Aurora is considering creating a lending program, to be run by a state agency, that would offer loans towards sustainability upgrades to commercial properties.
The proposal, as heard by a committee of the Aurora City Council on Tuesday, would allow the city to participate in the Illinois Finance Authority’s Commercial Property Assessed Clean Energy financing program, commonly called C-PACE. This type of lending has been available statewide since 2017, but individual local governments still need to approve its use within their boundaries.
“This really supports both economic development and sustainability at the city of Aurora,” Alison Lindburg, the city’s director of sustainability, said of the proposed C-PACE program at the Rules, Administration and Procedure Committee meeting on Tuesday.
Loans given through the program could fund certain upgrades to commercial, industrial, non-residential agricultural, nonprofit and multifamily properties, according to Lindburg’s presentation. In total, the loans could be for up to 100% of the project’s total cost, with a maximum amount no more than 25% of the property’s total value.
Upgrades that could be funded through the program include energy efficiency improvements like lighting, HVAC or insulation upgrades; the installation of renewable energy sources like solar or geothermal; the addition of water conservation systems; upgrades to improve resiliency like flood mitigation or infrastructure improvements; and the installation of electric vehicle charging stations.
City staff were recently talking to a property owner that needed to replace a large number of a building’s windows, and this financing tool could be a good option to help them do that, Lindburg said. That’s because replacing windows can help with energy conservation, making the project eligible for this type of financing.
The funding can also be used as a “gap” financing tool to support larger projects, she said, if they include energy efficiency or related improvements. Along with renovation projects, new construction is also eligible to receive this lending.
The loans will generally have a fixed, low interest rate and have terms as long as 40 years, although most will have terms of 10 to 30 years, according to her presentation. And unlike traditional loans, it is backed by the property, not through a personal guarantee by the owner, so it can be transferred to new owners if the property is sold.
In particular, C-PACE loans are repaid through a special “assessment lien” on the property, which is sort of like an additional tax on the property. However, the lenders bill and collect the payment separately from the property’s tax bill, according to Brad Fletcher of the Illinois Finance Authority.
After a property owner applies for C-PACE lending, the Illinois Finance Authority is the one that actually issues bonds or notes through private lenders, according to Lindburg. The Authority works with a variety of these private lenders, she said, which makes the process competitive so property owners can get a very low interest rate.
The city of Aurora wouldn’t be providing funding through the program and generally wouldn’t have much involvement in it, Lindburg said. However, the Illinois Finance Authority will be providing regular updates to the city, and the city would still get final approval over the loans, according to Fletcher.
Lindburg said the proposal would bring “another tool to our tool belt” for improving buildings within Aurora. Plus, it would also help to increase property values, lower the operating costs of buildings, encourage the reuse of older buildings, create jobs for local contractors and trades, support sustainability goals, reduce greenhouse gas emissions and help with long-term economic development, her presentation showed.
The C-PACE program was recommended for approval by the Aurora City Council’s Rules, Administration and Procedure Committee on Tuesday. It is now set to go before the Committee of the Whole before heading to the Aurora City Council for final approval.
According to the Illinois Finance Authority’s webpage on C-PACE, which can be found at www.il-fa.com/programs/c-pace, there are six counties and 16 cities already participating in its program.
Aurora staff in December presented early plans to bring funding programs like this one to the city. In addition to a C-PACE loan program, staff were also said to be working on a similar program for residential properties along with different financing options for small businesses and neighborhood improvements.
rsmith@chicagotribune.com