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HomeMy WebLinkAboutC30730 Initiate a PACE Strategy and National Lobbying EffortContract No. C30730 CITY OF PALM DESERT OFFICE OF THE CITY MANAGER STAFF REPORT REQUEST: AUTHORIZE STAFF TO NEGOTIATE A CONTRACT WITH ECOMOTION TO INITIATE A PACE SOLUTIONS STRATEGY AND NATIONAL LOBBYNG EFFORT SUBMITTED BY: John M. Wohlmuth, City Manager DATE: April 14, 2011 CONTENTS: EcoMotion Letter & PACE Solutions Work Plan Palm Desert Accord Resolution Recommendation By Minute Motion: 1. Authorize staff to negotiate and sign a contract with EcoMotion to initiate a PACE Solutions strategy and lobby effort in an amount not to exceed $25,000; and 2. Appropriate $25,000 from the General Fund Unobligated Reserve to support EcoMotion's creation of an appropriate entity to lobby the Executive and Legislative Branch to find a resolution to the Federal Housing Finance Agency (FHFA) position on AB 811/PACE loans for energy improvements. Executive Summary Approval of this item will authorize the City Manager to execute a contract with EcoMotion, and funding up to $25,000 for the formation of a PACE Solutions Organization. This entity will work strategically and collectively with other interested government agencies to lobby the executive and legislative branches of the federal government to reverse the FHFA road blocks that prevent the City's EIP and other PACE programs from operating at full strength. Staff Report Negotiate a Contract with EcoMotion for Lobbying April 14, 2011 Page 2 of 4 Background On July 21, 2008, the Governor signed into law AB 811, which amended Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code. The bill authorized cities and counties to establish a program to enter into contractual assessment agreements with property owners to finance the installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to real property. On August 28, 2008, the City Council approved Resolution No. 08-89, which established the City's Energy Independence Program (EIP). Since the inception of the EIP, the program has assisted 250 property owners with energy efficiency upgrades and installation of renewable energy projects. To date, a total of $5.5M has been funded for EIP projects. The EIP, coupled with the Palm Desert Energy Partnership have reduced energy consumption by 100 million kwh. This current energy savings is equivalent to removing 10,000 homes from the energy grid. The EIP and Energy Partnership have also assisted the City in meeting its' AB 32 green house gas reduction requirements by eliminating 36,400 metric tons of green house gases (equal to removing 7,100 cars from the roads). Since the approval of AB 811 and the City's Energy Independence Program in 2008, several California cities and counties have adopted AB 811 programs. In Sonoma County, over 1,600 EIP projects have been completed and over $43M has been funded for commercial and residential renewable energy and energy efficiency upgrades. AB 811 legislation has expanded across the nation and 25 states have adopted similar legislation. AB 811 is now referred to as PACE (Property Assessed Clean Energy) financing at the national level. Prior to the FHFA statement of July 2010, many states indicated a strong interest to implement energy independence programs. FHFA Statements: On July 6, 2010, the FHFA issued a guidance statement to Fannie Mae and Freddie Mac (the "July 2010 FHFA Statement") that: 1. Expresses its concerns that the absence of robust underwriting standards to protect homeowners among priority lien PACE programs across the nation raises mortgage safety and soundness concerns for the mortgage lender. 2. Although allowing a waiver for homeowners who prior to July 6, 2010, obtained a PACE -like loan (such as a loan under the EIP), directs Fannie Mae and Freddie Mac as of July 6, 2010, to tighten certain mortgage lending underwriting criteria in PACE jurisdictions, and to enforce the provisions of their Uniform Security Instruments prohibiting a property owner from incurring a senior lien on the property (such as an assessment under the EIP) without the consent of the mortgage lender. Staff Report Negotiate a Contract with EcoMotion for Lobbying April 14, 2011 Page 3 of 4 Based on the statement issued by the FHFA, the City's EIP was placed on hold on July 14, 2010. On August 26, 2010, the City Council directed staff to re -launch the EIP with a provision that an additional disclosure be provided to participating property owners regarding the recent statements released by the FHFA. The City's EIP is up and running but the demand has significantly decreased due to the statements released. AB 811/PACE Solutions Conference: At the October 2010 Energy Subcommittee meeting, staff was directed to look into the feasibility of hosting an AB 811 (PACE) Conference in Palm Desert. The purpose and goals of the conference include, but are not limited to: • Providing a forum to discuss the recent statements issued by the FHFA and implications that have occurred to PACE programs such as the City's EIP. • Develop solutions to address the FHFA concerns. • Develop a uniform position to lobby for federal legislation to address the FHFA concerns with PACE programs. On March 3-4, 2011, the City of Palm Desert hosted an AB 811 /PACE Solutions Conference at the University of California Riverside, Palm Desert Graduate Center. The conference was a great success and attended by 120 municipal, state, private and national stakeholders of AB 811/PACE. As a result of the conference, the attendees signed the Palm Desert Accord Resolution (see attached). The Palm Desert Accord calls for the PACE community to align and unite its' efforts to supporting the ongoing judicial, legislative, and executive movements to overturn the FHFA road blocks to PACE programs. Many private and public agencies attending the conference urged the formation of a single entity to drive a coordinated and comprehensive lobbying effort of find a solution to the FHFA issue, and to bring PACE back to the legislative and executive forefront. A proposal by EcoMotion has been provided and evaluated that would initiate the formation of an entity or coalition that would unify local and national efforts to lobby the Executive and Legislature branches to overturn the FHFA decision. This lobbying effort is necessary to drive an expeditious resolution to the road blocks that many PACE programs face today. The thought of initiating this "Energy Independence America" lobbying effort is that this process could be more expeditious than the judicial lawsuit (brought forward by the City of Palm Desert and other entities) against the FHFA, which may not be heard in court until the middle of 2012. If the formation of a lobbying organization is successful, it could be supported by public and private entities wishing to promote the establishment of PACE programs. In addition, this centralized entity would be an ideal conduit for sharing information and criteria that would promote PACE programs nationwide. Staff Report Negotiate a Contract with EcoMotion for Lobbying April 14, 2011 Page 4of4 Please find attached a letter from EcoMotion requesting $50,000 from the City for organizing startup funds and a draft work plan from EcoMotion. Although a comprehensive PACE solutions strategy could entail approximately $240,000 over a six-month period, the City's continued leadership and foresight in participating in this solution could leverage other public entities to participate in this important effort. EcoMotion is well recognized and experienced in the energy policy arena and a good option to get the stakeholders together and discuss the establishment of the entity framework. If EcoMotion is utilized to form this entity/organization, it is my recommendation to turn the process over to the newly created entity once the complete mission and framework is established. Therefore, if the City Council chooses to support this effort, staff recommends contributing $25,000 to lobby the Federal Executive and Legislative branches to remove the FHFA road blocks. If this effort is successful, perhaps the City Council could consider supporting future funding. Richards, Watson and Gershon law offices has agreed to assist with the formation of the appropriate entity pro bono. Other local governments, such as Sonoma County, have tentatively agreed to financially support such an effort. Fiscal Analysis The City Council approved $63,175 seed funding from Redevelopment funds for the PACE Solutions Conference. The conference revenues totaled $43,560 with $31,000 coming from sponsorships and $12,560 from registration fees. The net conference expense to Redevelopment was $19,479. If the Council were to fund EcoMotion or another entity to lobby or establish a stakeholder's organization, Redevelopment funds cannot be utilized. An appropriation of $25,000 from the General Fund Unobligated Reserve would be required. Prepared and Submitted B i art n Alvarez, Red velopment Manager ( 34 Paul S. Gibson, Director of Finance Department Head: 11 rthy, ACM foorRoevelopment ChFT_C01*CmAvhON ----j APPROVED �` DEW" RECEIVED OTHER Approval: MEETIbTG DAn AYES: G� NOES: ABSENT: o n M. Wohlmuth, City Manager ABSTAIN: * App o ed staff recommendations, fully VERIFIED BY: unde s nding that with approval of the Original on File With Ci lerk's Of lice $25, 0 it is very likely EcoMotion will need to return to the ty Council for additional funding to support this effort, and such a request would be viewed favorably_ 550 UuMotion — Business Greening Solutions 15375 Barranca Parkway F-104 • Irvine California 92618 • (949) 450 7151 • www.EcoMotion.us March 21, 2011 Dear Palm Desert Officials: The purpose of this letter is to officially request funding for the continuation of PACE Solutions. As you know, the PACE Solutions conference hosted by the City of palm Desert and managed by EcoMotion, was by all accounts a great success. More importantly, it catalyzed an important movement toward solutions. Participants are eager to work strategically and collectively to resurrect PACE - Residential to its full potential, specifically to overturn the FHFA roadblock. This is a great opportunity for all, and for the City of Palm Desert and the other local governments that are being approached to fund PACE Solutions — Energy Independence America. This project extends the value of the PACE Solutions conference. And the immediate task — of reversing the FHFA — focuses our activities. The tripartite work plan strategically addresses executive, legislative, and judicial fronts. At this time, EcoMotion is seeking $240,000 of funding to initiate the project and to fund its work for a six-month Phase One. Initial funding is being sought from founding local governments — Palm Desert and Sonoma County, Palm Springs may also contribute — with outreach to California's utilities that have shown leadership in this area. We request $50,000 from the City of Palm Desert to launch this work. Phase Two funding will be sought from a variety of sources including foundations, utilities, product suppliers, contractors, banks, financial advisors, etc. This could be as much as $1— 2 million, depending on the focus of the initiative at that time. Your funding has the potential to leverage major change, and to bring success back to Palm Desert and its citizens. Born in Palm Desert, AB 811 and now PACE have great potential in Palm Desert when unbridled from federal regulators absorbed in "willful ignorance." We envision tens of millions of dollars of local investments in Palm Desert, and many times that In lifecycle energy savings. PACE Residential can potentially bring hundreds of jobs to Palm Desert while meeting energy and climate protection goals. Home owners can cut their energy costs by tens of millions of dollars. The City's funding will help assure this. It has been EcoMotion's great honor to work with and for the City of Palm Desert, and we look forward to continuing this important work. Palm Desert's local leadership is of national importance. Thank you for your consideration of this request. Sincerely, Ted Flanigan President t� 1 ECOMotion - Business Greening Solutions 15375 Barranca Parkway. F-104 • Irvine California 92618 • (949) 450-7151 • www.EcoMotion.us PACE Solutions - Energy Independence America Work Plan Last edited on March 21, 2011 Outline Mission Education, Outreach, and Action Information hub State coordinators and networks The Tripartite Initiative Executive Bipartisan support for legislation Judicial tracking, briefs, and data Timeline and Methodology Phase One: Six months Phase Two: 1.5 years Budget Requirements Funding Sources Resources and Unique Qualifications Mission PACE Solutions - Energy Independence America has an immediate mission: It is an organization developed by local governments to overturn the FHFA "decision" and to return PACE to its original AB 811 intent and authority. The initiative and concerted effort outlined herein will be strategic and multi -faceted. It begins with limited funding and grows as warranted to succeed. PACE Solutions - Energy Independence America aims to secure our energy future, providing environmental and economic benefits. PACE Solutions is about making our communities energy independent of conventional power sources and replacing them with energy efficiency and local, clean and sustainable renewable energy resources. Education, Outreach, and Action PACE Solutions builds on the successful PACE Solutions conference held March 3 — 4, 2011 in Palm Desert. The conference brought together PACE advocates and leaders from across the country, 125-strong, to discuss ways of resurrecting PACE from its current FHFA roadblock. Solutions were discussed — financing, underwriting, subordinating, legal, legislative, executive — and all left energized to work collectively to take action to support PACE. This document reflects that desire for action and adopts many of the tactics suggested by conference participants. It is a rational, multifaceted work plan for a national education and outreach initiative led by local governments. Information Hub PACE Solutions will work to build and inform our network. We will do so through a web site, a -news, social media, and other forms of communication. These may include letters to the editor and publications such as those of the League of Cities and Association of Counties. Web site will have FAQs, You Tube clips, as well as Power Point slides for advocates' use to spread the message of energy independence and jobs. Establishing the Hub for Outreach and Action Headquarters Fully staffed State rally and national conference coordination Phones, inbound and outbound e-mails, tweets, etc. Mailings, direct and virtual Web site Home page with status The Value of PACE as a Local Government Tool Assessment Financing 101, 201 FAQ Power Point presentations YouTube library Links to PACE Now and others Constituent name/e-mail collection for network database Judicial suits, etc. e-News Monthly PACE Program highlights Legislative news Calls to Action Thus far, there have been two PACE Solutions conferences and participants hope that they are annual. They have presented cutting -edge programs and professionals. This year's conference drew together a network of dedicated professionals who are too often working in silos. They are looking for means to take concerted action. PACE Solutions will continue the "tradition" of annual conference in the desert. Throughout, PACE Solutions is about education and outreach, guiding network members to useful information and action as necessary. State Coordinators An equally ambitious is to build a network of state coordinators and networks in support of PACE. With 24 states having passed (or using) enabling legislation, PACE Solutions' goal is to recruit 24 state coordinators building statewide networks in 24 states. There may be other states that have attempted legislation, and where advocates are eager to do so. We assume that this may be the case in another dozen states, raising the potential number of state coordinators and networks to 36. National Outreach, Education, and Action • State coordinators • Statewide PACE supporter networks ■ National meeting of coordinators (2) We will be looking for pockets of PACE support. EcoMotion has already found a dozen of these in preparation for PACE Solutions 2011. As part of this scope of work, PACE Solutions will find these pockets and build a network of coordinators. We will then support the coordinators as needed to garner their legislative and communities support. The Tripartite Initiative The immediate mission is to reverse the FHFA "decision" that has blocked the development of residential PACE programs. Since we cannot predict where our success will be realized, PACE Solutions has a three -fold work plan: We will be using a tripartite implementation plan involving executive, legislative, and judicial efforts. 1. Executive The most immediate and timely effort involves the executive branch. Vice President Joe Biden was a staunch advocate of PACE. The DOE had flagged PACE for stimulus funding for local governments. The FHFA proclamation ran counter to this direction and enthusiasm. PACE Solutions will continue to promote PACE to the executive branch, demanding There is a unique opportunity to raise awareness about PACE in the upcoming presidential campaign. PACE Solutions will seek an early win by trying to raise the issue in early electoral college states. 2. Legislative PACE Solutions will provide bipartisan support for PACE legislation and will work with PACE Now and others to do so. PACE Solutions will suggest legislative language, and then recruit representative and senate support for legislation that clears the way for PACE Residential. As bills are introduced, they will be tracked and supported through committees and the Congress. 3. Judicial PACE Solutions will track and provide network support for lawsuits that seek to protect local rights to define public benefits and PACE assessments in particular. PACE Solutions will work to provide Amicus briefs in the FHFA lawsuits, presenting a coordinated set of briefs that lay out arguments in favor of PACE. Timeline and Methodology PACE Solutions is on a fast timeline. We do not know where success will come from — executive, legislative, or judicial — but we do know that we have to work diligently to assure success. The sooner the better: Then we can all get back to work designing and implementing programs to reap their multiple consumer and societal benefits. Initially, the project will be managed by EcoMotion. An advisory board will be established, as well as an executive committee of funders. Ultimately, the project will be formed into a non- profit trade association or similar structure best positioned to receive contributions. PACE Solutions • Local government executive committee • Management • Advisory board • Stable of local government spokespersons The project has two relevant time frames: 1. First is a ramp -up period. 2. Second is a full-scale, potentially 1.5 year campaign to overturn the FHFA. Phase One Six Months (April - September) Immediate Implementation Establish education and outreach mechanisms Logo, image Web site 4 e-News Press release Tripartite action Executive Strategy development Implementation, focus on presidential campaign Legislative, bipartisan support Work with SBA; Commerce Committee members Judicial Support for litigation as needed Coordinate filing of Amicus Briefs by local governments Management Refine mission given PACE Status Raise PACE Solutions funds as needed given PACE Status Phase Two October 2011 —December 2012 Full -Scale Implementation Establish 24-36 state activities Coordinators, networks Develop handbooks for coordinators Execute rallies in key state Fundraising (offer commissions for coordinators) Continued and expanded outreach and awareness Targeting key states and constituents e-News, special stakeholder editions Web enhancements Social media Executive efforts Working with early primary states Hitting the ground in key states Working on the big ticket states Legislative Track developments with PACE Now Develop bipartisan support for legislation Track and support as legislation goes through committees and Congress Work with key members of banking and energy committees Judicial Track lawsuits Provide data Support litigants with expert testimony Management Develop appropriate legal structure for PACE Solutions Richards Watson Gershon to establish entity to manage initiative Refocus energy independence mission as PACE is resolved Revise staffing and organizational design to manage new mission(s) 5 Budget The strategy for PACE Solutions is to build on its local government roots. Funding will initially come from local governments that will guide the genesis of the initiative. Requirements The budget to operate PACE Solutions during Phase One is $40,000 per month, $240,000 for the six-month Phase One period. Labor accounts for 75% of the budget; operating expenses dominated by travel costs are 25%. The need for Phase Two, and its funding, is unknown. If a full PR campaign is required to build public support for PACE, it could cost $1-2 million. Funding Sources The list of potential funding sources is long. Many boats will rise if PACE residential is restored. The key stakeholders are: • Local governments o Cities o Counties • Serving utilities o Electric o Gas o Water • Banks and mortgage lenders • Law firms and bondsmen • Financial advisors • Contractors and product suppliers o Solar o HVAC o Windows o Insulation, etc. • Third party program implementers Resources and Unique Qualifications EcoMotion brings a unique skill set to the management of this initiative. Our team worked for both Palm Desert and Sonoma County in the development of their energy independence programs. We have tracked progress, held two national conferences, and have built a network of PACE advocates coast to coast. We have an organization that can continue to carry the ball until a legal entity can be established. Let's help local governments work together to build on the PACE Solutions momentum and bring back PACE Residential's massive potential, to leverage multiple benefits many times over. 11 PALM DESERT ACCORD & RESOLUTION MARCH 4, 2011 WHEREAS, on July 21, 2008 California Governor Arnold Schwarzenegger signed into law a bill sponsored by the City of Palm Desert, Assembly Bill 811, allowing property owners to declare their independence from traditional production and delivery mechanisms of energy into their homes and the payment therefore; and WHEREAS, on August 28, 2008, the City of Palm Desert, California became the first local government in America to craft and offer an "AB 811" program to its residents as part of its overall Energy Independence campaign to reduce energy consumption by 30 percent and to promote rooftop solar energy; and WHEREAS, Assembly Bill 811 allows homeowners to finance energy efficiency and distributed energy systems in their homes through their local governments and repay these obligations over time from savings on their utility bills among other things; and WHEREAS, the genius of Assembly Bill 811 is that it allows these benefits to homeowners, while increasing equity in their homes, improving the security interests of their lenders, reducing the carbon footprint within their communities, helping manage demand response within their state and reducing our national dependence on foreign oil, all at no cost to taxpayers; and WHEREAS, the popularity of Assembly Bill 811, known nationally as "Property Assessed Clean Energy" or "PACE" programs, has caused the following 24 states and the District of Columbia to adopt this legislative scheme: California Maine Nevada Ohio Colorado Maryland New Hampshire Oklahoma Florida Massachusetts New Mexico Oregon Georgia Michigan New York Vermont Illinois Minnesota North Carolina Virginia Louisiana Missouri Texas Wisconsin District of Columbia WHEREAS, PACE takes its name in part from the security mechanism of the legislative scheme whereby the repayment of the local government loans are secured by "liens" on their property tax bills sent by the local government; and WHEREAS, on July 6, 2010 the Federal Housing Finance Agency (FHFA) issued a Statement calling on States and local governments to "pause" PACE programs and directing Fannie Mae, Freddie Mac and the Federal Home Loan Banks to prohibit any homeowner with senior PACE liens from participating in their programs;" and WHEREAS, the impact of the FHFA ruling was to cause most PACE programs to suspend lending operations and to cause California and numerous local governments and organizations to file suit in federal court against FHFA (State of California, the City of Palm Desert, County of Sonoma, and County of Placer, California, the Sierra Club, National Resources Defense Council, Town of Babylon, New York, County of Leon, Florida); and WHEREAS, the impact of the FHFA ruling was to incite Congressional action with the introduction of bills seeking to reverse the FHFA ruling and clarify the role of PACE in federally backed loans and other debt instruments; and WHEREAS, numerous attempts have been made to the FHFA, the Department of Energy, the Federal Reserve and other political subdivisions of the current Administration to remedy the situation set forth in the recitals to this Accord and Resolution, all to no avail; and WHEREAS, in recognition of the ongoing judicial, legislative and executive efforts to establish a national priority of the Energy Independence objectives of Assembly Bill 811 and PACE those so aligned and mutually interested in this objective have convened the "PACE Solutions: Bringing AB 811 Home" conference in Palm Desert, California on March 3rd and 4`h, 2011. Now, THEREFORE, BE IT RESOLVED by the participants, presenters, delegates, representatives and supporters of the PACE Solutions conference that our National elected and appointed leaders adopt and/or recognize as their highest priority. ENERGY INDEPENDENCE NOW BE IT FURTHER RESOLVED that those same leaders, whether in the executive, legislative or judicial branches of the federal government, recognize and respect the legislative scheme set forth in Assembly Bill 811 and PACE and further provide equal dignity to energy efficiency and distributive generation financing assessments to that of other public assessments which have been recognized by the federal government for over 100 years. AND, BE IT FURTHER RESOLVED that the Secretary of this conference be instructed to transmit a certified copy of this Accord & Resolution to United States President Barack Obama, House of Representative Speaker John Boehner and Senate Majority Leader Harry Reid and those identified on the service list attached hereto as Exhibit "A". I HEREBY CERTIFY THAT the foregoing Accord & Resorfer asduly adopted by acclamation at the PACC Solutions: Bringing AB 811 Home ce in Palm Desert, California held on March 3"' and zl"'. 201 1. 0 Ted Flani�an, Cokfer4nce .Nfote: Signatures in support of the Palm Desert Accord are being collected and will be instrumental in pressing legislators for support of PACE at the national level. hot -ward supporting signatures via email to: Virginia Nicols, EcoAlotion �ticoLs�a.ecomntinn. u.,. Please use the subject line: Support, fos• Palm Desert Accord Name Affiliation/Organization Slate