June 23, 2009 – Volume 12, Issue 8
I N · T H I S · I S S U E


A Thank You to all the Conference Participants

On behalf of Conference Chairman Jim Ferguson and the EcoMotion team, please allow me to thank you again for participating in what all agree was a hugely beneficial and timely conference.

Our feedback was heartening: The Palm Desert AB 811 Conference was well attended, praised as highly informative, and on time. We’re thrilled that you found it to be so useful. And we know it was a great networking opportunity.

Thanks again. We welcome any additional feedback that you may have, and we look forward to working with you in the future!

Presentations from the Conference

Please click on the links below to access the speaker presentations:

Cisco DeVries, President, Renewable Funding
The Berkeley Story

Ann Livingston, Sustainability Coordinator, Boulder County, Colorado
Boulder County's ClimateSmart

Brian Gitt, Bevilacqua Knight, Inc
Federal Stimulus Funding Update

Rodney Dole, County Treasurer, Sonoma County
The Sonoma County Story, "Taking Energy Independence to Scale"

Office of Energy Management
A Day in the Life of the Palm Desert Office of Energy Management

Ted Flanigan, President, EcoMotion
Crafting a Program that Makes Sense for You!

Breakout Sessions

Jim Ferguson, Palm Desert Councilmember and Conference Co-Chairman

Breakout Sessions
Breakout Session #1A: Preparing for Bond Takeout!

Ken Dieker (Del Rio Advisors), Kathy Larocque (Sonoma County), Sam Sperry (Meyers Nave), Tricia Ortiz (Richard, Watson, Gerson), Craig Hill (Northcross, Hill and Ach), Jim Cervantes (Stone and Youngberg)

Breakout Session #1B: Branding and Marketing
Virginia Nicols (EcoMotion), Vincent Battaglia (Renova Solar), Cheryl O'Connor (Sonoma County EIP), Mike Bacich (Riverside Public Utilities)

Breakout Session #2A: Turn-Key Assessment Services
Kay Hazen (Kay Hazen and Company), Cisco DeVries (Renewable Funding), Bob Williams (Royal Bank of Canada Capital Markets), Laura Franke (Clean Energy Advocates), John Paul McNeil (Powerhouse)

Breakout Session #2B: The Utility Connection
Craig Perkins (The Energy Coalition), Jennifer Green (Center for Sustainable Energy), Del Evans (Pacific Gas and Electric Company), Eric Nelson (Utility Consultant)

Special AB 811 Conference Edition:
"This was one of the best conferences I have attended this year. Informative panels, good materials, many opportunities to network, good food and facilities – the list goes on and on.."

Susan Wilson, Deputy City Attorney
City of Riverside

A Letter to an Old Friend

Dear Paul:

Greetings from California. So good to get your letter. Wow. It’s been so long since we’ve been in touch. Julie and Christie deserve a lot of credit for linking us together again. What 20 years or so? You moved overseas. What up?

Your life: Transferred to France, split from Janice, the ulcer, and now new and exciting love! Can’t believe that business “partner” of yours raked you over the coals. Chalk that one up.

Just back in Oyster Bay; memories hitting me like rocks. Flash-backs of biking, sailing, hanging out. Passed the tennis courts and I still hear Mr. Eissler telling me to move my feet. Passed your house and remembered go-carts, sleepovers, and booze. TheTyrolean traverse? Thank God for the pillow on the downside tree.

Just finished the AB 811 conference in Palm Desert, and since you asked, let me tell you:

By all accounts, it was great! Everything went off without a hitch and the EcoMotion team was entirely proficient. Participants really got value from a loaded agenda, an all-star cast of speakers from all four of the leading AB 811 programs, even had a powerful stimulus update thanks to Brian Gitt of BKI.

I’ve never been so proud of my staff: Russ and Maria in particular, but behind the scenes, a hugely powerful Virginia and a fired-up Tiffany. Talk about production. I had the luxury of being all spruced up and full of you know what. Just kidding! I’ll get there later.

Cocktails at Desert Willow

Desert Willow the night before; Palm Desert’s quite swanky golf resort. The clubhouse patio is an elegant venue for cocktails. We had a perfect evening, a light, sheltered breeze from the east with cooler-than-usual weather, about 75 degrees that night. Drinks and heavy hors d’oeuvres; the “fajita station” was popular.

Palm Desert Councilmember, Conference Chairman, and friend, Jim Ferguson, served as host with me. Councilmember Jean Benson and City Manager John Wohlmuth were there, as well as my great friend Pat Conlon and his wife Jann. A most welcoming registration table; Russell, Virginia, and Michael worked the crowd. What pros. I had my hands full trying to have substantive conversations while meeting everyone! Sounds like me, doesn’t it?

Jim and I were having a ball, greeting so many distinguished guests as well as Sonoma County partners, treasurer Rod Dole and counsel Kathleen Larocque, and so many others. It was Rick and Vicki Phelps’ 30 anniversary night. They were down from Mammoth. We had about 75 people at the reception; a panorama of sunset in the desert.

Show Time

Friday morning was show-time. Staff was up and running at 5:30; Terry and I a bit more leisurely. I was finalizing my MC transition talking points and closing remarks, nervous about delivering pithy points at the end of such a full day: EcoMotion’s 20-Step Guide to AB 811 Implementation. I’m still antsy before presentations after all these years.

Ended having coffee with Jim, changing the order of welcoming politicians. We had Palm Desert Mayor Pro Tem Cindy Finnerty and State Senator John Benoit in person; U.S. Representative Mary Bono Mack prepared a special videotape welcome. We decided to show the video as a change-up between our morning bank of plenary speakers.

Coffee, pastries, fruit, and registration from 7:30 to 9:00. The conference began on time. I admit to greater punctuality as I age. The opening was warm and exciting; a great energy in the room. Jim gave a quite personal welcome and told his story of logic. He’d tuned into energy because of its massive costs. Once fired up, he’s put his muscle and wit behind one of the nation’s most aggressive efficiency programs, and he master-minded AB 811.

From Basics to Judicial Validation

You know, I’m wondering if you remember this whole AB 811 thing. It’s a simple concept, but new and only alpha tested. Basically, if a city sets up an AB 811 program it can lend money to property owners for solar systems and big efficiency upgrades. The property owner – and it could be a homeowner or business owner – repays the loan (technically a “contractual assessment” made by placing a lien on the property) on his or her property taxes, either once or twice a year depending on the county.

This new financing mechanism is so simple, and yes, the devil is in the details! Right now it’s in the throes of lawyers’ opinions, each trying to discern the seniority of the lien. Does it “subordinate” – or take preference over -- the primary mortgage in the event of a foreclosure? If so, it’s a darn secure loan. Cities aggregate loans and liens and then sell bonds to replenish their coffers. The interest rate of the bonds is best when the loans are most secure. In this instance, the bonds can be sold at 5 – 6% and loans can be made at 7%.

Right now, very smart and well-paid lawyers and financial advisors are “having a field day” with the lien seniority issue, calling for “judicial validation.” This judicial process is done regularly by bondsmen, and takes 60 – 90 days if uncontested. Before you sell bonds, you issue notices of the bond issuance and its legal basis – including the seniority issue – to everyone, friends and foes. Those that object and wish to do so can file motions. In the end, a judge decides on the legal framework and its validity. If affirmative, the bond issuance proceeds and is immune from challenges.

Am I telling you too much? Paul, are your eyes glazing over? I find this stuff really interesting but respect others who may not!

Cisco Kid

We began with Cisco. Great name, great guy. Young guy; former Clinton staffer. Very personable guy and the one who got this all going. Someone recently called him “the Godfather of AB 811.”

Cisco DeVries was serving as chief of staff to Berkeley Mayor Tom Bates and was overwhelmed by the disparity between the costs of rooftop solar, and the City’s aggressive CO2 reduction targets. How could Berkeley reach its goals without solar? The barrier: first costs. Cisco likened the costs of a solar system to the costs of an I-phone over 20 years. Interesting: No one would pay $25,000 for a cell phone up-front!

A power line undergrounding project hit Cisco in the face. A group of Berkeley neighbors got together, assessed themselves with the City’s help, and got the power lines out of their views. Why not do this for solar? A group of neighbors could band together, opt-in to an “assessment district,” and go solar with no money down. Berkeley led the nation with the first solar financing assessment district, and a program called FIRST.

Cisco left Berkeley and is president of Renewable Funding, a “turn-key” AB 811 service for cities like Berkeley that don’t want to administer a program, or take financial risk. So far, Berkeley has reserved funding for $1.5 million in loans, 39 residential solar systems. The pilot program is financed and administered by Renewable Funding.

The Palm Desert Story

Next up, I introduced my Spanish travelling buddies, Jim Ferguson and Pat Conlon. Jim’s law firm specializes in government law. He’s been on the Palm Desert Council for fourteen years, making him one of the “kids.” There are three octogenarians on the council. (Hey, if a city works as well as Palm Desert, term limits are not needed!) Pat is the guy who has implemented the program so successfully there.

Jim’s non-technical story is compelling. When he calculated how much he’d need to spend on electricity for the next 20 years, he realized it was more than he would spend on his kids’ weddings and even more than sending his kids to college. He had aging air conditioning units, and like Cisco, had no way to finance them. Was he stuck paying for conventional power, contributing to global warming, and national insecurity?

Jim wanted to take action. He and then City Manager Carlos Ortega were watching Berkeley. Their lawyers at Richards, Watson, Gershon suggested that the Berkeley model for contractual assessments could be contested. It was based on a Mello-Roos statutory platform that was intended for public projects. Palm Desert believed that legislation was needed to amend the California Streets and Highways Code chapter on assessment districts.

If successful, Palm Desert could open up a path for every city and county in the state to make great gains with energy management, a mechanism that allows property owners to invest in solar and efficiency using the savings from their utility bills. They can do it with no money down.

Jim’s summer-time electricity bill dropped from $1,200 a month to $400. He now uses the difference to pay off his efficiency upgrades. And he’s proud of his twin, SEER 18 system.

AB 811 was signed into law as an urgency measure by Arnold Schwarzenegger on July 21, 2008. Palm Desert – with EcoMotion’s help – designed its program guidelines in five weeks. On August 29th, the Palm Desert Council approved the program with $2.5 million for loans. There were 317 people on the waiting list. Within weeks, all the money was gone, and the City replenished “the pot” with an additional $5 million. That’s all reserved now too, so the City has arranged for another $5 million, this time from Wells Fargo Bank. Because of the uncertainty in the bond market, Palm Desert has had to secure this line of credit through a lease revenue bond. Ultimately, contractual assessments will be secured by the property liens. We’re in transition.

Pat Conlon is the Director of Palm Desert’s Office of Energy Management. That’s where the AB 811 loan process is managed. His primary point was the importance of face-time with prospective participants. “They have lots of questions. It’s up to the city to provide them with a high level of service.” Pat is also passionate about promoting tax-exempt financing for AB 811 loans. This would require a change to the IRS code, and will drop interest rates by 1 – 2%, 100 – 200 basis points as they say. EcoMotion collected dozens of names of participants wanting to follow and support tax exempt financing for AB 811.

Like many engineers, Pat strongly advocates energy audits prior to investments. In Palm Desert, however, this is an option: Jim feels even more strongly that, “It’s the people’s money,” and that they can thus invest in whatever they want. No one tells us what kind of car to buy, or which cell phone plan is best. Palm Desert’s program offers services – like energy audits –but ultimately allows for consumer choice, bucking engineering disciplines and logic in favor of action.

Palm Desert took the Berkeley model to the next level. Palm Desert has already provided five times the cash. Berkeley funds PV only; Palm Desert has a long list of eligible solar and efficiency technologies and allows for custom measures too. Instead of outsourcing the program, Palm Desert purposefully has a lot of “skin in the game.” Its Energy Independence Program is on a roll.

Rocky Mountain High

EcoMotion only paid for one person to attend the conference: Ann Livingston from Boulder County Colorado, the home of the ClimateSmart Loan Program. I’d been in Boulder a few months ago and met with Ann and her colleague Suzie. I was impressed by their “AB 811” model. It was enabled by Colorado legislation in 2008, House Bill 1350. Ann is so matter of fact and reeks of competence.

Boulder took a different approach. Its voters in ten cities – including Boulder -- authorized the County to issue bonds and to lend up to $40 million for ClimateSmart loans. Meetings were held, and hundreds of applications were received. Unlike the Berkeley and Palm Desert models which provide interim financing while loans are being “pooled up,” Boulder took reservations. When $10 million of loans were aggregated the County went to the bond market. This happened in May; loans were ultimately funded for less than the magic number of 7%. Boulder has two rates: one for regular participants and a slightly lower rate for non-profits.

Scaling Up Wine Country

Rod Dole, in my view, has eclipsed the field. As Sonoma County Controller - Treasurer, he took a careful look at the AB 811 opportunity. Could it accelerate the uptake of distributed renewable generation and efficiency so that the County could meet its aggressive climate-protection goals? Could the burden of these investments be directly placed on their beneficiaries? Could the County run a “net zero cost” program? Rod believed it could and a feasibility study – supported by EcoMotion and managed by Peter Rumble – supported this assertion.

In May, Sonoma County opened up its Energy Independence Program to the public with $100 million in initial funding. Dole can draw up to 3% of the $1.5 billion Country Treasury to fund loans. The Water Agency in Sonoma made another $50 million investment. Each of these agencies – like Palm Desert’s reserve fund – is earning less than 3% on its combined portfolio. Why not lend locally? Sonoma realized that it could borrow money from the Treasury at 3%, lend it at 7%, and administer the program on the difference, or “the spread.” AB 811 holds the promise of being a self-sustaining/funding program with huge local economic development and global environmental benefits.

So far, $7 million in loan reservations have been placed in Sonoma and applications are coming in every day. Sonoma added water efficiency measures to the eligible equipment list; a very good case can be made that saving water is the same as saving energy. Fully 20% of all electricity in California is used for water pumping. That’s before you get to heating it.

The Lunch Break

Believe it or not, we were on schedule at lunch. I inhaled a sandwich. To my surprise, white bread is still baked. And it was good.

Like any good conference, lunch is a time of heavy networking; our registrants fell into groups. Did you know that we were at the University of California Riverside Palm Desert campus? It’s a great facility; the auditorium is spacious, cool, and totally equipped. There was lots of room for mixing and matching.

Hey, time’s up! We had a hard time busting up pleasant conversations, like “herding cats” back into the sessions. It was time for the afternoon break-outs. We held concurrent sessions on “Preparing for Bond Take-Out,” “Marketing AB 811 Loans,” and then later on “Turn-key AB 811 Services,” and “The Utility Connection.” Our respective moderators – Ken Dieker, Virginia Nicols, Kay Hazen, and Craig Perkins – were fantastic.

Bond Take-Out

Sounds like fast food, doesn’t it? Appetizing?

As I said earlier, the key issue facing AB 811 programs right now is preparing for bond take-out. If cities can sell bonds at attractive interest rates, this financing mechanism has huge green potential. What about the lien seniority issue? Is a judicial validation process necessary? Yes, was the consensus on stage. The panelists were all-star: Sam Sperry had written Mello-Roos, Tricia Ortiz wrote AB 811, Kathy Larocque is Sonoma’s counsel, Craig Hill worked on the Berkeley program, and Jim Cervantes brought a wealth of bond market perspective to the table. Sonoma has already begun the validation process, preparing for its next $100 million in loans.

One intriguing point raised involved private investment. While focused on bonding to “take-out” loans with long-term financing, what about turning inward? Could Palm Desert, or Sonoma, or Berkeley, create an investment pool? Could high, net-worth individuals – and potentially foundations – invest locally? Sure, and they will want the same assurance as the bond market. The loans must be senior – like all other assessments – and secured with equity in the property.

Marketing AB 811

Paul, it seems to me that this program concept, this new financing mechanism, is already suffering from a lack of nomenclature. As I write you this rambling letter, I find myself having to be overly verbose. What the heck is AB 811? Will anyone understand it? Or care?

The purpose of the marketing panel was to dig in on how to help people understand it, and to make them care! My colleague Virginia Nicols has years of experience in marketing, and her panel members do too – so they offered a lot of guidance to the others in the room.

First, what exactly are we selling? A loan? Cheaper utility bills? Freedom from reliance on foreign energy? A healthier planet? All of the above? Depending on what we decide we’re selling, what should we call it? FIRST, PACE, a contractual assessment, an energy independence loan?

For panelist Vince Battaglia, solar installer, AB 811 means sale of more product. Mike Bacich of Riverside Public Utilities has to fit this new “service” into its already substantial list of programs. Cheryl O’Connor, who heads up Sonoma’s marketing, has already hit the ground with a new logo, signage, even a store-front where “customers” can come with their questions.

All agreed that the key to success is to identify the different markets (for example, homeowners, seniors, commercial property owners) and develop the appropriate marketing message, campaign “look and feel,” and offer for each. As Virginia put it, “If we build it, will they come? Not unless we build it right."

Turn-Key Services

One option that cities and counties have is to outsource AB 811 program including financing and administrative services. I call this “hands-free” and “turn-key.” Firms like Renewable Funding, Powerhouse, and Clean Energy Advocates are sprouting up, each providing the three legs of a successful AB 811 program: legal, financial, and administration. Existing energy and financial services firms are developing AB 811 services.

Bob Williams, bond underwriter from Royal Bank of Canada Capital markets, presented the budding statewide program being developed by CSCDA, the California Statewide Community Development Agency. It acts like a redevelopment agency for cities and counties that don’t have their own. Bob has a long track record of bonding, is self-defined as a bit crusty, and most importantly, has done “pooled assessments” for CSCDA. Now it is his job to find a way to make pooled assessments work for solar and efficiency. He believes that the CSCDA program will be up and running in the next 90 – 120 days.

Without question, the turn-key service providers are getting ready too! Without clear-cut sources of financing, they are not yet equipped to offer services. Are they right around the corner? Is there clearly a niche for them? Yes. Some cities will elect to outsource, others will have take control of their own programs, offering unique levels of services and quality control. Some counties will elect to outsource some functions. For instance, Boulder County hired Renewable Funding to administer its loans.

The Utility Connection

Craig Perkins spearheaded the utility connection panel, focusing on how local governments and utilities can work together to maximize customer benefits. Pacific Gas and Electric sent Del Evans to speak; Jennifer Green represented the California Center for Sustainable Energy; Eric Nelson represented Southern California Gas.

Customers benefit from being able to take advantage of both the utilities’ incentives and the local government’s loans. Think about it: Utilities rebates and incentives typically provide 10 – 25% of the cost. AB 811 provides funding for 100% of the remainder of the cost. The loan is repaid by the actual recipient. So it’s a nice marriage. The Palm Desert Energy Partnership is a great example of how utility programs and a city loan program complement one another.

Seamless programs mean customers are able to upgrade their energy equipment for the lowest cost, local governments reduce their community’s carbon emissions, utilities meet their energy efficiency goals, and the State meets its energy goals. This is why Edison and The Gas Company supported AB 811. Right now, PG&E is exploring this opportunity with ABAG, the Association of Bay Area Governments, potentially even serving in a financial capacity. EcoMotion is supporting this work with strategic planning.

In addition to working hand-in-hand during the program design and implementation phases so that loan program criteria align with utility program criteria, enabling customers to take full advantage of rebates, utilities can work at the federal level to pass legislation allowing municipals to use tax-free bond financing to fund the loans. They may be able to provide an information clearinghouse function. Utilities can provide on-bill financing programs for business and institutional customers, as Sempra currently does. These programs don’t replace AB 811 loans but instead provide a financing option for specific customer segments at very low rates.

Awarding the All-Stars

So quickly, it was the final session of the day. It was my time to present in eight minutes the EcoMotion 20-point guide to designing an AB 811 program. My turn to clarify and expound: This tool – the AB 811 opportunity -- can create huge win-win-wins.

I’d written a companion guide called “What Works for You!” that we inserted in each participant’s packet. It earned rave reviews from several experts as a concise, annotated check-list for program designers. The talk went well; I love this stuff!

“Did anyone learn anything today?” I asked. This was met with hands all around. “Is anyone confused on a higher level?” This drew laughs and many nodding heads. Just how would participants go home and take action? The day had been jam-packed with information and insights. We saw almost everyone taking notes in their EcoMotion pads.

With my conference chairman, I presented the first three Palm Desert AB 811 awards to Cisco DeVries, Ann Livingston, and Rod Dole. Kathy Larocque accepted Rod’s plaque stating definitively that, “He deserves it.” The City of Palm Desert will also be given an award at an upcoming council meeting.

These leaders are cutting a new path: Cisco’s vision may result in hundreds of millions of tons of avoided CO2 emissions. Jim’s clarity will help so many others redirect their expenses, from sunk monthly costs to sound investments. Rod – a tall, handsome man of great wit and humility -- took it to scale. These champions have created big opportunities for so many others.

Jim Ferguson wrapped the conference with calm, thankful words. “This has been a heart-felt day for me,” he said. His vision has become a reality: The foundation is set for all 480 California cities and all 58 counties to follow suit and to unlock a tremendous potential. Jim thanked the speakers and participants all, and with a sheepish grin coming in my direction, said he very much looks forward to next year’s conference!


So that’s it Paul. Are you still there?

Gosh it was a big day. Lots of preparation – months of meetings, planning, and to-do lists -- clearly paid off. We had the right people in the room and very satisfied participants. Everyone learned and was inspired.

We wrapped the conference with an EcoMotion dinner at Las Casuelas, my favorite Mexican watering hole. Our team had worked hard and was rewarded by success. For many participants, the AB 811 work had just begun. We took the weekend off!

So you get a glimpse of a day in my life, an exciting day no doubt. Thankfully, there are so many. Here’s hoping that you are similarly blessed with mission and diversity, and with family, friends, and colleagues who can do and definitely care. Please be in touch when you come “state-side.” It will be a pleasure to see you again and to host you in our home.

Best for now,