Aurora is considering creating a lending program, run by a government agency, that would provide loans to improve the sustainability of commercial properties.
The proposal, an Aurora City Council committee heard Tuesday, would allow the city to participate in Illinois’ 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 borders.
“This really supports economic development and sustainability in the city of Aurora,” Allison Lindberg, the city’s director of sustainability, said of the proposed C-PACE program at Tuesday’s Rules, Administration and Procedures Committee meeting.
Loans made through the program can finance certain upgrades to commercial, industrial, non-residential, agricultural, non-profit and multifamily properties, according to Lindberg’s presentation. In total, loans can be up to 100% of the total project cost, with a maximum of no more than 25% of the total value of the property.
Upgrades that can be funded through the program include energy efficiency improvements such as lighting, HVAC, or insulation upgrades; Installing renewable energy sources such as solar or geothermal energy; Add water conservation systems. Upgrades to improve resilience such as flood mitigation or infrastructure improvements; And installing electric car charging stations.
City staff was recently talking with a property owner who needs to replace a large number of building windows, and this financing tool could be a good option to help them do that, Lindberg said. This is because replacing windows can help conserve energy, making the project eligible for this type of financing.
She said the funding could also be used as a “gap” financing tool to support larger projects, if they include energy efficiency or related improvements. Besides renovation projects, new construction is also eligible for this loan.
The loans will generally have a low, fixed interest rate and have terms of up to 40 years, although most will have terms between 10 and 30 years, depending on their presentation. Unlike traditional loans, they are backed by the property, not a personal guarantee from the owner, and can therefore 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 like an additional tax on the property. However, lenders invoice and collect payment separately from the property tax bill, according to Brad Fletcher of the Illinois Finance Authority.
After a property owner applies for a C-PACE loan, the Illinois Finance Authority is the one that actually issues the bonds or securities through private lenders, according to Lindberg. She said the authority works with a variety of private lenders, making the process competitive so property owners can get a very low interest rate.
The city of Aurora will not provide funding through the program and generally will not have much involvement in it, Lindberg said. However, the Illinois Finance Authority will provide regular updates to the city, and the city will still receive final approval for the loans, according to Fletcher.
The proposal would bring “another tool to our tool belt” to improve buildings within Aurora, Lindberg said. In addition, it will also help increase property values, reduce building operating costs, encourage reuse of old buildings, create job opportunities for local contractors and craftsmen, support sustainability goals, reduce greenhouse gas emissions, and aid in long-term economic development, my presentation showed.
The C-PACE program was recommended for approval by the Aurora City Council’s Rules, Administration and Procedures Committee on Tuesday. It is now scheduled to be presented to 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-paceThere 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 the C-PACE loan program, staff are 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