Colorado: Fort Collins Utilities Epic Homes Program

Fort Collins Utilities is a municipal utility serving 66,000 customers in northern Colorado. In 2009, the City Council adopted energy policy goals that established greenhouse gas emissions reduction goals of 20 percent below 2005 levels by 2020 and 80 percent below 2005 levels by 2030.  In 2015, the Fort Collins Climate Action Plan Framework established Fort Collins’ aim to be carbon neutral by 2050.

As a result, Fort Collins Utilities implemented the Home Efficiency Loan Program (HELP), an on-bill financing program in 2012. Energy Smart Partners, a local credit union, administered the program and provided on-bill loans to customers using buy-down capital from the city. HELP evolved overtime, which made loan offerings more affordable and attractive, thereby increasing uptake. These program changes were then incorporated into a more comprehensive initiative called the Epic Homes Program.

Fort Collins Utilities launched Epic Homes in mid-2018 with help from a $1 million grant as winners of the 2018 Bloomberg Philanthropies U.S. Mayors Challenge, and a $200,000 grant from the Colorado Energy Office. From August 2018 through December 2019, the program issued $540,500 across 44 loans to support energy efficiency upgrades in Fort Collins homes. This included five loans for rental properties. Since inception in 2013, on-bill financing programs operated by Fort Collins Utilities have issued 211 on-bill loans, totaling $2,284,400 in energy efficiency investments, with no defaults.

The Epic Homes Program uses an integrated approach that includes an on-bill financing option to help customers finance residential energy upgrades. Under Epic Homes, customers can receive a loan for energy efficiency and clean energy upgrades, including solar PV, and repay the loan via their monthly utility bill. Epic Homes shares common design elements with HELP, but with a greater focus on low- and -medium-income households. With $6.6 million in long-term capital agreements, Fort Collins Utilities offers the loans to customers; rather than a credit union. Fort Collins Efficiency Works, a local non-profit, provides energy audits and shares the contractor network used by other Fort Collins’ energy efficiency programs. This links the on-bill program to the broader climate actions being undertaken by the City of Fort Collins.

Epic Homes includes three pillars: an on-bill loan option, an indoor environmental quality study for health and well-being purposes, and an energy performance certificate. Epic Homes is designed to enhance the health and well-being of Fort Collins residents by helping improve energy inefficient homes.  With nearly 50 percent of low- and moderate-income residents living in rental housing, Epic Homes helps finance energy upgrades to accomplish the health, equity, and quality of life community goals.

Program Details

Epic Homes is an innovative on-bill financing program demonstrating how municipal utilities can leverage partnerships to secure long-term and affordable capital for clean energy projects. The program utilizes third-party capital to scale impact for homeowners and rental properties. Epic Homes partnered with Colorado Clean Energy Fund, a Colorado green bank, to secure $3.25 million in capital over 15 years for the program from Denver-based Vectra Bank. Additionally, U.S. Bank and the Colorado Energy Office agreed to provide another $3.3 million in loans for clean energy projects financed under Epic Homes. “Fort Collins’ Epic Loans 15-year capital is critical for keeping monthly payments attractive for property owners, particularly for rental property owners who tend to be cash flow-sensitive regarding investments to rental units,” said Sean Carpenter, Lead Sustainability Specialist at the City of Fort Collins.

Epic Homes provides low-interest financing for residential “whole house” energy efficiency retrofits, rooftop solar PV, and water conservation projects. The loans help city residents finance energy improvement on their homes by making them more comfortable, while saving energy and money. Eligible efficiency measures include heat pump and ventilation (HVAC) system replacement, insulation and air sealing, water heaters, energy-efficient windows, and water service line repair and/or replacement. Loans can be combined with energy efficiency rebates through Efficiency Works Home and with solar rebates for both homes and businesses.

Through the on-bill program, customers can borrow up to $25,000 with a repayment period of up to 15 years. Loan rates are structured in three tiers based on repayment periods: 2.95 percent for customers choosing a 3-5-year repayment window, 3.15 percent for 7-10-year windows, and 3.25 percent for 11-15 years.

Eligible properties include detached single-family dwellings, duplexes, attached townhomes, and rental properties. However, condo units in multistory buildings are not. While rental properties can participate in the program, it is the owner, not the tenant, who repays the energy upgrades costs.

Following an online application, an Epic Homes participant receives an energy audit that includes infrared scans and blower door testing. Based on the findings of the authorized energy auditor’s findings, the applicant is given a work plan and loan estimate. The applicant is then responsible for completing a full loan application and soliciting bids from a list of previously-approved contractors. Once the work is successfully completed, the contractor is paid and loan payments are set up on the participant’s monthly utility bill.

For loan underwriting, Epic Homes uses a hybrid method that includes both credit checks (minimum 640 FICO score) and six months of utility bill payment history. Additionally, participants cannot have a bankruptcy or foreclosure in the last five years. Fort Collins Utilities retains the authority to shut-off service for non-payment, according to municipal code. Loans are not transferable, as the loan is due in full when the property is sold, and are secured by a UCC lien filed through Larimer County.

“Epic Homes is a great opportunity to bring together multiple City sectors and organizations to benefit Fort Collins residents with healthier living spaces. It’s not about the houses, it’s about the people living in the houses, and I’m excited to see the positive impact this collaborative effort will have on our community,” said Fort Collins Mayor Wade Troxell.