June 16, 1999
To:Policy and Finance Committee
From:City Clerk
Subject:Energy Efficiency Office - Continuation of the Better
Buildings Partnership and Other Energy Efficiency and
Building Renewal Initiatives
Recommendation:
The Works Committee recommends the adoption of the report dated June 1, 1999, from the Commissioner of
Works and Emergency Services respecting the Energy Efficiency Office and continuation of the Better Buildings
Partnership and other energy efficiency and building renewal initiatives.
The Works Committee reports, for the information of the Policy and Finance Committee and Council, having requested:
(1)the Commissioner of Works and Emergency Services to report back to the Policy and Finance Committee on
opportunities and techniques for the Better Buildings Partnership (BBP) to provide advice to other communities on how
the BBP could be replicated in other cities;
(2)the Commissioner of Works and Emergency Services to develop a detailed plan together with the Toronto
Atmospheric Fund to be able to present to the Federal Government for the creation of a national BBP based on Toronto's
model;
(3)the Commissioner of Works and Emergency Services and the Toronto Atmospheric Fund, in consultation with the
Sustainable Energy Work Group of the Environmental Task Force, to report to the Policy and Finance Committee on the
CO2 emissions inventory, the history of such inventory, goals and directives appropriate for the City to adopt, and the
strategies that are being pursued and intended to be pursued to achieve these directives; and
(4)the Commissioner of Works and Emergency Services to report further on an appropriate sharing of the flow of
revenue that the City is receiving from the BBP with the Toronto Atmospheric Fund, which has invested in the BBP and
has been instrumental in developing and expanding the program.
Background:
The Works Committee at its meeting on June 16, 1999, had before it a report (June 1, 1999) from the Commissioner of
Works and Emergency Services respecting the Energy Efficiency Office and continuation of the Better Buildings
Partnership and other energy efficiency and building renewal initiatives.
Mr. Richard Morris, Manager, Energy Efficiency Office, gave a presentation to the Works Committee with respect to the
foregoing matter, and submitted a copy of his presentation and material with respect to the Better Buildings Partnership.
City Clerk
Trudy Perrin/es.5
Attachment
c:Commissioner of Works and Emergency Services
(Report dated June 1, 1999, addressed to the
Works Committee from the
Commissioner of Works and Emergency Services)
Purpose:
To report on the ongoing and planned program initiatives for the reduction of carbon dioxide and other emissions that are
harmful to the environment.
Funding Sources, Financial Implications and Impact Statement:
(1)Initiatives outlined in this report do not impact on the approved 1999 Budget.
(2)The Loan Recourse Fund Agreement which was executed in May 1999 and is fully described in this report has the
potential to become a new source of revenue for the City up to a maximum amount of $2 million.
Recommendations:
It is recommended that:
(1)City Council endorse the ongoing and planned program initiatives of the Energy Efficiency Office as outlined in this
report, in support of the City's goals to significantly improve the local air quality and to reduce carbon dioxide emissions
by 20% relative to 1990 levels by year 2005;
(2)the Commissioner of Works and Emergency Services develop in consultation with the appropriate industries,
residential contractor organizations, community organizations and various stakeholder associations, a residential sector
public outreach program to increase awareness and participation in initiatives to improve energy/water efficiency in single
family and low-rise buildings.
(3)the Commissioner of Works and Emergency Services in consultation with the Director of Purchasing and Materials
Management, and in co-operation with the Better Buildings Partnership partners, be authorized to identify by means of
Request for Pre-Qualification, Request for Qualification and/or Request for Proposal processes where necessary, various
community groups, energy management firms, consultants, contractors, manufacturers, retailers and other delivery and
distribution channels, for the purpose of identifying these groups as qualified service delivery agents;
(4)the service delivery agents involvement in the Better Buildings Partnership continue to include their traditional role of
providing sales support, marketing support, merchandising, product and equipment distribution, auditing, feasibility
advice, financing, engineering design, implementation, project management, monitoring, verification and reporting, in
support of the Better Buildings Partnership;
(5)the Commissioner of Works and Emergency Services be authorized to utilize funds deposited into the Better
Buildings Partnership Loan Repayment Reserve Fund in support of the Better Buildings Partnership Loan Program and
other program initiatives of the Energy Efficiency Office;
(6)all loan recoveries, estimated to be about $700,000 per year, received from public/non-profit sector building owners as
a result of the repayment of loans previously made under the Better Buildings Partnership loan program be deposited into
the Better Buildings Partnership Loan Repayment Reserve Fund, By-Law No. 1997-0568;
(7)all Budgeted Incentive Contributions received from Enbridge Consumers Gas in accordance with the terms of Retrofit
Facilitation Agreement, be deposited into the Better Buildings Partnership Loan Repayment Reserve Fund, By-Law No.
1997-0568 upon dissolution of the Loan Recourse Fund;
(8)the administration of the Better Buildings Partnership loan program for the public and non-profit sectors be continued
and be based on the criteria outlined in this report. Furthermore, that this loan program continue to provide fully secured,
partially secured or unsecured loans and loan securitisation on a case by case basis as determined by the Chief Financial
Officer and Treasurer in consultation with the Commissioner of Works and Emergency Services, for renewal projects in
existing buildings and the replacement of energy inefficient, obsolete buildings;
(9)the City Solicitor be authorized to redraft legislation if necessary, pertaining to the foregoing recommendations, and
where necessary prepare application(s) for special legislation in support of the various types of transactions to be carried
out under the Better Buildings Partnership program;
(10)the Commissioner of Works and Emergency Services continue to consult with the Chief Financial Officer and
Treasurer, the City Solicitor and the Director of Purchasing and Materials Management regarding the implementation of
the recommendations set out above; and
(11)the appropriate City officials be authorized and directed to take the necessary action to give effect thereto.
Council Reference/Background/History:
Council of the former City of Toronto at its meeting of June 23 and 24, 1997 adopted Clause 18 embodied in Executive
Committee Report No. 17 entitled, "Better Buildings Partnership: Criteria for Provision of Canada/Ontario Infrastructure
Works Interest-Free Loans for Energy and Water Efficiency Retrofits in Non-Profit Buildings", and in so doing revised the
existing lending criteria to permit the approval of partially secured and unsecured repayable loans to public sector and
non-profit building owners.
At its meeting of July 14 and 15, 1997, the former Toronto City Council adopted Clause 13 of Executive Committee
Report No. 18 entitled, "Better Buildings Partnership Program: Modifications to the Financing Framework Design of the
$2 million Securitization Fund", and in so doing authorized City to enter into negotiations with Enbridge Consumers Gas
and the Toronto Atmospheric Fund for the purposes of establishing a Loan Recourse Fund.
The former City of Toronto Council at its meeting of October 6 & 7, 1997 amended and adopted Clause 50 embodied in
Executive Committee Report No. 23 entitled, "Better Buildings Partnership: Continuation of the Pilot Program into a
Full-Scale Energy/Water Efficiency and Building Renewal Program Beyond 1998", and in so doing established the Better
Buildings Partnership Loan Repayment Reserve Fund, By-Law No. 1997-0568
City Council at its meeting held on July 8, 1998 received for information, Clause 10, embodied in Report No.6 of the
Works and Utilities Committee entitled "Strategic Action Plan to Reduce Carbon Dioxide Emissions in the New City of
Toronto", which outlined the expansion of the former City's of Toronto Strategic Action Plan for the reduction of carbon
dioxide emissions across the new City of Toronto.
City Council at its meeting of October 28, 29 and 30, 1998 adopted Clause 1 embodied in Report No.7 of the Striking
Committee which recommended that sustainability be considered a primary option for the unifying and integrating concept
for the Council's Strategic Planning Process and that the attainment of sustainability requires programs such as the Better
Buildings Partnership which simultaneously promote economic, environmental and social equity goals.
Comments and/or Discussion and/or Justification:
The Chief Financial Officer and Treasurer, the City Solicitor, the Director of Purchasing and Materials Management and
Better Buildings Partnership stakeholders have been consulted in the preparation of this report.
1.0The Better Buildings Partnership
In July 1990, the former Toronto City Council established the Energy Efficiency Office with a mandate to develop and
implement a comprehensive energy efficiency and conservation strategy for the city. One of the programs developed in
support of this mandate was the Better Buildings Partnership.
The Better Buildings Partnership was initiated by the former City of Toronto's Energy and Water Savings Committee in
response to the threat of global warming. It was launched as a "Green Economic Initiative" and was further developed
jointly with public and private sector parties namely; Enbridge Consumers Gas, the Toronto Atmospheric Fund, Toronto
Hydro, Ontario Hydro and in consultation with a broad range of stakeholders such as the International Council of Local
Environmental Initiatives, financial institutions, building owners and managers, the environmental community, trade
unions, community groups, equipment manufacturers, and the construction energy/water efficiency service delivery
industries.
The Better Buildings Partnership was launched as a program on June 13, 1996. Most notable amongst 26 goals and
objectives that were identified for the program, were targets to generate $30million in spending by building owners, create
400 person years of employment and reduce carbon dioxide emissions by 40,000 tonnes annually. The Better Buildings
Partnership has proved to be an innovative and successful public-private partnership that has to date resulted in the renewal
of more than 150 industrial/commercial/institutional (ICI) and multi-residential buildings, surpassing the program's target
of 100 buildings. Better Buildings Partnership participants have spent over $60million, more than double the target of $30
million and created 3000 person-years of employment. The environmental impact has been equally impressive, surpassing
the goal of 40,000 tonnes/year reduction in carbon dioxide and other harmful pollutants, to achieve a total reduction of
65,000 tonnes/year.
Momentum has been established to build on the initial success of the Better Buildings Partnership. It is being
recommended that the Better Buildings Partnership, which is primarily geared to Institutional, commercial and industrial
and multi-residential buildings, be complemented by a residential sector public outreach program developed by the
Commissioner of Works and Emergency Services to increase awareness and participation in initiatives to improve
energy/water efficiency in single family and low-rise buildings. Consultations should be pursued through the appropriate
industries, residential contractor organizations, community organizations and various stakeholder associations in order to
explore the nature and scope of any future role to be assumed by these respective groups.
2.0The Role of Energy Management Firms
Surpassing the Better Buildings Partnership's initial targets was in large measure due to the professionalism and dedicated
efforts of the three Energy Management Firms participating in the Better Buildings Partnership. It is recognized that
expanding the Better Buildings Partnership across the entire amalgamated City addresses a potential market for building
improvements and new construction projects which is beyond the scope and capabilities of only three Energy Management
Firms carrying out work on Better Buildings Partnership projects. Request for Pre-Qualification, Request for Qualification
and/or Request for Proposal processes may be required to identify various community groups, Energy Management Firms,
consultants and contractors, manufacturers, retailers and other delivery and distribution channels as Better Buildings
Partnership qualified agents. These agents will provide sales support, marketing, auditing, feasibility advice, financing,
engineering design, implementation, project management, monitoring, verification, reporting and other program support
services.
Therefore, it is being recommended that the Commissioner of Works and Emergency Services in consultation with the
Director of Purchasing and Materials Management, and in co-operation with the Better Buildings Partnership partners, be
authorized to identify by means of Request for Pre-Qualification, Request for Qualification and/or Request for Proposal
processes where necessary, for the purpose of identifying the aforementioned groups as Better Buildings Partnership
qualified service delivery agents. By increasing the number of Energy Management Firms involved in the program, a
higher participation rate will be realized, resulting in a greater reduction in carbon dioxide emissions and a more successful
program. Consultations will be held with Energy Management Firms as well as with the appropriate industries,
organizations and various stakeholder associations in order to co-operatively determine the nature and scope of any future
enhanced role to be assumed by these respective groups.
The implementation of the full-scale Better Buildings Partnership program should include where feasible, the involvement
of Better Buildings Partnership utility partners, private, public/ non-profit, and corporate organizations, particularly with
regard to development, co-investment, management, and administration to ensure a streamlined application, approvals and
loan repayment process, effective market-oriented management of deposits, and to position the Better Buildings
Partnership to make timely adjustments to ongoing changes in the marketplace.
3.0Better Buildings Partnership Financial Mechanisms/Strategies
During 1997 and 1998, the Better Buildings Partnership assisted building owners and managers to determine the technical
and financial options available for the renewal of their buildings. New lending criteria were developed to allow more
retrofits to be completed in the public and non-profit sectors. The Better Buildings Partnership incorporated innovative
financial strategies beyond traditional energy service financing to enhance the attractiveness of the program to building
owners, the energy service community and the financial community and the financial services industry. It is of importance
to note that the Better Buildings Partnership does not provide financial grants to building owners. Rather the Better
Buildings Partnership program facilitated the provision of repayable interest-free loans for up to two-thirds of the retrofit
project costs with the remaining one-third being secured through private sector financial institutions or the building
owner's own resources such as reserve funds. In principle, the utility bill savings assisted building owners in the repayment
of loans.
3.1Canada-Ontario Infrastructure Works Program Interest-free Loans to
Public/Non-profit Sector Building Owners
The Better Buildings Partnership was allocated $12 million under Phase 1 of the Canada Ontario Infrastructure Works
Program. This program utilized a tripartite funding arrangement whereby the federal, provincial and municipal
governments each contributed a one third share, in this case $4million each. The City's share was provided by the Energy
Management Firms as private sector financing. This arrangement allowed the Better Buildings Partnership to use $8
million in Canada Ontario Infrastructure Works program funding i.e. the federal and provincial shares, in conjunction with
$4 million in private sector financing, to provide loans to public sector and non-profit building owners to implement energy
and water efficiency measures. It is important to note that the Better Buildings Partnership program was allocated up to
$1.9 million of the $12 million as administrative or sunk costs thereby allowing $10.1 million for investing in energy
efficiency projects. The Better Buildings Partnership was able to decrease its administrative costs to approximately $1.4
million resulting in loans to energy efficiency projects totalling $10.6 million. Two-thirds of this amount or $7.1 million is
being repaid to the City in scheduled monthly intervals over an average ten year term as noted in the following table.
