Financing Energy Efficiency through On-Bill Repayment: Testing a new financing strategy for affordable rental homes in Santa Monica

More than 400,000 California households live in publicly regulated, rent-restricted, affordable rental properties. The California Energy Commission recently studied barriers for low-income Californians to contribute to meeting the State’s climate and energy goals and recognized that affordable rental housing faces unique barriers, including financial arrangements and limited budgets with restricted opportunities to take on additional debt. The Energy Commission recommended that the State continue to develop low-income energy upgrade nfinancing and credit enhancement programs.

On-Bill Repayment (OBR) has the potential to unlock opportunities for affordable rental property owners to finance energy efficiency retrofits as a stand-alone project rather than waiting to finance the retrofits as part of a substantial rehabilitation, which typically occur only every 15 to 30 years. OBR also has the potential to enable affordable rental property owners to finance solar energy, energy storage and other systems to reduce energy bills.

This report examines a recent test of OBR at five affordable rental home properties in the City of Santa Monica, California.