Item - 2022.IE31.9

The Infrastructure and Environment Committee recommends:

1. City Council direct the Deputy City Manager, Corporate Services to ensure that projects applying to the Sustainable Energy Plan Financing program for funds must be projected to generate savings or revenues sufficient to offset a debt service schedule over the performance life of the asset, limited to a maximum of 30 years, inclusive of all financing costs at the City of Toronto's cost of borrowing at the time of approval, or demonstrate sufficient financial ability to service the debt as determined by a financial review by the Chief Financial Officer and Treasurer.

2. City Council authorize the Deputy City Manager, Corporate Services, or their designate, to negotiate and enter into any agreements necessary for the Sustainable Energy Plan Financing program, including agreements to disburse or receive funding, on terms and conditions acceptable to the Deputy City Manager, Corporate Services, or their designate and in a form satisfactory to the City Solicitor.

In December 2021 City Council adopted TransformTO - Critical Steps for Net Zero by 2040, an ambitious climate change strategy targeting net zero greenhouse gas emissions by 2040. Existing buildings are Toronto's largest source of greenhouse gas emissions emissions accounting for about 57 percent of total community-wide emissions (2019). In July 2021 City Council approved the Net Zero Existing Buildings Strategy which identified nine key actions for reducing emissions, including the need to provide integrated retrofit support (Action 4) and to expand and enhance retrofit financing (Action 5).

The Sustainable Energy Plan Financing program provides financing at the City's cost of borrowing to invest in energy efficiency, renewable energy, and emission reduction projects in support of TransformTO. It is a key tool to help reduce building emissions.

This report requests an amendment to the Sustainable Energy Plan Financing program to extend the maximum debt service period for financing from 20 years to 30 years. The 30 year term is the maximum financing term for capital projects under the City's Capital Works Financing Policy.  Building decarbonisation requires a shift in the way we build and retrofit buildings, focusing on holistic deep energy retrofits which will need to include envelope updates, fuel switching, renewables, and other measures. Many of these investments will last much longer than conventional investments, such as low carbon building envelope retrofits with asset lives of up 50 years or geo-exchange bore holes which are expected to last up to 100 years. This amendment is a step towards aligning the Sustainable Energy Plan Financing program with TransformTO - Critical Steps for Net Zero by 2040 and Net Zero Existing Buildings Strategy.