Kingston home energy retrofit program (KHERP

The City of Kingston will develop a local improvement charge (LIC) financing program to encourage homeowners to undertake deep-energy retrofits. In addition to the primary LIC model, the city will encourage utilities to offer on-bill financing and third-party lending from financial institutions as the program grows over its first few years to enable a long-term scale-up. This program is expected to retrofit 25–50% of Kingston’s pre-1991 single-family homes by 2040, achieving an average carbon-reduction impact of 30% per home. 

The city will have authority over the administration, development, budgeting, contracting and monitoring of the program. Utility providers, for their part, will be key marketing and promotion leads. They will also play an important role in engaging contractor and Residential Energy Auditor (REA) networks, provide advice on database development and decision-support platforms, and share expertise to ensure the use of the latest information and technology to optimize cost-effective energy and emission reductions. Training support will also come from organizations who provide field experience to enable new workers to obtain their REA certification. Moreover, proposed home energy coaches may provide objective guidance to eligible homeowners, such as interpreting energy assessment reports and going over financing and optimal retrofit options with the homeowner. Coaching can help residents better understand and more quickly navigate retrofit options, improving homeowner overall satisfaction with the program. Implementing a residential energy retrofit program aligns with Kingston’s 2015 Community Climate Action Plan, which estimated that using incentives and loans to support home retrofits over a 20-year period could result in 18,000 tonnes of greenhouse gas emissions reductions. The program’s objectives are further supported by Kingston’s Official Plan. Additionally, the program will support the public commitment to climate change leadership for carbon neutrality by 2040. Municipal staff across various city departments will be involved in the program. 

Financing terms extended to homeowners: 

· Loan amount: The program’s primary financing will be through a local improvement charge (LIC) bylaw approved by Kingston City Council that allows the provision of retrofit loans to registered property owners. Applicants must have no outstanding property tax arrears at the time of program application. Maximum funding for program applicants is limited to the lesser of 10% of their current Municipal Assessment Property Assessment Corporation (MPAC) assessment or $40,000. These values may require revisions over time, which will be addressed through amendments to the city’s LIC bylaw. 

· Loan terms and repayment: The program will offer amortization periods of five to twenty years based on the average life of the retrofit equipment installed with additional consideration of the homeowner’s financial circumstances. 

· Interest rates: Interest rates offered to eligible homeowners will follow the addition of a 0.25-0.5% spread from the FCM loan rate offered to the city. 

· Underwriting criteria: Review of homeowner standing of city tax accounts, debt service and combined loan-to-value ratios, income and debt obligations and credit scores will form the basis of the financial ability to repay the LIC. 

· Additional fees or charges to participants: In the first two years of the program, no administrative fee is expected to be charged to applicants. However, in year three a fee may apply to build up future reserves for ongoing program support after the four-year FCM funding period. This could contribute, for example, to an ongoing loan loss reserve fund or to maintaining the LIC administration past the initial four-year period. 

· Consumer protection measures: The program may use other programs (such as eRenovate) or agencies (such as the Heating, Refrigeration and Air Conditioning Institute of Canada - HRAI) that provide a degree of assurance to homeowners regarding contractor certifications as well as posted customer reviews. Learning from past program delivery, the city may also consider a pre-qualification process to establish quality assurance standards and project cost maximums to prevent artificial elevation of prices. Notification to supply chains for common equipment (e.g., heat pumps) may also take place during program scale-up to ensure that increased demand does not create shortages that could affect retrofit duration and costs. 

· Other: The FCM Community Energy Financing funds and the city’s confirmed 20% contribution will form the main sources of capital to support implementation of the home energy retrofits. Any use of a homeowner’s available capital and/or use of other financing (e.g., line of credit from banks or on-bill utility financing) may apply as secondary alternative or supplementary sources at the discretion of program applicants and other lenders. It is expected that homeowners will transact directly with trades contractors and energy advisors. The city may choose to contract with a single energy advisor organization if it can achieve volume discounts. Environmental benefits: The program is anticipated to reduce energy usage by 18,671 GJ per year and greenhouse gas emissions by 876 tCO2e per year. 

Social and economic benefits: 

The socio-economic benefits of the project include an increase in property value; reduced operating costs (home affordability); the creation and retention of jobs; the generation of local economic development; improved neighbourhood cohesion; and possible market transformation for home-energy retrofits. 

Innovative aspect(s): 

· The program will leverage PACE/LIC financing for the first time to provide homeowners with an affordable and accessible way to finance energy efficiency and renewable energy upgrades 

· Specific innovative components of the program include the collaborative approach to program implementation with multiple utility companies; an energy coach; energy advisors; a platform/database and mobile apps to support homeowner decision making; incentives (in addition to provincial rebates) that can be used at the discretion of the homeowner; and a wide variety of eligible measures (including climate-adaptation measures) 

· An established loan loss reserve will mitigate risks to mortgage providers 

· Utilities were encouraged to offer on-bill financing and third-party lending from financial institutions, which would support long-term scale-up of the program 

Replicability: 

The program’s proposed key performance indicators are well defined and applicable to many municipalities. Additionally, the program includes an online public engagement tool and toolkit that that is replicable across several municipal contexts. 

(Project description from original funding application)