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What would it take for PACE funding to work in Canada? The Manitoba Chapter of the Canada Green Building Council hosted this interactive session to discuss. These slides cover material from a large study done with the Federation of Canadian Municipalities (FCM) about the role municipalities can play in enabling net-zero construction. Finance models were a big discussion topic in that study, and PACE is a very interesting tool. This presentation explores how PACE could work in Manitoba.
Derek SatnikFolgen
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PACE Funding Instruments
- PACE Funding Instruments CHBA MB Mar. 16, 2023
- Federation of Canadian Municipalities – Green Municipal Fund Municipal Tools for Catalyzing Net-Zero Energy Development www.s2etech.com/fcm-gmf
- Finance Policy/Process Technology Enabling Net-Zero Energy Development
- Confidential S2e Technologies Inc. Design Strategies for Achieving Net-Zero Energy:
- Confidential S2e Technologies Inc. Design Strategies for Achieving Net-Zero Energy: (Sample technology)
- Confidential S2e Technologies Inc. Design Strategies for Achieving Net-Zero Energy: (Summary table)
- Courtesy: mfoa.on.ca Financial Strategies for Achieving Net-Zero Energy: • Reduce expenses (i.e. eliminate redundancy) • Offset expenses (i.e. incentives/grants or net-metering) • Externalizing expenses (i.e. micro-utilities or 3rd party operator) • Non-traditional methods of financing (i.e. energy service agrmt) Financial Feasibility
- Courtesy: e2tech.org Policies and Programs that Support Net-Zero Energy: • Solar enablement • District energy • Incentives: • Municipal Programs and Incentives (i.e. Tax-Increment Grant) • Provincial Programs and Incentives (i.e. SMART Green Program) • Utility Incentives (i.e IESO Save ON Energy) • Federal Programs, Incentives, Climate Initiatives (i.e. GIF) • Programs and Incentives outside of Canada • Industry Programs Policy/Program Feasibility
- Green Housing Programs
- Green Building Programs
- Lessons Learned Site One: West 5 (greenfield, mixed- use development) Site Two: McCormick Candy Factory (urban, mixed use redevelopment) Site One: Block 4 (urban, mixed use redevelopment) Site Two: Davis Tannery (residential [re]development) Site One: Bramm Yards (urban, mixed use redevelopment) Site Two: Greenfield Demonstration Site Site One: Philip St (urban, commercial redevelopment) Site Two: Frobisher Dr (industrial infill) Case Studies Lessons Learned
- Figure 6-23: Conceptual Master Plan for a Greenfield Demonstration Site, Kitchener Case Studies - Kitchener
- Trends and Key Lessons Learned 1. Process is Secondary to Vision 2. Conflicting Policies 3. Death by a Thousand Meetings 4. Context, Context, Context 5. Experience is King 6. Institutional Inertia 7. Incentives are Enablers, Not Less or More (continued)…
- Trends and Key Lessons Learned 8. Money Talks 9. Technology is Not the Issue 10.It’s All About Design 11.Solar Access 12.District Energy 13.Optimizing the Underground 14.Permits and Approval
- Benchmarking Training Continuous Learning Consider Solar Right-to-Light District / Distributed Energy Community Improvement Plan Celebrate Conclusions
- Kitchener Operations Facility – solar roof A. Incentives: Municipal, Provincial, Utility, Federal B. Solar Energy: Policies, program, by-law C. District Energy: Policies, easement, access agreement D. Community Improvement Plan and Programs Appendices and Sample Initiatives
- Recommended Incentive Programs: Overview 1. Green Housing Incentive Program 2. Green Building Incentive Program 3. Property Tax Reduction Incentive Program 4. Advanced Queuing Incentive Program 5. Property Assessed Payments for Energy Reductions (PAPER) Program 6. Development Charge Reduction Program 7. Building Permit Fee Reduction Program
- Incentive Program Summary Confidential © s2e Technologies Inc.
- Green Housing Incentive Program Confidential S2e Technologies Inc.
- Green Building Incentive Program Confidential S2e Technologies Inc.
- Property Tax Reduction Incentive Program Confidential S2e Technologies Inc.
- Advanced Queuing Incentive Program Prioritizes developments that will be Green Building Certified. All hard project costs are covered through related permit fees paid by applicants. Buildings will obtain higher performance, providing increased revenue on collected municipal property taxes.
- Property Assessed Payments for Energy Reductions (PAPER) Program (pg 1) Confidential S2e Technologies Inc. (Cont…) (Cont…)
- Property Assessed Payments for Energy Reductions (PAPER) Program (cont.) Confidential S2e Technologies Inc. (Cont…) (Cont…)
- Development Charge Rebate Incentive Program Confidential S2e Technologies Inc.
- Building Permit Fee Reduction Program Confidential S2e Technologies Inc.
- Key Strengths of the Incentive Programs • Education and Experience • Social Benefits • Environmental Benefits • Direct Financial Returns
- Thank you! www.s2etech.com/fcm-gmf dsatnik@s2etech.com 226-339-0943
Hinweis der Redaktion
- Green Municipal Fund 4 partner municipalities
- NZ requires these three things in order to be feasible: The right tech (always feasible, but need local support etc) The right financial approach The right policy environment (ie: we need permits to build!)
- We reviewed almost 90 different technologies in this report for their effectiveness. We looked at: Strengths v. limitations Availability: whether they are established (readily available) v. emerging (potentially hard to find local suppliers for) Scale of impact (small to large) Scale of cost (ie: ideally we’d love to find a big impact 5* item with low cost) Scope of application: whether this technology is something you use in a building (eg: insulation), across a neighbourhood (eg: district energy), or throughout a whole city (eg: energy storage). We tried to summarize everything for public servants, assuming they were technically educated readers who are stronger in policy and in planning than in mechanical or electrical engineering.
- Here’s an example review of one sample technology.
- Then we added a summary to make it quick and easy to compare lots of the technologies we reviewed.
- -highlights with an example or two
- [see the appendices in this slide deck for more detail]
- This figure shows the various Green Housing programs that have offered the required building science training that has made it possible to advance the energy requirements in the national building code, and have helped educate the industry to grow and improve at the same pace. These programs have helped the rest of the industry advance, and have paved the way for progress for future clean developments. The two dimensional axis indicates that generally as energy performance increases, environmental performance increases as well. This is indicated by the LEED and Living Building Challenge certifications on the far top left of the figure. The figures make it clear to see the wide variance between the different Green housing Certifications. While it would be exhaustive to discuss the similarities and differences (it would require a study of its own), the figure can help the reader orient the various programs.
- As you can see, the two figures are anecdotal and are offered for discussion purposes only. There is no universal evaluation available that could adequately compare this group of programs on a two dimensional axis. However, the figures are useful to see how the programs generally are oriented and perform generally in relationship to each other. These are the green building certifications that have been worked into the proposed incentive programs that will be discussed. It is important to indicate that the most attractive incentives are provided for the higher green building certifications to encourage them to adopted by developers. Municipalities can offer support and healthy pressure to builders and developers to watch these standards, learn from them while they are voluntary, and prepare for net-zero energy as an obtainable target for 2030. These considerations have inspired and guided the incentive programs that the research team suggests to the various municipalities across the country
- S2e’s work with our case study partners provided meaningful insights to ensure there is interest in pursuing net zero energy developments.
- Discuss and identify fey energy features
- The following lessons were learned through S2e’s work with our case study partners. It is recommended that municipalities keep these key lessons in mind, as they have influenced the suggested CIP and provide important contextual insight on how to overcome barriers to achieving net zero energy efficiency. While difficulties and challenges will vary with context, it is often very useful to look to the experience of other municipalities when forming a CIP or implementing a particular incentive program. Process is Secondary to Vision Mock-trial process with cities was difficult in most cases – there was a strained gap between envisioning new projects and process of realizing these visions May have good / ambitious visions, but permit / approval officials will struggle between the requirements of existing policy and other pressures and time constraints. Net zero energy is still a new enough concept that it requires a certain level of creativity. This is an issue, as many municipalities are used to a simpler design structure when approving permits – this may result in hesitancy and difficulty embracing the new creative process that is required for a net zero energy proposal 2. Conflicting Policies Often planning documents that are highly ambitious (ie. District Energy) will cause issues between different departments and local utilities, which can impact the release of permits Lesson from west 5 – Planning policies may force developments to remain within certain portions of the City (ie. Condensed downtown core) – however, builders and developers should not have to negotiate with the city to pursue sustainability in projects – a self contained neighborhood with appropriate densities of mixed uses should not just be encouraged where a well-intentioned policy thought it would be best pursued. 3. Death by a Thousand Meetings Superfluous amount of voices needlessly slows down the entire development process, creates redundant approvals, and adds unnecessary complications. Municipal committees only need to review the master plan of development – review can be done by a third party, rather than forcing the developer to continue to meet with the city throughout the development process. If Municipality wants to prioritize involvement in each stage of the building design, they should not waste the developers time and money preparing a master document outlining the detailed development plan. This is an unnecessary use of time and money if the municipality forces the developer to meet with the city throughout the development process 4. Context, Context, Context Each project exists in a broader neighbourhood context. Each of the case studies struggled with the tension between maximizing the use of the project lands and respecting and integrating with adjacent lands. This tension can significantly affect design (eg, solar access, District energy, ect) and careful planning is required to avoid this issue. 5. Experience is King Developers need to have a team that has expertise in the innovations they wish to implement. The municipality should invest in its own competence at reviewing innovative designs. Communication will make it easier for the two to work towards implementing the projects, identifying and addressing challenges, and resolving any issues. Both parties need to be proactive throughout the process. Every successful project facilitates the success of the next – collective experience continues to benefit the next innovations 6. Institutional Inertia Municipalities are resource constrained – understaffed and overworked. With a lack of resources, it becomes difficult to budget time for training – hard to stay informed on industry best in practice and modern innovations Makes it difficult to be comfortable with new innovations, which can make it hard for developers to get permits for innovative projects, such as net zero development proposals West 5 water infiltration example McCormick redevelopment – delaying gentrification example Delays increase the costs of redevelopment* - the more that needs to be done on the site, the faster it should be approved, or you lose the interest of private developers and potential revenue Municipalities need to identify where they have policies or practices that discourage or delay builders / developers from the ability to innovate. Making the appropriate changes to these policies or practices will be an important condition to helping to achieve net zero energy efficiency. 7. Incentives are Enablers, Not Less or More Most municipalities can only offer financial incentives which offer returns to the municipality, or that offset the cost of the incentive While Incentives did not define any of the 8 case studies, appropriate incentives were an important enabling factor for each of the 8 case study locations Each of the 4 municipalities directly participating in case studies has used incentives to promote various developments over time, and has had success in doing so Worth Remembering: There may be circumstances where a site is so challenging that the municipality may accomplish more with less time and effort if they focus elsewhere – but the focus should be on creating a catalytic benefit that achieves good in both sites – this can be a powerful way to leverage limited municipal funds
- 8. Money Talks Financial considerations are the primary determinant in most project decisions Often it is more cost effective to rebuild – incentives are needed for redevelopment projects, especially if municipalities want to preserve heritage sites If approval for the development plans for land may take additional efforts the municipality must invest in items which the private sector cannot be expected to bear (ie. Partial or full waivers of municipal fees). This will help to retain private interest in the land. 9. Technology is Not the Issue Technologies on market can currently achieve net-zero energy efficiency in homes and buildings An issue is that projects often are constrained to work with the best locally available technology, rather then the best technology (importing tariffs / lack of service personnel) Some buildings achieve net zero more easily than others, based on its built characteristics (or the amount of remediation that is needed)– but with the right mix of technologies and enough investment any site can be built to provide for itself The degree of investment required is often what causes net zero projects to fail, not an issue with the technologies that are available on the market. This indicates the importance of ensuring appropriate incentive streams are available to support net zero energy efficiency development 10. It’s All About Design Substantial energy can be saved by only constructing required elements (ie. Combining parking space in one shared garage – business parking during day, residential at night – reduces space, reducing AC, reducing energy use) 11. Solar Access Net-zero energy requires on-site generation – with common use of solar energy for onsite supply, access to sunlight is a necessity. Need to plan for future to protect current solar systems from future land use / planning designs – implementing a right to light bylaw should be seen as important to protect the long-term viability of net-zero construction 12. District Energy Net-Zero in high density projects requires DE – often not enough unshaded space for solar panels Often larger buildings struggle to provide enough on-site power – off-site renewables is often required in this case DE requires many partners to ensure optimal success for the load mix for the sites it supplies – without sufficient partnerships, the success of the DE system may suffer Once technical issues are overcome, need to overcome the legal issues (Community Charters, Easement for DE in Public Right of Way, Municipal Access Agreement for Public Right of Way) Successful approach always will vary with context – this is an important consideration for the legal aspects 13. Optimizing the Underground Especially in dense developments, buildings may be constructed right up to lot line – footings often require underground elements that go beyond lot lines, interfering with utility services that are underground Care is essential when planning the underground touring of services and footings/shorings/supports Combining multiple utility trenches saves very little time and adds costs for specialized trades waiting on each other to do work – different utility services need to be coordinated Future ready smart or net zero energy designs should build on the lessons of the past – utilities and telecom networks have grown disruptively due to the amount of underground pipe / needed duct space – future design may justify the proactive installation of additional underground piping and duct space to accommodate for unforeseen future infrastructure needs 14. Permits and Approvals Research team initially predicted the challenges would not be technical or financial but securing permits and approvals. Prediction was fulfilled – here are lessons 1. Policy Jurisdiction: some permitted lands are restricted by entities other than city. Some projects may require approval from agencies which do not want to participate in the development approvals process and may require legislative change if the proposed project deviates from their intended use of the site. Ex. 400 Philip St Site 2. Ownership Models Define Applicable Approvals: DE systems will require different buildings to be interconnected – piping needs to go between them, often under public roads – requires permits to go through public right of way. Could change private ownership to public ownership. Also could be solved through policy, creating by-laws or easements to enable private owned infrastructure to go through public right of way, or by enabling DE heating pipes to pass through public right of way Privately held energy assets under public infrastructure need special permissions – easier to get approvals for public assets through private lands than approval for private services through public right of ways – cities looking for net –zero should establish required bylaws No different than communication or gas utilities 3. Approvals in general – same challenges for net-zero project as typical construction – brownfield, heritage and wetland related challenges often are more difficult than technical challenges associated with net zero buildings and communities – approvals also can take longer to resolve – adding net zero consideration to heritage concerns can limit a projects ability to design innovative energy efficient facades or to use solar panels
- Benchmarking: If we’re going to talk about net-zero energy developments then we need to know how to measure “net zero”. 3rd party programs (like those shown in the previous slides) are very helpful here. Training & Continuous Learning: Could be simple: monthly or even quarterly internal lunch & learns where the staff share what projects they’re working on , what challenges they’ve had, and how they can learn together. Deliberately making time to attend things like webinars and online conferences. Target areas of priority: if the webinars and other efforts reveal a key need, then invest in sending staff to a proper course for a day (or several days) to learn how to do something like creating a municipal energy plan. Solar Right-to-Light, District/Distributed Energy (DE), Community Improvement Plan (CIP): refer to the appendices in the report. Celebrate: Public servants are not marketers. Policy people and technical people are usually the worst at marketing. Find external partners, share your story with them, and get their help celebrating successes. Good news spreads: make sure you tell your story to the people who can spread it best!
- 8. Money Talks Financial considerations are the primary determinant in most project decisions Often it is more cost effective to rebuild – incentives are needed for redevelopment projects, especially if municipalities want to preserve heritage sites If approval for the development plans for land may take additional efforts the municipality must invest in items which the private sector cannot be expected to bear (ie. Partial or full waivers of municipal fees). This will help to retain private interest in the land. Remember – incentive programs have been designed to ensure that the municipality will obtain a financial return. There should not be the hesitancy to put money into a well thought out and efficiently designed incentive program 9. Technology is Not the Issue Technologies on market can currently achieve net-zero energy efficiency in homes and buildings An issue is that projects often are constrained to work with the best locally available technology, rather then the best technology (importing tariffs / lack of service personnel) Some buildings achieve net zero more easily than others, based on its built characteristics (or the amount of remediation that is needed)– but with the right mix of technologies and enough investment any site can be built to provide for itself The degree of investment required is often what causes net zero projects to fail, not an issue with the technologies that are available on the market. This indicates the importance of ensuring appropriate incentive streams are available to support net zero energy efficiency development 10. It’s All About Design Substantial energy can be saved by only constructing required elements (ie. Combining parking space in one shared garage – business parking during day, residential at night – reduces space, reducing AC, reducing energy use) 11. Solar Access Net-zero energy requires on-site generation – with common use of solar energy for onsite supply, access to sunlight is a necessity. Need to plan for future to protect current solar systems from future land use / planning designs – implementing a right to light bylaw should be seen as important to protect the long-term viability of net-zero construction 12. District Energy Net-Zero in high density projects requires DE – often not enough unshaded space for solar panels Often larger buildings struggle to provide enough on-site power – off-site renewables is often required in this case DE requires many partners to ensure optimal success for the load mix for the sites it supplies – without sufficient partnerships, the success of the DE system may suffer Once technical issues are overcome, need to overcome the legal issues (Community Charters, Easement for DE in Public Right of Way, Municipal Access Agreement for Public Right of Way) Successful approach always will vary with context – this is an important consideration for the legal aspects 13. Optimizing the Underground Especially in dense developments, buildings may be constructed right up to lot line – footings often require underground elements that go beyond lot lines, interfering with utility services that are underground Care is essential when planning the underground touring of services and footings/shorings/supports Combining multiple utility trenches saves very little time and adds costs for specialized trades waiting on each other to do work – different utility services need to be coordinated Future ready smart or net zero energy designs should build on the lessons of the past – utilities and telecom networks have grown disruptively due to the amount of underground pipe / needed duct space – future design may justify the proactive installation of additional underground piping and duct space to accommodate for unforeseen future infrastructure needs 14. Permits and Approvals Research team initially predicted the challenges would not be technical or financial but securing permits and approvals. Prediction was fulfilled – here are lessons 1. Policy Jurisdiction: some permitted lands are restricted by entities other than city. Some projects may require approval from agencies which do not want to participate in the development approvals process and may require legislative change if the proposed project deviates from their intended use of the site. Ex. 400 Philip St Site 2. Ownership Models Define Applicable Approvals: DE systems will require different buildings to be interconnected – piping needs to go between them, often under public roads – requires permits to go through public right of way. Could change private ownership to public ownership. Also could be solved through policy, creating by-laws or easements to enable private owned infrastructure to go through public right of way, or by enabling DE heating pipes to pass through public right of way Privately held energy assets under public infrastructure need special permissions – easier to get approvals for public assets through private lands than approval for private services through public right of ways – cities looking for net –zero should establish required bylaws No different than communication or gas utilities 3. Approvals in general – same challenges for net-zero project as typical construction – brownfield, heritage and wetland related challenges often are more difficult than technical challenges associated with net zero buildings and communities – approvals also can take longer to resolve – adding net zero consideration to heritage concerns can limit a projects ability to design innovative energy efficient facades or to use solar panels
- The 7 incentive programs provide a range of incentives for various development projects, and include the previously mentioned GBS to ensure that development remains on track to satisfy net zero energy efficiency standards
- Highlights We collected a total of >180 incentive programs from 40 Municipalities across Canada. The aim was to determine the topics that municipalities currently are providing financial incentives for, and how effective those programs have been. If we’re going to talk about using incentives for something like Net-Zero Energy, then let’s start by talking about incentives in general, what works, what doesn’t, and what could help NZ. We found: 98 Municipalities with Brownfield incentives (obviously a significant trend) 9 Municipalities with Mixed-Use Development Incentives 36 Municipalities have Non-Brownfield Development Incentives 0 Municipalities with Greenfield incentives 1 Municipality (Toronto) with Green Roof and Cool Roof incentives 2 Municipalities with Urban Agriculture incentives 10 Municipalities with Green Building Standards 0 Municipalities with Net Zero Building or Electric Vehicle Incentives 2 Municipalities (Edmonton and Banff) have On-Site Renewable incentives 5 Municipalities with Indoor water Conservation 2 Municipalities with Storm Water Incentives 2 Municipalities with Rainwater incentives 2 Municipalities with Grey water incentives So what can we learn from this? Municipalities are all cash-strapped, so incentives should ideally be cost neutral (ie: create replacement revenues somehow), or at least be cost neutral (eg: waive fees that have minimal impact on the city’s budget). Typically, Municipalities favor the use of Tax Assistance Plans (do not have to pay out of municipal reserve), Environmental site assessments (ties in with the focus on Brownfields), Development Charge Rebates, Property tax rebates, and Cash Rebates From the table it is clear to see that Municipalities favor Brownfield redevelopment and rehabilitation projects (not surprising: recovers land for use where land is needed, performs an environmental good, removes the eye-sore land, higher property taxes can be collected, etc) There are only 13 programs dealt with energy efficiency, and 11 more on water efficiency – energy and water could likely benefit from some of the program models serving other areas.
- Idea Motivate builders to build homes which are certified to advanced green building standards; The incentives help to overcome the learning curve, and they reduce in value as the builder gains experience.
- Idea Similar to the housing incentive on the previous slide, but for larger buildings (therefore different programs).
- Idea Reduce a cost that motivates homeowners, because builders will do what they’re paid to do: if the homeowner wants a green certified home, the builder will be motivated to oblige.
- Idea Play of the reality that time is money. Especially while the labour shortages are making everything slower, offering faster processing times can be powerfully motivating to builders.
- Idea - PAPER = the same thing as PACE or GMM (Green Municipal Mortgages). This one’s a bit more complicated, but plays off the idea that government can often get cheaper money (at lower interest rates, amortized over longer periods) than the public can. Gov’t can also leverage utility data to target the most profitable project opportunities: eg, war-time housing retrofits. Gov’t can also leverage it’s position and employee base to partner with qualified contractors who can offer preferred services, thus minimizing risk in project success. Further, the size of gov’t means that many projects can be pooled together, in this case creating increased buying power. These and other advantages build together to make gov’t more aptly able to programmatize energy retrofits, target the properties with the highest probability of benefitting the most, creating cost effective opportunities, and scaling impact. This is PACE at it’s finest, with a few tweaks.
- (pg 2)
- Idea - Simple cash rebate to the builder (thought being that builders are great at selling, so if we get them motivated, they will find ways to sell)
- Idea - again, cash rebate, less meaningful than the DC rebate to a builder, but still helpful