Campbell County approves legislation creating special assessment district to finance energy-efficiency improvements for commercial properties in county
In 2015, the Kentucky General Assembly passed legislation that allowed cities and counties to create EPADs, special assessment districts where commercial property owners can obtain Property Assessed Clean Energy (PACE) financing to pay for energy-efficiency improvements made to these properties.
“PACE financing covers 100 percent of the hard and soft costs of energy upgrades, such as solar panels, LED lighting, energy-efficient air conditioning and heating systems, and water conservation projects,” said Chris Jones, director of PACE financing for Energize Kentucky, a nonprofit organization that administers the program in Kentucky.
“This is done through fixed-rate, long-term loans that require no down payment or personal or business guarantees. The loan is repaid annually through a voluntary special assessment on the property owner’s tax bill.”
“We are excited to pass enabling legislation to allow the use of PACE financing throughout Campbell County because we recognize that this financing tool is a win-win situation -- for property owners and developers as well as the county and our cities in our collective efforts to promote economic development in our communities,” said Campbell County Judge-Executive Steve Pendery.
With passage of the Campbell County ordinance, developers who are rehabbing two commercial buildings in the Fort Thomas’ Midway business district plan to use PACE financing for energy upgrades to these buildings, Jones said.
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Once Energize Kentucky determines that these properties qualify for PACE financing, it will ask the Fiscal Court will pass separate legislation approving the use of this financing for these buildings and will do the same thing for other projects that plan to use this type of financing in the future.
“PACE is a flexible financing tool that gives developers a new source of revenue for both new construction projects and building renovations,” Jones said. “Having access to PACE financing is changing how developers think about energy efficiency. To be able to instantly increase your capital stack for these improvements removes the financial burden that this new technology sometimes brings to development projects and makes the goal of an energy-efficient project more attainable.”
The City of Covington was first municipality in the state to create an EPAD after the law went into effect in 2015. The city approved a PACE-financed project at the Ivy Knoll Senior Retirement Community on Highland Avenue, where the property owner installed $750,000 in energy upgrades to replace outdated and inefficient equipment in the seven-story building.
These improvements included new solar panels that generate more than 64,000 kilowatt hours of energy annually, LED lighting that saves more than $12,000 annually, and energy-efficient heating and cooling units and new elevator technology, which reduced energy consumption of the old systems by 20 and 40 percent, respectively. Overall, the energy savings at Ivy Knoll has been about 37 percent annually since the improvements were installed.
In August 2017, Covington became another Kentucky PACE first when it became the first city in the state to use PACE financing for a new construction project. Indianapolis-based Flaherty & Collins Properties is in the process of incorporating more than $4 million in energy improvements to its “RiverHaus” project, which is currently under construction at the southwest corner of Fifth and Main Streets in Covington’s Mainstrasse neighborhood.
This high-end, residential development includes 187 one- and two-bedroom units, a 314-space parking garage, and retail commercial space on the ground floor. The energy improvements include energy-efficient windows, LED lighting, heating and cooling systems, programmable thermostats, and insulation, Jones said.
Jones said the advantage of adopting a countywide EPAD, as Campbell County did on Wednesday night, means that individual cities within the county no longer need to adopt their own EPAD districts to receive this benefit since they now fall within the countywide district.
“This really speeds up the process for property owners who are interested in pursuing this financing tool,” Jones said. “A process that sometimes took many months to complete can now be completed in just a few weeks.”
Jones said that Energize Kentucky plans to speak with elected officials in Northern Kentucky’s other counties in the near future to see if they also have an interest in passing countywide legislation similar to the ordinance the Campbell County Fiscal Court passed Wednesday.