstreams
8
Develop Indoor Air Quality protocols and data collection systems
Develop protocols and data collection systems to document efficiency impacts
Communications (property owners, renters, contractors, capital providers)
Engagement with the field
Program:
Initiative:
Grantee:
Program Officer:
Currency:
Grant Reference ID:
Financial Summary
Period 1 Period 2 Period 3
1/1/2019 1/1/2020 1/1/2021
12/31/2019 12/31/2020 12/31/2021
Personnel Salaries 29,645 41,582 43,995 115,222 12% 12%
Fringe Benefits - - - - 0% 0%
Contracts/Consulting - - - - 0% 0%
Travel & Events 1,000 2,833 6,895 10,728 1% 1%
Advertising/Media/Communications 1,000 4,000 2,000 7,000 1% 1%
Supplies 49,500 2,000 1,500 53,000 5% 5%
Grants 100,000 50,000 50,000 200,000 20% 20%
Equipment - - - - 0% 0%
Other Direct Operating Costs 600,930 11,560 1,560 614,050 61% 61%
Total Direct Costs 782,075 111,975 105,950 1,000,000 100% 100%
Total Indirect Costs - - - N/A N/A N/A
Total Costs 782,075 111,975 105,950 1,000,000
% of
Budget Total Total Direct
% of
Grand Total
Government Innovations
Mayors Challenge
City of Fort Collins
Anne Emig
Dollars
5 digit GIFTS ID
1
ATTACHMENT 2
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ORDINANCE NO. 084, 2019
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING UNANTICIPATED GRANT REVENUES FROM BLOOMBERG
PHILANTHROPIES AND AUTHORIZING TRANSFERS OF APPROPRIATIONS IN THE
LIGHT AND POWER FUND FOR RESIDENTIAL EFFICIENCY PROJECT LOANS
WHEREAS, under Ordinance No. 033, 2012, the City established a Home Efficiency
Loan Program, also known as On-Bill Utility Financing (OBF), which enabled Fort Collins
Utilities to offer financing and on-bill servicing of customer loans for energy efficiency, water
efficiency and renewable energy upgrade projects; and
WHEREAS, during 2013 through 2016, OBF provided low-cost financing for energy
efficiency, solar photovoltaic, and water conservation improvements, in support of Utilities’
efficiency and conservation efforts, and policy goals from Plan Fort Collins, the Climate Action
Plan and the Energy Policy and Water Conservation Plan; and
WHEREAS, in early 2017, outstanding OBF loan balances reached the $1.6M limit set
by City Council in Ordinance No. 035, 2016, and the City began looking to third-party capital to
fund the program; and
WHEREAS, in February 2018, the City was selected as a Champion City as part of the
2018 Bloomberg Philanthropies U.S. Mayors Challenge competition; and
WHEREAS, in conjunction with selection as a Champion City, Bloomberg
Philanthropies awarded the City a $1M grant over three years to further develop a program to
improve energy efficiency of low- to moderate-income rental households; and
WHEREAS, on March 3, 2019, the City Manager executed a grant agreement on behalf
of the City with Bloomberg Philanthropies, in acceptance of the grant award; and
WHEREAS, on March 19, 2019, City Council adopted Ordinance No. 046, 2019,
appropriating the first tranche of the Bloomberg grant award in the amount of $100,000,
directing the funds be used for enhanced OBF loan program capital for residential energy
efficiency and renewable energy upgrades, to be administered as the “EPIC Loan Program”; and
WHEREAS, the City recently received the second tranche of the Bloomberg grant
award in the amount of $682,000, which is available for appropriation from the Fort Collins
Utilities’ Light and Power Fund to support the EPIC Loan Program; and
WHEREAS, EPIC Program loans incentivize rental and owner-occupied property
owners to invest in energy-efficient improvements, advancing public benefits to health, safety
and welfare by supporting the City’s progress toward 2030 community energy and climate
objectives; and
WHEREAS, City staff and the City Manager recommend appropriating $193,650 from
the second tranche of Bloomberg Philanthropies grant award funds to increase participation by
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low- and moderate-income households in the EPIC Program, including transferring $14,520 of
appropriated funds to the Economic Health Office for EPIC Program loan management; and
WHEREAS, staff and the City Manager will bring recommendations for appropriating
the remaining $488,350 of the second tranche with other third-party capital in a separate
ordinance at a later date; and
WHEREAS, City Council determines it is desirable to continue enhancement of program
incentives and financing options for EPIC/OBF loans and to provide flexibility in the
administration of loans for rental and owner-occupied properties, in furtherance of conservation
benefits available to ratepayers through City Utility energy efficiency and renewable energy
upgrade programs; and
WHEREAS, City Council further determines improving motivations and financing
options for EPIC/OBF loans for rental and owner-occupied properties will benefit utility rate
payers by incentivizing conservation energy efficiency and renewable energy upgrades in an
additional segment of local housing stock, reducing overall utility consumption across rate
classes, as required by Article XII, Section 6, of the City Charter; and
WHEREAS, Article V, Section 9, of the City Charter permits the City Council to make
supplemental appropriations by ordinance at any time during the fiscal year, provided that the
total amount of such supplemental appropriations, in combination with all previous
appropriations for that fiscal year, does not exceed the current estimate of actual and anticipated
revenues to be received during the fiscal year; and
WHEREAS, the City Manager has confirmed the appropriation of the Bloomberg
Philanthropies grant award as described herein will not cause the total amount appropriated in
the Light and Power Fund to exceed the current estimate of actual and anticipated revenues to be
received in that fund during the fiscal year; and
WHEREAS, the City Manager has confirmed that the appropriation of the Bloomberg
Philanthropies grant award as described herein will not cause the total amount appropriated in
the General Fund to exceed the current estimate of actual and anticipated revenues to be received
in that fund during the fiscal year; and
WHEREAS, Article V, Section 10, of the City Charter authorizes the City Council to
transfer by ordinance any unexpended and unencumbered appropriated amount or portion thereof
from one fund or capital project to another fund or capital project, provided that the purpose for
which the transferred funds are to be expended remains unchanged; the purpose for which the
funds were initially appropriated no longer exists; or the proposed transfer is from a fund or
capital project in which the amount appropriated exceeds the amount needed to accomplish the
purpose specified in the appropriation ordinance.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
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Section 1. That the City Council hereby makes and adopts the determinations and
findings contained in the recitals set forth above.
Section 2. That there is hereby appropriated from unanticipated grant revenue
received from Bloomberg Philanthropies in the Light and Power Fund the sum of ONE
HUNDRED NINETY-THREE THOUSAND SIX HUNDRED FIFTY DOLLARS ($193,650)
for expenditure in the Light and Power Fund for the EPIC residential efficiency project loan
program.
Section 3. That the unexpended appropriated amount of FOURTEEN THOUSAND
FIVE HUNDRED TWENTY DOLLARS ($14,520) in the Light & Power Fund is authorized for
transfer to the General Fund and appropriated therein for the Economic Health Office for project
management of the EPIC residential efficiency project loan program.
Section 4. That the remaining sum of FOUR HUNDRED EIGHTY-EIGHT
THOUSAND THREE HUNDRED FIFTY DOLLARS ($488,350) of unanticipated grant
revenue received from Bloomberg Philanthropies shall be held in the Light and Power Fund for
subsequent appropriation for the EPIC residential efficiency project loan program.
Introduced, considered favorably on first reading, and ordered published this 2nd day of
July, A.D. 2019, and to be presented for final passage on the 16th day of July, A.D. 2019.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 16th day of July, A.D. 2019.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk