Energy Efficiency Projects: Possible Now with EPAD in Kentucky
By Janet Lively, Business Development, Harshaw Trane
Great news for building owners! The Energy Project Assessment District
Act of 2015 (the “EPAD Act”), was signed into law by Kentucky’s Governor,
Steve Beshear in April 2015 and became available for cities to adopt in
July.
What is EPAD?
The Energy Project Assessment District Act of 2015 provides a new,
innovative, proven way for commercial property owners to pay for energy
efficiency upgrades, on-site renewable projects and water conservation
measures.
EPAD funding is arranged for 100 percent of a project’s cost, and is repaid
by adding a voluntary assessment to the property tax bill over a term of up
to 20 years.
EPAD Value
Municipalities can now create EPAD districts that enable the creation of a voluntary assessment to a property owner’s tax
bill in order to facilitate energy efficiency and renewable energy upgrades. The voluntary assessment is used as security
for the issuance of financing to fund the improvements and services within the district. The security for the financing and
the only source of repayment, unless guaranteed by a third party, is the property being financed and the cash flow
generated by the property tax assessment.
EPAD can also be considered a real estate finance tool and an economic development driver. The assets financed are
tangible and lend value to the property(ies). Investors in EPAD bonds look solely to the value of the property as their
source of repayment.
Numerous benefits are available to industrial, manufacturing, healthcare and commercial property owners through the use
of EPAD versus traditional loan vehicles. Financing energy projects is often plagued by short repayment periods, high or
variable interest rates, stringent credit requirements and lack of equity. EPAD assessments offer low fixed interest rates,
longer repayment terms and the ability to effectively improve overall property value and marketability.
Sector Benefits
Energy efficiency can be a vital part of any organization’s strategic
objectives. With increasing global competition, every business faces issues
related to labor costs, shrinking profits and fewer opportunities exist to
improve profitability. EPAD can provide an untapped “revenue stream” to
improve both profitability as well as the working environment for employees
or tenants (in the case of income-producing properties). Kentucky
traditionally has lower utility costs relative to peer states; however,
increasing pressures on electricity generation are changing the dynamic, and
thus rates. Costs will be passed to consumers. Energy efficiency can
improve the bottom line and EPAD offers the ability to reduce operational
spending without having to “compete” with traditional capital projects.
Who Can Apply?
Any property that:
 meets the definition of industrial, commercial, institutional, multi-family
 is developed within a municipality having passed EPAD ordinance
 has a title is clear of any tax liens, judgment liens, or similar voluntary liens
 is current on property taxes
 is current on mortgages

is not in bankruptcy

is not an asset in a bankruptcy proceeding
What Type of Projects Qualify?
 Annual utility spend >$75,000 & >30,000 SF
 Energy analysis
 Insulation/weather sealing
 Efficient lighting and lighting controls
 Heating, ventilation, and air conditioning upgrades
 Solar photovoltaic (electric) systems
 Combined heat and power systems
How to get Started?
Once your municipality has adopted the ordinance, manufacturers can begin the application process to determine EPAD
project feasibility. Contact Harshaw Trane to learn more about the benefits of an EPAD project for your facility and to
obtain information on the application and process.
Harshaw Trane is a professional services company specializing in sustainable energy efficiencies that employs 300 highly-trained associates including
Certified Energy Managers and LEED® Accredited Professionals. Harshaw Trane is a founding member of the Kentucky U.S. Green Building Council
and is an ENERGY STAR® Services and Product Provider and Kentucky Best Places to Work honoree. Harshaw Trane serves Kentucky and Southern
Indiana with offices in Louisville, Lexington and Bowling Green, Kentucky, and Evansville, Indiana. www.HarshawTrane.com
To learn more, visit www.epad-ezone.com or contact Janet Lively at 502.499.7000.