Toronto Forges Ahead – "Local Improvement
Charges" Offer a New & Promising Financing Mechanism to
Encourage Energy Retrofits
Since then-Minister of Municipal Affairs and Housing Kathleen
Wynne authorized municipalities to use Local Improvement Charges
(LICs) to promote energy efficiency, renewable energy and water
conservation projects last November, industry watchers have been
waiting to see whether Toronto would take advantage of the
Last week, they did: Toronto City Council unanimously approved its first pilot energy and
water efficiency program. The three-year, $20 million pilot
launching in late 2013 will include 1,000 single-family homes and
10 multi-residential buildings. It will permit participating
property owners to undertake natural gas, electricity and water
efficiency and conservation measures, with the City of Toronto (the
City) covering all of the associated up-front costs. Beneficiary
property owners will pay this investment back to the City via a
special charge on their property tax bills. This charge is intended
to be equivalent to or less than the energy or water savings
accruing to the property owner.
There are two critical barriers to undertaking energy retrofits:
(i) property owners often have trouble obtaining up-front financing
and (ii) property owners who may want to sell their properties in
the future are reluctant to make investments that they may not be
able to recoup in the short term. The LIC program addresses these
problems by allowing the City to leverage its ability to raise
low-cost, long-term financing for property owners and by tying the
repayments of such financings to the property rather than to the
What makes LICs even more compelling in the current era of
government austerity is that LICs are intended to operate at zero
net cost to the City, with the possibility of future positive
returns if carbon credits are introduced. The priority lien status
of the LIC further lowers the risk to the City of property owners
defaulting on their payments.
The City, and other cities and municipalities across Ontario,
will be able to use LICs to reduce greenhouse gas emissions while
simultaneously stimulating the economy. The City's stated aim is to reduce emissions by 30% below 1990
levels by 2020. The residential sector is the largest
greenhouse gas emitter in Toronto, accounting for 54% of natural
gas use and 30% of electricity use. With the majority of houses and
apartment buildings in Toronto built pre-1980, encouraging
cost-effective energy retrofits is a no-brainer.
Moreover, there are encouraging signs that there may be
substantial economic benefits associated with LICs. The United
States has a federal program in place similar to Ontario's LIC
program called the Property Assessed Clean Energy (PACE) program.
One study cited by the Brookings Institute
looking at the impact of PACE spending in Santa Barbara, San
Antonio, Columbus and Long Island found that $4 million in spending
could generate an average of $10 million of gross economic output,
$1 million in tax revenue, and 60 new jobs.
The objectives of the LIC program include assessing the
cost-effectiveness of a variety of energy efficiency measures and
developing a clear business case to recommend a full-scale version
of the pilot program to the City. Should the pilot results be
positive, look for energy retrofits to skyrocket between
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In Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363, the Alberta Court of Queen's Bench enforced the "immediate replacement" provision in the Canadian Association of Petroleum Landmen 2007 Operating Procedure...
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