If the plan is approved by council next week, 500 homes could access low-interest financing to install new high-efficiency furnaces, heat pumps, upgraded water heaters and wall and attic insulation. The program would be administered through Vancity Credit Union and repayment would be done over 10 years through the city's utility and property tax billing system.
Energy savings would be "commensurate" with the outlay of capital, Dave Ramslie, the city's sustainable development program manager, said Thursday. That means that after the 10th year the average homeowner could save about $1,200 a year in energy costs, he said. If the three-year pilot program is a success, the city could open the program to as many as 3,000 households a year.
The federal and provincial governments have in the past operated incentive programs to convince homeowners to upgrade or repair their homes to improve energy efficiency. The province now offers about $4,500 in rebates for a variety of upgrades.
But Ramslie said the city's involvement would add "scale and certainty" to the program by offering low-interest payment options not normally available to borrowers. Under the plan, homeowners would have a qualified company conduct an energy audit of their house, showing the best options for reducing their energy costs. Vancity would then loan them between $4,000-$10,000 to do the repairs.
The loan, with an interest rate of 4.5 per cent per year, would then be repaid on a pro-rated annual basis through the property tax or utility services bill. The city would expect homeowners who qualify for provincial incentives to apply the payments to their loans, Ramslie said.
Vancity will put up as much as $5 million for the pilot project. But to backstop any potential loan defaults, the city will put aside $500,000 in an interest-bearing loan-loss fund, to which Vancity will add another $1 million. Under the terms of the agreement, Vancity must cover the first 10 per cent of bad loans before being able to access the city's contribution, Ramslie said.
He noted that regular mortgage default rates are about one-half of one per cent, and property tax defaults are less than one-third of one per cent. In other words, he said, the city expects the interest generated on the $1.5 million fund to adequately cover any loan defaults.
Vancouver isn't the only city considering getting into the energy retrofit financing business. Halifax also is gearing up a program for August, Ramslie said, and several other Canadian municipalities are close behind.
"We expect to see a strong uptake in this program if it is approved by council," Ramslie said. "There is significant interest in this plan."
The city believes that an estimated 90,000 tonnes of greenhouse gases could be saved by 2020 through retrofits to single-family homes.