Local Improvement Charges Study

The Need for Building Energy Retrofits

The Intergovernmental Panel on Climate Change (IPCC) has determined the need for urgent action to curb carbon emissions by 2030 to avoid catastrophic climate change.

Buildings account for 50% of energy consumption and GHG emissions in urban municipalities. As calculated for the Vaughan Municipal Energy Plan (2016), the residential sector in Vaughan accounts for over 35% of GHG emissions, most of which is associated with space heating and water heating in residential buildings. Energy consumption for space heating and cooling of buildings is likely a large component of the industrial and commercial GHG emissions accounting for an additional 40% of Vaughan’s carbon footprint.

Vaughan's GHG Emissions by Sector, 2013

The study by C40 Cities assessing three critical de-carbonization strategies modelled an annual building energy retrofit uptake of 3% of the existing building stock and would generate 1.5 million jobs and annual reduction of 80 megatonnes (Mt) of carbon dioxide equivalents (CO2e) across North America. For Vaughan, this would translate to retrofitting 2,000 to 3,000 dwellings per year if a 3% retrofit rate could be achieved.

Local Improvement Charges Financing

The Local Improvement Charges regulation is an existing tool available under the Municipal Act 2001

This financing mechanism is known as Property Assessed Clean Energy (PACE) financing in the US and has been in place since 2008. PACE legislation is now in almost 40 states in the US and has enabled residential retrofits for over 200,000 households and leveraged over $5 billion in energy improvements.

The LIC regulation is a type of property-assessed financing mechanism. The main benefit to the building owner of LIC financing is that repayment of the financing by the building owner is added to the property tax account and ‘runs with the land’. If the property is sold, the new owner continues the LIC payment. From the municipal government perspective, the payment obligation attaches to the benefitting property, not the owner, and is secured by statutory priority lien. Property owners also have the option of repaying the LIC in full.

Vaughan LIC Study

A grant from the Federation of Canadian Municipalities (FCM), under the Municipalities for Climate Innovation (MCIP) program, was awarded in June 2018 to undertake an operational study on the use of LICs. The City of Vaughan Climate Emergency Declaration is Communication #23 to Report No. 20 to the Committee of the Whole on June 4, 2019 and identifies the LIC study as an initiative demonstrating progress on climate action.

The Vaughan LIC Study was prepared by the Ontario Climate Consortium, an agency of the Toronto and Region Conservation Authority (TRCA), and the City of Vaughan. The LIC Study was undertaken in four phases: research and a municipal scan; risk assessment; stakeholder consultations and input; and the LIC toolkit development, including a draft generic implementing by-law.

A staff report regarding the Vaughan LIC Study is scheduled for the April 7, 2020 meeting of the Committee of the Whole.

The City of Vaughan gratefully acknowledges the input of the stakeholders and reviewers during the Study.

Resources

The preparation of this study was carried out with assistance from the Government of Canada and the Federation of Canadian Municipalities. Notwithstanding this support, the views expressed are the personal views of the authors, and the Federation of Canadian Municipalities and the Government of Canada accept no responsibility for them.

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