HomeMy WebLinkAboutMemo - Mail Packet - 6/19/2018 - Memorandum From John Phelan And Sean Carpenter Re: Bloomberg Grant Appropriation - On Bill Financing UpdateUtilities
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222 Laporte Avenue
PO Box 580
Fort Collins, CO 80522
970.212.2900
utilities@fcgov.com
fcgov.com/utilities
M E M O R A N D U M
DATE: June 13, 2018
TO: Mayor Troxell and Councilmembers
FROM: John Phelan, Utilities Energy Services Senior Manager
Sean Carpenter, Climate Economy Advisor
THROUGH: Darin Atteberry, City Manager
Jeff Mihelich, Deputy City Manager
Lisa Rosintoski, Utilities Deputy Director for Kevin R. Gertig, Utilities Executive
Director
RE: Bloomberg Grant Appropriation – On-Bill Financing Update
The purpose of this memo is to provide more information regarding the status of Utilities On-Bill
Financing services, as requested by the Leadership Planning Team on June 11.
Bottom Line
Utilities is planning to restart On-Bill Financing services in July 2018, with special focus on rental
properties that serve low and moderate-income Fort Collins residents, as part of the Bloomberg
Mayors Challenge. The finance offering will provide utility bill-serviced loans for a range of
energy and water projects, and customer segments. For rental properties, the loans will be
serviced and paid for on the owner’s portion of the utility bill, not the tenants.
Background
In February, Fort Collins was selected as one of thirty-five “Champion Cities” from 320 applications
from across the United States, as part of the 2018 Bloomberg Philanthropies U.S. Mayor’s
Challenge (“Mayor’s Challenge”). The Mayor’s Challenge provides grants and technical assistance
to city leaders who are solving urgent problems in their communities. As part of the Champion City
award, Bloomberg awarded Fort Collins a $100,000 grant to develop a program that would improve
the energy efficiency of low- to moderate-income rental households. Fort Collins plans to use over
95% of these funds as capital for the loan fund, as well as leverage other sources of external, non-
ratepayer capital.
Staff has been testing a range of possible program structures and marketing materials with property
managers, property owners, renter residents and capital providers for the last several months –
“idea prototyping” in Bloomberg nomenclature. In August, Fort Collins will submit the final
application for the Mayor’s Challenge competition with a chance to win one million or five million
dollars that can be used for additional loan capital, and indoor air quality and housing health
research with Colorado State University.
On-Bill Financing 2.0
The City of Fort Collins 2013 – 2016 On-Bill Financing program successfully demonstrated the
feasibility of a Utility department-managed, private sector-driven strategy to reduce carbon
emissions through residential energy efficiency building upgrades, in collaboration with external
partners including contractors, equipment suppliers and area homeowners. In late 2016, the
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City transitioned from the successful on-bill financing methodology to a third-party commercial
model. Although the new structure aligns with the City’s and Utilities’ current financial
requirements, the third-party financing program has not achieved uptake equal to the prior
results.
In order to achieve community energy and climate goals, as adopted by City Council, a “reboot”
and upgrade of the original approach is necessary, thus On-Bill Finance 2.0 (OBF2.0). The
OBF2.0 reboot will:
Materially contribute to the City’s energy and climate objectives, particularly the 2030
goals. Research and analysis indicates that OBF2.0 will be a critical factor in Fort Collins
likelihood of successfully achieving CAP goals;
Expand equitable participation of low and moderate-income (LMI) households in energy
efficiency and renewable energy programs with a focus on rental properties;
Establish a scalable public-private partnership (PPP) social impact model that incents
the private sector and residents to upgrade aging building stock in an affordable, cost-
effective manner;
Spur the start, strengthening and/or expansion of new and existing energy efficiency-
related businesses and jobs in Fort Collins; and
Obtain non-recourse, private-sector debt capital to fund new energy efficiency loans.
Financial and Program Update
The new program offering will not use Utilities or General Fund capital for the loan fund. In the
third quarter 2018, the initial funds from Bloomberg will be supplemented from committed grants
and a low interest loan from the Colorado Energy Office (CEO). CEO funding is being provided
to develop and demonstrate a replicable model and tools for other Colorado communities to
implement similar programs across the state. Additional third-party, private-sector capital
sources will also be added to develop a long-term sustainable financial model.
The program will operate similarly to the Home Efficiency Loan Program from 2013 to 2016,
utilizing the Efficiency Works Home program, third-party financial services and Utilities on-bill
servicing of loans. After a formal procurement process, staff is nearing completion of an
agreement for third-party financial services for administration of loan programs, and the same
vendor will be able to provide loan services for Utilities, Environmental Services, and Historic
Preservation, which will simplify financial administration for all three programs.
CC: Jacqueline Kozak-Thiel, Chief Sustainability Officer
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