HomeMy WebLinkAboutSubmittal-Citizens Allied for Safe Energy, Inc.C.A.S.E.
Citizens Allied for Safe Energy, Inc.
10001 SW 129 Terrace
Miami, FL 33176
305-251-1960
infogcase-fl.orq www.case-fl.org
POSITION PAPER:
PROPOSED YGRENE PACE RENEWABLE ENERGY
INTERLOCAL AGREEMENT WITH CERTAIN
MIAMI-DADE MUNICIPALITIES
For purposes of this paper, it will be assumed that the reader is
familiar with the PACE program and the proposed Ygrene Interlocal
Agreement with several Miami -Dade County municipalties.
CASE'S CONTENTIONS:
1) The fixed 7 % interest rate for the Ygreen Interlocal Agreement
(IA) is too high and will discourage homeowners and businesses
from participating in the PACE program; lower municipal bond
rates should be offered instead.
2) Granting an exclusive franchise to Ygrene prohibits and bars
others from issuing municipal bonds on behalf of a municipality
while Ygrene is committed to using private funds at a fixed
interest rate.
3) The Ygrene contract is unnecessarily complex and goes far
beyond the structure and franchise required to perform the
function of financing renewable energy effectively creating an
extra -governmental agency.
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CONTENTION 1.
The Ygrene Interlocal Agreement (IA) includes a fixed interest rate of
7% for the renewable energy and energy conservation from a private
source. Current municipal bond rates as well as home loan
mortgages are in the 4 % to 5 % range. This discrepancy is at variance
with the way several authoritative sources envision the interest rate
structure for PACE loans. The Florida Bar Journal
(September/October, 2010 Volume 84, No. 8) in a story entitled
Florida Is Keeping Pace: House Bill 7179, states:
"It is critical that local governments get interest rates for
property owners that are lower than that which property
owners can get on the open market or the program will
likely not be sustainable... Ensuring that there is a large
pool of individuals interested in receiving the funding will
assist local governments in obtaining low interest rates on
the upfront financing. Having low interest rates is
important because this would reduce the overall cost to
the residents and would persuade individuals from using
other methods of financing the improvements, such as
savings accounts or home equity loans." (Note 1, Page 44)
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Note 1: http://www.millionsolarrooftops.com/users/jesseroche
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record in conn
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Priscilla A. Thompson
City Clerk
Mr. Jesse Roche, a researcher and advocate for solar energy (Note 2) in a
discussion: PACE Bonds Fund Residential and Commercial Solar Projects (Note
2) states (emphasis added):
"(PACE loans) enable both residential and commercial property owners to
finance solar electric (PV) and solar hot water systems over terms up to 20
years at low Interest rates. ... The PACE program is an attempt to use
the financing mechanisms traditionally available to government agencies to
provide borrowers with the lowest possible Interest rates.
In a private email to this writer on November 15, 2011, Mr. Roche stated:
1. In the absence of significant rebates / FIT, there Is no
way they can make a residential solar Installation cash
flow neutral/positive at 7%. As far as residential energy
conservation improvements are concerned, I don't see how they can
make 7% work either (unless they're putting windows on a house that
doesn't have any and cranks the AC all day long).
2. My understanding was that this was basically targeting energy conservation
improvements for commercial buildings. (I'm pretty sure FHFA is still
posing an obstacle with respect to using PACE to fund residential
improvements.)
3. Overall, the Ygrene concept seems anti -competitive to me.
don't see why counties / municipalities couldn't work together to create
the same financial deal that Ygrene is offering. They have the legal
ability to do this right now. Anyhow, there are any number of small
Note 2: http://millionsolarrooftops.com/content/pace-bonds-fund-
residential-and-commercial-solar-projects.
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Priscilla A. Thompson
City Clerk
companies that have been after FL counties to do the same thing that
Ygrene wants to do. The counties I've spoken with (on the FL west
coast) have rejected them based on the interest rate being
too high. It seems a shame that PACE might be commandeered by a
single consortium composed of big business. In my opinion, this could
possibly be fought based on its anti -competitive nature. What is the legal
basis for giving exclusivity to Ygrene? At the very least, shouldn't the
burden of proof be on them to show a clear and overwhelming benefit for
obtaining this lucrative right? I'm not sure this has taken place in a
satisfactory way."
In Fioirda, St. Lucie County, is offering 4% Pace loans by creatively
using available federal funding and underwriting. There are many
more models, The Gainesville Model, Solar Leasing, available for
funding renewable energy on our homes and businesses; there Is
more research and work to be done before the correct program is
designed here
CONTENTION 2
Granting an exclusive franchise to Ygrene as provided in the subject IA prohibits
and bars others from issuing municipal bonds on behalf of a municipality while
Ygrene is committed to using private funds at a fixed interest rate. If Ygrene
does not seek municipal bond financing the municipality is giving up its option to
do so on behalf of the purchasers and all citizens thereby depriving the them of
opportunity to obtain the lowest possible rate for their energy project.
Mr. Derek Brown, Managing Director of the Clean Fund, a California firm
(http://www.cleanfund.com) which arranges PACE loans, stated in
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Priscilla A. Thompson
City Clerk
private email to this writer (October 12, 2011):
"You point out one of the huge problems with the Ygrene "monopoly
concession" approach - that the loan rate Is not set by the
market but by an unaccountable private sector monopolist.
...In the SF and LA programs. administration is done on a not -for -profit
basis, and property owners are free to source capital from whoever they
choose on whatever terms they can find."
Mr. Brown also said that Ygrene tried to market its program to
many California cities but was only successful in Sacramento where there
was not competitive bidding for the contract.
Mr.• Brown also noted that as the market place becomes more familiar
with the PACE bonds interest rates will decline so that to not offer PACE
financing through municipal bonds does not give investors an opportunity
to learn about them and to let them seek the lower level of interest in the
market place which the well screened and qualified borrowers deserve.
Links to the Los Angeles PACE Program:
https://commercial-pace.enerqvuporadeca.orq/countv/los angeles/overview
http://www.lacommeroialbpp.com/
CONTENTION 3
CASE contends that the scope and breadth of the -proposed Ygrene IA goes far
beyond what is necessary for an agency to simply provide assistance in
obtaining financing for the PACE program. The Agreement is too complex and
empowers Ygrene to, in effect, create an independent governmental agency. It
is not necessary to have such an entity to do the work at hand to implement the
PACE program. Municipalities should carefully consider the nature of the
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Priscilla A. Thompson
City Clerk
franchise they would be granting and the implications and potential problems
which could arise, The Cutler Bay/Ygreen IA is 29 pages long with minutely
detailed provisions and soverign grants; the City of MiamilYgreen IA provided to
the Miami City Commission is 7 pages long with little detail. It would seem that
the Miami City Commission would want to know exactly what is being granted to
Ygrene and its associates before entering into a very complex, extensive binding
agreement which could run to hundreds of millions of dollars in volume and
franchise a third party to act on the City's behalf with extensive potential liability
and risk for the City and which takes substantial rights from the Cityfor itself and
its partners. With whom is the is the City aligning titself and whatis their interest
and motivation for their participation. The City should fully understand the dollar
value of sovereign assets being provided to the grantees in this matter.
CONCLUSION
The 7% interest rate being offered by Ygrene in the subject IA is too high in
relation to prevailing market interest rates. The PACE program was predicated
upon obtaining affordable low interest rates for purchasers by offering quality
loans to investors as municpal bonds; the Ygrene IA does not fulfill those
objectives and obviates the offering of municipal bonds in favor of fixed private
financing at a rate substantially above the current market rates. CASE's position
is that the proposed contract should be rejected as is and only be approved if the
method of financing is changed to offering municipal bonds on the open market.
At the very least, a workshop should be held so that the Commissioners can fully
understand the scope of the commitment being made by this extensive and far
reaching Interlocal Agreement.
CASE/Citizens Allied for Safe Energy, Inc. is a Florida non-profit corporation.
There is no paid staff; all work is done by volunteers. Page 6
Submitted Into the publld
record in connection
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Priscilla A. Thompson
City Clerk