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Louisville's Efforts To Finance Energy Efficiency Off To A Slow Start

Solar on roof of Copper and Kings

More than a year after Louisville implemented a program to help business owners finance energy efficiency improvements on their properties, not a single person has taken out a loan.

Since launching the initiative in Nov. of 2016, the Office of Sustainability has received only three initial applications, said Angela Futter, Louisville Office of Sustainability project manager.

Energy Project Assessment Districts (EPADs) are Kentucky’s iteration of what's known in other states as PACE, or Property Assessed Clean Energy Districts.

In short, the districts help business owners pay for energy upgrades including solar panels, energy efficient air conditioning systems and water conservation projects.

The full cost of the improvements are paid for through long-term loans. Property owners pay the loans once a year through an assessment on their property tax bill. Also, the loan is fixed to the property so if an owner sells, the debt stays with the building.

“So say for example, if you did it for solar panels. You will immediately see reduction in your energy costs, your monthly utility bills will go down,” said Maria Koetter, Louisville Office of Sustainability director. “And then instead of having to make monthly payments on that installation, you are only paying once a year.”

No Takers So Far In Louisville

Koetter said her office has fielded 20 to 30 calls and emails about EPAD financing since launching the initiative more than a year ago.

But so far, no one has used the financing tool.

City spokesman Will Ford said the initiative has not required any upfront costs, besides staff time. He said launching the program took about six months and included five separate divisions of city government.

Koetter said she thinks business will pick up once more property owners and lenders know about the program and understand how it works.

“It’s just, I think, a bit of a learning curve and people finding out more about it and how they can actually use it,” Koetter said.

Also, some lenders have said that they aren’t interested in financing EPAD projects under $1 million, she said.

Councilman Bill Hollander, who sponsored the city's legislation, said it's taken some time to find banks that want finance the loans.

"I understand that there now is a bank that's interested in doing these kind of deals so I hope that it will pick up," Hollander said.

Other Cities Using The Program

But elsewhere in Kentucky, a few projects have become reality through these kinds of financing programs.

Since the Legislature established the initiative in 2015, about a dozen local governments have become Energy Project Assessment Districts, said Chris Jones. He's the director of PACE financing for Energize Kentucky, which helps administer the program and made the state’s manual to teach local municipalities.

So far, Jones said Energize Kentucky has helped finance about six projects through the EPAD initiative. One of them is in Louisville's backyard — in the city of Hillview in Bullitt County.

Louisville Metro government is not working with Energize Kentucky.

“It’s really a lot of time that’s involved in meeting with property owners, facilitating the PACE lenders to them, again just getting them comfortable with the process since it is new,” Jones said.

The program has been successful for the people that have used it, said Lee Colten, Kentucky’s assistant director for the division of efficiency and conservation.

“There is some time and effort that’s required,” Colten said, “If there’s not a real strong need, I can understand that a city might say ‘well maybe we’re better putting our resources elsewhere.’”

Ryan Van Velzer is WFPL's Energy and Environment Reporter. Email Ryan at rvanvelzer@lpm.org.