Citizens Union Bank is a long-time supporter of eco-friendly projects. This month CUB closed the first loan through the city’s Office of Sustainability designed to finance energy efficiency upgrades to properties.
“This is a fantastic new program in Louisville and we’re happy to be a part of it,” says Grant Simpson, 1st vice president of commercial lending at CUB. “It allows companies to become greener and more energy efficient, which is a goal of the city.”
Through the new Louisville Energy Project Assessment District (EPAD), CUB provided financing to client Tony Holland to upgrade a 15-unit apartment complex near Frankfort Avenue with a new HVAC system and high efficiency lighting.
“Grant Simpson is exceptional to work with at CUB,” says Holland, a private equity investor. “We both approached this project in a deliberate fashion knowing that we were helping the city work through the first one. CUB and I worked as a team with Natalie Vezina, Maria Koetter, and the rest of the group at the City to systemize the process.”
Koetter, director of Louisville’s Office of Sustainability, describes the initiative this way.
“The EPAD program provides new and innovative ways for commercial and multi-family property owners to repay private loans for energy efficiency upgrades, on-site renewable energy systems and water conservation measures,” Koetter says. “Property owners who utilize EPAD get to affix
the loan to the property title rather than on their balance sheet. This loan repayment mechanism is attractive to property owners and helps minimize the financial burden of borrowing money for building improvements.”
Simpson says clients really like the EPAD provision allowing them to repay the loan through annual invoices from the City, much like property assessments, rather than making more frequent payments to the bank. Also, rather than having five years to pay back the loan, borrowers can spread payments out over the useful life of the energy-efficient equipment purchased, in this case 18 years.
Why did Holland choose the EPAD program rather than more traditional financing?
“The simple answer is that is it allowed me to fill out the equity stack with debt rather than the higher cost of equity,” Holland says. “The EPAD act was passed a couple of years ago, but no one had utilized it here in Louisville. I studied the program nationally and visited other cities … to learn more about it. When I contacted the city they were knowledgeable of the program, but it was still new and no one had tried to use it. I think now that the city has processed mine the program will take off here like it has in other cities.”
Simpson says CUB was happy to step up as the lender in Louisville’s first-ever EPAD financing project.
“We always try to find a way to say ‘yes’ so long as it’s prudent and makes sense for the bank,” he says.
Now that CUB and Holland have successfully closed the first EPAD loan, Koetter says she expects other borrowers to participate in the City’s new initiative.
“EPAD financing is a great tool that will help incentivize property owners to install energy efficiency improvements in buildings across the city,” she says. “EPAD also allows building owners to realize the immediate cost savings of lower energy bills as a result of the energy efficiency improvements.”
Simpson says CUB actively looks for ways to support community-focused initiatives. “This is a good program for the City. At CUB we try to be a good steward for the community.”
Koetter says the EPAD program means a greener future for the city of Louisville.
“As more property owners use the EPAD program,” she says, “Louisville will see the benefits of decreased greenhouse gas emissions, increased economic development, cleaner air, healthier residents, increased property values and an overall improvement in the quality of life and livability of the City.”