One Lesson Ottawa Can Take From Toronto

As hard as it might be these days to believe that the City of Ottawa can draw inspiration from Toronto City Hall, it is indeed the case. Beneath the rancour of the media-frenzied politics, Toronto has quietly undertaken an important step in municipal leadership that ought to serve as an example to the nation’s capital. 

Despite the rather dry title, the Toronto Residential Energy Retrofit Pilot Program sets out to mitigate a major source of greenhouse gases – the heating and cooling of buildings – in a novel way.  In so doing, it will test a voluntary approach that offers a sensible way to also create local employment, lower air pollution, reduce the need for future energy infrastructure investments and improve energy efficiency for homes and other buildings. All of this at no cost to the taxpayer. The Toronto pilot is based on similar programs, often referred to generically as Property Assessed Payments for Energy Retrofits (PAPER), that have been tested and developed in other municipalities throughout North America, including Halifax.

Thanks to recent changes in provincial law that now permit municipalities to do so, Toronto plans to provide $20 million in loans to 1000 home and business owners to finance energy and water efficiency upgrades.  The pilot is expected to reduce 5000 tonnes of greenhouse gas emissions annually while generating 300 new jobs and saving participating owners as much as a million dollars.  The upgrades could include everything from higher efficiency windows, to better insulation to hot water solar panels.

At first blush, that approach might sounds familiar. Efficiency incentive schemes have been with us for some time, after all. But the features of this pilot hold bold promise for Ottawa and other municipalities in Ontario.

First, unlike traditional loans that are tied to the person who borrows the money, these loans are tied to the property which receives the upgrades.  The loan repayment amounts are added to the property tax bill, meaning that homeowners who make the upgrades and then decide to sell the property are not burdened with payments related to a house they no longer own. This feature addresses a natural reluctance on the part of many of us to invest in our homes for fear we may not be there long enough to reap the benefits of our investments.

Second, the repayments on the loan are never greater than the amounts saved by reduced energy costs. For example, if an upgrade results in reduced energy costs of an average of $50 dollars a month, then the monthly payment on the loan will be amortized to ensure the repayment is less than that amount. This means that participating homeowners will never have to spend a nickel more out of pocket on energy and loan payments than they do now on energy costs alone.  Importantly, once the loan is paid off, they will be able to reap the savings due to lower energy bills.

Third, unlike other energy efficiency incentives, this pilot doesn’t require public expenditure.  Given that cities often have solid credit ratings (Standard and Poor rates Ottawa’s as AA+), they are able to borrow money at lower interest rates than individuals. These rates are then passed on to the participating owners using “local improvement charges” financing.  The borrowing charges the City incurs plus the administrative costs of running the program are rolled-up into the individual loan re-payments, ensuring full cost neutrality.  

One explanation for why Toronto was a first mover in Ontario is that it has set ambitious greenhouse gas emissions targets: a reduction of 30 percent by 2020 and 80 percent by 2050 from 1990 levels.  Now it needs to find ways to meet them.  For its part, the City of Ottawa has yet to renew its expired Air Quality and Climate Change Management Plan and therefore currently has no forward targets.  By introducing a PAPER pilot of its own, Ottawa City Council has an opportunity to revitalize its commitment to lowering the City’s greenhouse gas emissions while offering a host of economic benefits to local businesses and citizens - with no budgetary implications.  

While we should be pleased that our municipal leaders are not following Toronto’s example in other respects, on this issue, they have every reason to follow suit.

Tobi Nussbaum is the Chair of the Beechwood Village Alliance and a former President of the Lindenlea Community Association. These views are his own. He can be reached on twitter @tobi_nussbaum

Source: Ottawa Citizen