Home energy retrofit loans Photo © Andy Dean \ Fotolia.com

It might be time to replace that aging water heater in the basement.

The City of Toronto is here to help, announcing last week that it’s taking steps to make it easier for property owners to make their homes more energy efficient through the Home Energy Loan Program (HELP).

Under the initiative, homeowners will be able to apply for low interest loans (from five years at 2.5 per cent, up to 15 years at 4.25 per cent) for use in retrofitting their homes to install high efficiency furnaces, air conditioners or water heaters, or to improve attic, window or basement insulation, for example.

The system is called on-bill financing, an alternative to traditional financing models such as asking the bank for money or putting charges on credit cards. It means homeowners approved for the loan will pay the city back over time via small instalments on their property tax bill to remove the burden of finding large sums of cash up front as an obstacle for making homes more energy efficient.

The item will appear on property tax bills as a Local Improvement Charge and, smartly, is tied to the property and not the savvy homeowner who made the decision to invest in retrofitting. In other words, if you sell your property before the loan has been fully repaid, paying the remainder of the loan will be the responsibility of the new homeowner who will also enjoy the benefits of living in a more energy-efficient building.

In Toronto, the city has made up to $10-million in funding for the three year pilot project available to qualifying residents in the city’s Black Creek, Toronto Centre, Riverdale, Beaches, Junction, High Park and South Scarborough neighbourhoods.

"Investments in energy efficiency and water conservation create high-quality jobs, reduce energy use and keep housing affordable," said Scarborough Councillor Michael Thompson, who also sits as the Chair of Toronto's Economic Development Committee. "The Home Energy Loan Program provides financing for homeowners that enables them to improve the energy efficiency of their homes, reduce energy consumption and cut costs."

The HELP pilot is also a significant part of the city’s efforts at reducing greenhouse gas emissions by 80 per cent from 1990 levels by 2050. Buildings, including individual residences, make up more than 44 per cent of Toronto’s GHG emissions.

One drawback of the program could be what seems, at first glance, to be an application process that’s too onerous for the average homeowner.

Are you ready?

After filling out a pre-application form, the city requires your mortgage lender provided your mortgage hasn’t been paid off to consent to the loan and proposed upgrade. Next, an energy assessment of your property must be conducted by an Energy Advisor certified by Natural Resources Canada who will recommend what upgrades are needed most. Then, if you’re still interested in upgrading and you qualify, you must supply quotes from independent contractors to the city for the work you want done, fill out a funding request form and then sign a property owner agreement form that is ratified by the city’s Chief Corporate Officer and City Clerk.

Whoa. Still with me? Yes, it’s a slog to navigate this labyrinth of city bureaucracy, I won’t lie. But it’s worth persevering. There are savings to be found in making your home more energy efficient, both short- and long-term. The Government of Ontario estimates, in their Long-Term Energy Plan released in late 2013, that for every $1 invested in conservation and efficiency, the province has avoided $2 in upgrades to the electricity system costs that tend to make their way onto consumer bills. Ontario’s Energy Minister Bob Chiarelli announced the province would be moving forward with its own on-bill financing program to encourage energy retrofits province-wide starting in 2015.

The idea is already working in other parts of the country. British Columbia, Manitoba and Nova Scotia already have deals in place that allow their utilities to offer on-bill financing as a way of helping homeowners afford small capital upgrades to encourage electricity conservation.

“A lot of [utilities] are still supporting retrofits as part of their conservation programs [and] it can be extremely meaningful in terms of the cost of energy for homeowners to have the retrofits done,” Chiarelli told reporters in late March 2013. “It sounds like a tremendous idea, and it would be wonderful if more cities would do that.”