Rapid inflation is affecting all of us right now. And it’s particularly true for commercial property owners, agricultural businesses, and other entities responsible for paying monthly utility bills.
Buildings in Kentucky account for nearly one-third of energy consumption across the Commonwealth. Electricity costs rose 3.9% in 2021, the fastest rate since 2008. If you do the math, it’s clear that increasing energy costs are a big deal for our region’s property owners.
These cost increases won’t be slowing down anytime soon; unfortunately, they can significantly deter economic growth.
Equipping facilities to conserve more energy is a smart move for property owners, commercial investors, and startups. And that’s precisely why there’s a statewide program helping to facilitate smarter uses of energy on a commercial level.
The EPAD program is helping Kentucky business owners make energy and water conservation upgrades to owned facilities — and save money from start to finish.
EPAD is a public-private partnership model available in over 30 states and launched in 2015 in Kentucky.
Part of SOAR Innovation’s work is helping business owners connect with critical resources that can help them grow. We’re highlighting the EPAD program for consideration because it has the potential to be transformative for property owners and potential investors in our region.
Let’s take a closer look at the EPAD program, learn who it’s for, and unpack how it can benefit our regional economy.
What is the EPAD program?
The Energy Project Assessment District (EPAD) program is a state-level initiative that offers PACE financing, which offers highly favorable terms to its recipients.
Property Assessed Clean Energy, or PACE, is a financing mechanism for eligible property owners in EKY that reduces the costs of energy-related upgrades to owned facilities, such as:
- Energy efficiency upgrades
- On-site renewable energy systems
- Water conservation measures
Improving and modernizing our region’s building infrastructure should attract more competitive businesses, startups, and investment activity.
What’s so exciting about PACE funding is it aligns conservation goals with economic growth, creating several benefits for those involved with the program. EPAD can help Eastern Kentucky expand its tourism economy, offer more opportunities for facility expansion in our region, and much more.
The primary aim of the EPAD program is to incentivize energy conservation for business owners. The target outcomes include:
- Reducing statewide energy consumption.
- Adding jobs related to commercial remodeling projects.
- Generating tangential economic benefits for adjacent communities.
How does the EPAD program work?
The EPAD program offers more favorable financing terms than traditional methods. The interest rates are lower, and the repayment terms are more manageable. Plus, it doesn’t impact the property owner’s access to other forms of debt financing, making it an attractive option for a diversified funding stack.
First, the EPAD program administrator conducts an EPAD assessment. Energize Kentucky serves as the EPAD program administrator for many county and town governments in Eastern Kentucky.
The County Property Valuation Authority (PVA) records EPAD assessments in county land records. Then, the district authorizes the assessment and adds it to the property owner’s tax bill.
Since EPAD assessments are attached to property tax records, PACE funding is quite different from a traditional bank loan. They don’t affect your balance sheet or the business owner’s credit.
Finally, the PACE funding comes from private lenders. The terms include:
- No down payment
- Fixed repayment schedule with low interest rates
- Extended terms of up to 25 years
What types of businesses and projects are EPAD-eligible?
EPAD-eligible businesses may include commercial, agricultural, industrial, and multi-family property owners.
Projects that may be eligible for the program include:
- Upgrading facilities, appliances, HVAC, and other assets to meet energy efficiency standards
- Deploying on-site renewable energy systems
- Installing water conservation measures
How to apply to the EPAD program
Follow these steps to apply to the EPAD program. Be sure to review the complete list of EPAD application requirements before you get started.
- Submit your initial eligibility form at KYPACE.org. A program administrator will review it and can issue conditional project approval if it checks out. This is not a required step, but it’s helpful if you need conditional approval before securing a contractor partnership or approval from your mortgage bank.
- Complete the Energy Project Summary form with your contractor. Your contractor should be registered with the EPAD program to help your project avoid preventable hiccups.
- Create your energy project application. You’ll need access to the following information about your property: parcel number, market value, existing mortgage loans, mortgage company contact information, your Energy Project Summary, and contractor proposals.
If the EPAD program administrator approves your application, you’ll need to review and sign your financing terms. From here, the PACE special assessment is added to your tax bill, and the project can kick off.
The EPAD administrator will keep in touch to ensure you implement your project application as written.
Case study: Reducing energy consumption and improving resident quality of life with the EPAD program
The Ivy Knoll Senior Retirement Community was the first PACE-funded renovation project in Kentucky. The project team secured $750K in financing on a 20-year term.
The Ivy Knoll Senior Retirement Community now boasts solar panels, LED lighting throughout the facility, modernized elevators, and an improved HVAC system. The facility is projecting a 37% annual reduction in energy cost savings thanks to these upgrades. And its residents are enjoying more reliable elevators and facility temperatures as a result.
Which EPAD partners should I look into for my project?
Energize Kentucky is a regional program administrator that helps PACE-eligible projects secure funding. They’ll process your application and partner with your district, funder, and contractor to provide project oversight.
SOAR Innovation has a connection with Donovan Energy. This funding provider has expressed interest in getting involved with PACE projects in Eastern Kentucky. Reach out to them if you’re seeking a funder for an energy upgrade project aligned with the EPAD program.
Conclusion: Get funding for facility energy upgrades
The SOAR team provides application assistance, serving as a second pair of eyes to help you submit a well-thought-through plan to the EPAD program administrator.
We can also help with introductions to EPAD program partners. If you’re ready to get started with a facility energy conservation project, reach out today.