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SID Vicious-ly Good Tool for Energy Efficiency in Ohio

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Ohio law allows for the creation of special improvement districts (SIDs) for energy improvements, including some unique features that make the program a particularly effective tool for incentivizing building energy upgrades.

First the basics.  Back in 2009, Ohio HB 1 authorized local municipalities and townships to create “special energy improvement districts” that offer property owners financing to install PV or solar-thermal systems on real property.  In 2010, S.B. 232 further allowed for financing of geothermal, customer-generated systems (e.g., wind, biomass, and gasification systems) and certain energy efficiency improvements.  More info about Ohio’s program is available at DSIRE, and Ohio Revised Code Chapter 1710 offers the gory details.

The main barrier to energy efficiency upgrades is pretty simple: money (or, rather, lack of money or the will to spend it to pay for upgrades).  Ohio’s program is designed to help overcome that barrier through a variant of Property-Assessed Clean Energy (PACE) financing, which basically lets property owners borrow money to pay for energy improvements. The amount borrowed is typically repaid via special assessment on the property over up to 30 years.  In other words, for little or no up-front investment, the owner can invest in energy improvements and reap the benefits now by stretching the payments over time.

Among the unique aspects of Ohio’s program are its inclusion of energy efficiency improvements (it’s not limited to renewable energy-generating features), and a special energy improvement district does not have to be comprised of contiguous properties.  With proper planning and structure, stakeholders can overcome the Federal Housing Financing Agency (FHFA) declaration relative to senior lien status associated with most PACE programs.

Such programs have been unveiled in Cleveland and Toledo, and OGBL contributors (including this author) have consulted with various municipalities and individuals about taking advantage of the program in Central and Southern Ohio.



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