The Aurora City Council on Tuesday approved the creation of a lending program, to be run by a state agency, that is set to offer loans toward sustainability upgrades to commercial properties.
The city is now participating in the Illinois Finance Authority’s 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 boundaries.
Alison Lindburg, the city’s director of sustainability, has said the program will support both economic development and sustainability within Aurora.
Loans given through the program can fund certain upgrades to commercial, industrial, non-residential agricultural, nonprofit and multifamily properties, up to 100% of the project’s total cost, but with a maximum amount no more than 25% of the property’s total value.
Upgrades that could be funded through the program include energy efficiency improvements like lighting, HVAC or insulation upgrades; the installation of renewable energy sources like solar or geothermal; the addition of water conservation systems; upgrades to improve resiliency like flood mitigation or infrastructure improvements; and the installation of electric vehicle charging stations.
The funding can also be used as a “gap” financing tool to support larger projects, Lindburg has said, if they include energy efficiency or related improvements. Along with renovation projects, new construction is also eligible to receive this lending.
The loans will generally have a fixed, low interest rate and have terms as long as 40 years. Unlike traditional loans, it is backed by the property, not through a personal guarantee by the owner, so it can 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 sort of like an additional tax on the property. However, the lenders bill and collect the payment separately from the property’s tax bill.
After a property owner applies for C-PACE lending, the Illinois Finance Authority issues bonds or notes through private lenders. The Authority works with a variety of private lenders, so the process is competitive and property owners can get a very low interest rate, Lindburg has said.
“This is not a state funding program,” Brad Fletcher of the Illinois Finance Authority told the Aurora City Council’s Committee of the Whole on Jan. 20. “This is attracting private capital with the best mousetrap that we can design for the property owners in our communities.”
The city of Aurora wouldn’t be providing funding through the program and generally wouldn’t have much involvement in it, but Fletcher said his group will be providing regular updates to the city, which would still get final approval over the loans.
Lindburg previously said that the program will bring “another tool to our tool belt” for improving buildings within Aurora.
Plus, it will also help to increase property values, lower the operating costs of buildings, encourage the reuse of older buildings, create jobs for local contractors and trades, support sustainability goals, reduce greenhouse gas emissions and help with long-term economic development, according to her presentation from the Aurora City Council’s Rules, Administration and Procedure Committee meeting on Jan. 6. That committee voted unanimously to recommend the program for approval.
The City Council on Tuesday approved the program through the meeting’s consent agenda, which is typically reserved for routine or non-controversial items that are all approved with a single vote. So, aldermen did not discuss the program at the meeting.
According to the Illinois Finance Authority’s webpage on C-PACE, which can be found at www.il-fa.com/programs/c-pace, there are six counties and 16 other cities participating in its program.
Aurora staff in December presented early plans to bring funding programs like this one to the city. In addition to a C-PACE loan program, staff were 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
