Incentives and Rebates

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November 23, 2009

Risk Transfer Reflections From Greenbuild

Posted by Steve Sacks under Build It Green / Green Point Rated, Conferences / Conventions / Events, Incentives and Rebates, Risk Transfer, USGBC / LEED | Tags: |
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There were many compelling sessions at the USGBC Greenbuild conference, but I focused on sessions that discussed policy, local government, and risk transfer.  I would like to start with the session on risk transfer.  But rather than go into what the speakers presented (which only scratched the surface), I thought it would be a good to dig deeper and review and summarize what we have stated previously on the CGBB.

When going for LEED, Greenpoint Rated, or any other certification, make sure to pay close attention to the following areas:

- Scope of work.  Make sure the scope of work is clearly defined.  If you’re going for a specific certification, LEED, GreenPoint Rated, or other, cut and paste the requirements right into the specifications in the contract.  Also, you’re going to need to specify who is responsible for review and inspection of each item, and who is responsible for documentation and preservation.  High-performance buildings require a new level of inspection, and the heightened level of liability for these tasks must be detailed in the contract.  Failure to properly document materials for construction is one of the top reasons buildings fail to get proper certification.

- Incentives and rebates.  Make sure it is clear who is responsible for applying for and securing incentives and rebates for products and efficiencies.

- Standard of care.  The AIA recently issued form contract B214–2007 for architects working on LEED buildings.  That form specifies the standard of care architects should observe when designing a LEED building.  After the AIA contract, there’s not a lot of guidance, so make sure your contract is specific regarding ALL parties on the project.

- Review specifics with your surety.  Make sure your surety is committed to building a green building…not many are convinced of the added value in green buildings.  Sureties will not help you build an independently certified building unless you clearly specify such in the contract.

- Value engineering.  Don’t go through the process of value engineering without reviewing how this might effect your LEED or GreenPoint Rated application.  Know your materials, and make sure there are no substitutions without a clear understanding of the implications.  This goes for projects that use BIM software too.  If the project uses BIM, make sure liability is clearly assigned for any changes that may result in issues, and make sure the liable party is aware of the implications changes may have of third party certifications.

Arguably, the greatest risk to constructing a high-performance building is in the contract documents themselves.  Make sure the documents are precise and reflect exactly what needs to happen.  All parties need to be informed of their responsibilities, AND liabilities.

Stay tuned for more from Greenbuild – future posts will reflect more of actual session content…I promise.

 

October 20, 2009

Congratulations AB 920!

Posted by Steve Sacks under Energy, Government, Incentives and Rebates, Law, Legislation, and Policy, Photovoltaic, Wind | Tags: , , , , , , , , , , |
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AB 920 was signed into law last week.  The law requires that utilities pay for energy they receive through net metering.  We have followed AB 920 (previously AB 1920) here at the CGBB since we posted our first articles nearly a year ago.  AB 920 is the common-sense approach to net metering.  

Net metering is an arrangement whereby utilities purchase power from consumers who generate power from solar arrays or small wind turbines.   Previously, utilities would provide credits against a utility bill.  Starting in 2011, utilities will be forced to pay power-producers wholesale rates for the power (if a credit remains at the end of the calendar year).   Cash compensation to the original power producer makes sense because the utility makes money by selling that same power to end users.  

AB 920 is a great step, but California needs to travel light years before we realize the “million solar roofs” idea.  At the very least, California needs to abandon the limits on the sizes of residential power production.  Currently, to be eligible for net metering, residences must limit the size of their solar array or wind turbine.  PG&E and other utilities argue that larger arrays and turbines will result in higher electricity rates for those not participating in net metering.  This argument can not be summarily dismissed.  There are legitimate concerns about reliability from residential power producers.  However, utility concerns can be addressed in future legislation (such as infrastructure service fees or production guarantees for net meter users over a certain size).   I appreciate that ideas such as this were left out of AB 920 in order to get it passed, but by no means does this mean the work is done.

Also, the net metering program has an overall cap, and after the cap is met residential power producers are not compensated for their power produced.  AB 560, proposed by Assemblymember Nancy Skinner, representing the 14th District, would have raised the cap for net metering power available for purchase from 2.5% of peak power to 5% of peak power.  PG&E supported that bill, but it died in committee .  For an article on some of the issue with the bill, click here.

AB 920 represents a positive step for residential solar and wind power in California, but we have miles to go before we sleep.

 

July 15, 2009

California To Get $183 Million to Weatherize Homes

Posted by Steve Sacks under Building Operations, Energy, Government, Green Economy, Incentives and Rebates, Law, Legislation, and Policy, Make Money, Save Money | Tags: , , , , , , |
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California will get $183 million in federal funds just to weatherize homes. Now, this is a tremendous improvement from the $6.3 million originally budgeted, but I’m speculating there’s a dark side to this story…

The reason there is a push of money into the weatherization program is because money in the American Reinvestment and Recovery Act (ARRA) that is set aside for construction is underutilized. Remember, projects need to be “shovel ready” to receive money under ARRA.  With state budgets in the tank before ARRA, there are not a lot of projects that fit the criteria. Now, money is still on the table, and the clock ticking. The federal government is looking for ways to spend and get the construction industry back on its feet.  

Weatherization is a good start.  It addresses remodeling, which is an area of construction that is woefully overlooked by the green building sector.

Check back here later to find out more about ARRA funds and green building.  In the meantime, click here  to read an article from the AP on the weatherization windfall.

 

May 25, 2009

Public-Private Partnership Installs Photovoltaics With No Up-Front Cost To Homeowners*

Posted by Steve Sacks under Energy, Finance, Government, Green Economy, Incentives and Rebates, Law, Legislation, and Policy, Save Money | Tags: , , , , , , , , , |
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Every now and then there is one of those moments when you ask “why didn’t they do this before?”  Well, the launch of the Berkeley FIRST program is exactly one of those moments.  With the help of Renewable Funding, LLC, Berkeley, CA now offers a program where residential homeowners can install a photovoltaic solar array on their home with no money down.

Renewable Funding, LLC, a private company, created this “win-win” financial services product for municipalities and homeowners, and Berkeley, CA is the first taker.  For Berkeley, Renewable Funding underwrites (AKA bankrolls) revenue bonds that pay for the installation of solar arrays.  Then, through a separate line item on a property owner’s property tax bill, the bonds are paid down over a 20 year term.  If the property owner sells the home, the debt obligation for the solar array (just like the array itself) stays with the property.

Boulder County, CO took  a different approach. Berkeley hired Renewable Funding, LLC to finance and administer the bonds, but Boulder hired Renewable Funding to only administer the bonds.  Whether Renewable Funding bankrolls the program or not, the model seems to work, and solar arrays get installed faster.

Look for this type of program in your California community!  AB 811 (amending Streets and Highways Code 5898.12 et seq.) passed last year authorizes just such an initiative.  Under S&H Code 5898, Renewable Funding is working with the California Statewide Communities Development Authority to implement California FIRST this summer.

Read more about Renewable Funding, LLC by clicking here.

Read more about the Berkeley FIRST program by clicking here.

Read more about the California FIRST program by clicking here. 

 * A Public-Private Partnership is a partnership between a government entity and a private entity that results in the private entity delivering services traditionally offered by government. (e.g. a toll road).

 

 

May 19, 2009

A Solar Solution to the Economy*

Posted by kevinjeong under Carbon, Energy, Finance, Finance / Mortgages, Green Economy, Incentives and Rebates, Law, Legislation, and Policy, Mortgages, Save Money | Tags: , , , , |
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Everyone seems to have a “solution” to the economic problem these days.  One attorney, perhaps a little self-servingly (and rightfully so), implores the government to forgive student loan debt to stimulate the economy. (Click here)   A group of Ohio University students continue with the decades-old mantra that America must protect its economic interest through restrictions on free trade.  (Click here)  While I am able to easily dismiss these solutions as fanciful ideas–more idealistic than pragmatic–there is one recent solution that has caught my attention.

A recent Forbes article written by an ex-Lehman Brothers VP raises an interesting solution to solving the ever-increasing foreclosure problem: subsidizing solar panels for distressed homeowners.  In his article, Robert Luty states that the government has already launched over a trillion dollars in spending programs designed to help distressed homeowners and banks.  His solution would, in his words, “help possibly a million homeowners, unleash strengthened bank capital for new lending and increase gross domestic product with the same solution and at the same time.”  In addition, it “could also make a significant advance in the country’s renewable energy goals in the process.”  Now imagine all of this, with the same trillion dollars the government is already spending.  Talk about teaching a person to fish!

At first glance, I was ready to throw this solution into the “it’s a great idea, but . . .” pile.  However, I decided to read on.  After all, here was a Wharton-educated Wall Street capitalist writing in favor of tree-hugging green technology.

Luty throws some fancy numbers and finance terms around, but the gist of his proposed solution is this:

Imagine an average homeowner who purchases a house in 2006 that loses 25% of its value.  Add to that lost household income of about 20%.  This puts the household’s debt-to-income (DTI) ratio at about 47% (ah, the good old days when your mortgage comprised only 20% of your income).  

Now, he roughly calculates a solar photovoltaic (PV) system would cost about 10% of the home value and generate 100% of the household energy needs.  The total cost of the solar PV system would be subsidized by the government of course.  In return, the homeowner would no longer be subject to increasing energy costs and the value of the solar PV system (both in terms of current energy savings and future potential) would bring the value of the house almost back to its pre-crisis value.  As a result, the homeowner would be able to refinance the home with current low interest rates and lower his or her DTI to the desired 31%.  

Yes, I had some trouble following the logic of a finance guru, but to put it in laymen terms:  (1) create value and equity by adding government-subsidized solar power to the home, (2) refinance the now “detoxified” asset, (3) save money, (4) produce clean energy, and (5) help the environment.  It seems like a win-win situation.

And yet, being the proverbial Chicken Little, I can’t help but be a bit skeptical and pessimistic at this overly-simplistic solution.  As a colleague of mine stated, “People won’t buy into this.  It’s like rewarding irresponsible individuals for overextending themselves.”  Maybe so, but isn’t the government already doing that for the same homeowners and banks?

(Click here for the full article)

* The author of this post is in no way advocating Luty’s proposal.  Rather this post is meant to be a simple observation on how green technology can possibly be an economically viable solution.

 

May 12, 2009

Tax Incentives For The Tax Exempt – AKA What To Do When Tax Incentives Don’t Apply

Posted by Steve Sacks under Finance, Government, Green Economy, Incentives and Rebates, Law, Legislation, and Policy | Tags: , , , , , |
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Tax incentives are the biggest tool for governments to encourage green building, but what do you do when you don’t pay taxes?  There is a long list of groups that don’t pay taxes and thus miss out on any tax credit incentive.  Generally, these are groups that have the least amount of capital to invest in the up front cost of building green (schools, non-profit organiations, religious institutions, and yes, municipalities).   Also, let’s not forget businesses that aren’t making a taxable profit . . . there are a few of those around these days . . .

The state of Oregon seems to have a good solution.  Oregon allows the tax-exempt entity to pass through tax credits to their contractor or other vendor.   They even allow taxable entities to use the pass through program.  Tax credits are based on the cost of the project.  Arguably, the pass through program encourages construction that would otherwise not get started – that means jobs, and that means a stronger economy resulting in more tax revenue.  The Oregon Department of Energy states,

“The Pass-through Option allows a project owner to transfer their Business Energy Tax Credit project eligibility to a pass-through partner for a lump-sum cash payment. A project owner may be a public entity or non-profit organization with no tax liability or a business with tax liability that chooses to use the Pass-through Option.”

 

Click here to read more about Oregon’s Tax Credit Pass-Through Program.

 

April 8, 2009

Free Webcast: Green Building Summit, April 22

Posted by Steve Sacks under Building and Design, Conferences / Conventions / Events, Free, Green Economy, Incentives and Rebates, Innovators, Materials and Manufacturing | Tags: , , , , , , , , |
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There are a number free webcasts at the online “Green Building Summit.”  The programs look focused, and the speakers are generally very good.  

Topics include: incentives and regulation; building and operations; nanotechnology and other topics focused on green building and technology.

For more information go to: http://www.brighttalk.com/summit/greenbuilding

 

April 4, 2009

Homebuyer’s Tax Credit …Need I Say More

Posted by Steve Sacks under Finance, Incentives and Rebates, Just Plain Cool, Law, Legislation, and Policy, Marketing Ideas, Mortgages, Save Money | Tags: , , |
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According to state Franchise Tax Board, the applications for the $10,000 state tax credit for new home buyers has generated 2,624 applications in the first 28 days!

Get more information on the tax credit here 

The Sacramento Bee, reports:

“The credit, estimated to benefit about 10,000 homebuyers statewide this year, offers up to $3,333 off state taxes for each of the first three years after buying. First-time and move-up buyers alike are eligible, and there are no income limits. The state credit can also be combined with a new $8,000 federal tax credit for first-time buyers”

As mentioned above, applications are flooding in.  The allocation for the credit will likely be consumed by the middle of the summer. So, if you’re in the market, or know someone who is, grab it now.

 

March 26, 2009

Solar Power Purchase Agreements

Posted by kevinjeong under Energy, Green Economy, Incentives and Rebates | Tags: , , |
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Solar power is cool, but still expensive for most of us, even with the various incentives.  Fortunately, there are companies that will install with little or no money down.  Instead of buying the solar panels and paying for the installation, the buyer now simply leases the equipment which is installed and maintained by the company.  The buyer instead pays a set price for the solar energy produced.

On Wednesday, March 18, the San Francisco Budget & Finance Committee voted to table discussions in regards to entering into a recurrent solar power purchase agreement with a private entity until April 22.  Much of the debate seems to stem from the costs associated with the proposed agreement.  On one hand, by purchasing the solar power from a private entity, the city would avoid the upfront (and expensive) costs of purchasing, installing, and maintaining the solar array.  Instead, the city would lease the property to the private entity and the city would then purchase the power at a set price.  On the other hand, should the city decide to purchase the solar arraydown the line, it would end up paying a premium over the initial startup costs (much like the premium paid for a lease-to-own vehicle).

A solar power purchase agreement, similar to a conventional power purchase agreement, is a contract whereby a buyer (i.e. utility company) purchases power from an energy source (i.e. power producer). 

In addition to municipal uses, solar power purchase agreements have commercial and residential applications as well.  Small companies and individuals, who find the startup costs for solar panels too steep even with the federal and state incentives, can opt to lease a portion of their property to a private entity that builds and maintains the solar panels.  In exchange, the consumer pays a set price for power.  The price is determined by various factors such as power generated and tax credits/incentives.  For example, a commercial warehouse occupying a lot of space but using little power can generate a large amount of surplus power.  Of course, the tax incentives are limited to the energy needed to run the warehouse since the incentives are given to offset the consumer’s own (not surplus) energy use.  See Public Resources Code 25782.

 

February 2, 2009

USGBC and Obama Administration Working to Create New “Green-Collar” Jobs

Posted by kevinjeong under Build It Green / Green Point Rated, Energy, Green Economy, Incentives and Rebates, Law, Legislation, and Policy, USGBC / LEED | Tags: , |
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First a little bit of history for the nostalgic . . .

The year was 1933 and the U.S. was 4 years into a crippling depression.  Unemployment was over 25% in most sectors and FDR had been in office for less than a year.  On June 16, 1933, Congress passed the National Industrial Recovery Act, creating the Public Works Administration (PWA).  The PWA then set out to “spend big bucks on big projects” by financing numerous public works projects in order to curb the astronomical rate of unemployment.  Between July 1933 and March 1939, the PWA funded the construction of more than 34,000 projects, including: airports, electricity-generating dams, aircraft carriers, and 70% of all schools and one-third of all hospitals built during that time.  However, the PWA failed to build quality, affordable housing, building only 25,000 units in four and a half years. (click here for more information)

Of course, the debate remains whether it was public works or World War II that ultimately reduced unemployment rates and bolstered the economy.  Regardless, our modern infrastructure reached a new height of production during the era of the New Deal.

Fast forward to 2009 . . .

President Obama has been in office for less than a month and the U.S. is  one year into a devastating recession.  Unemployment, at least in California, has reached nearly 10%.  On January, 29, 2009, the U.S. Green Building Council announced that it would be working closely with the Obama administration to create millions of new green-collar jobs and save Americans billions of dollars in energy. 

The USGBC states that it is actively monitoring the economic recovery package under development in Congress.  (click here for more information)  While the bill is not yet finalized, USGBC states that the following parts of the package hold great promise for green building:

  • Green Schools – Billions of dollars for modernization of schools and universities, with preferences or requirements for green building projects
  • Green Federal Buildings – Billions of dollars for the General Services Administration’s Federal Buildings Fund, with green requirements for federally funded projects
  • Weatherization Assistance Program – Billions of dollars to expand the Department of Energy’s Weatherization Assistance Program, which provides weather services to help improve energy efficiency of homes and lower energy costs
  • Energy Efficiency and Conservation Grants – Billions of dollars in block grant funds to states, localities, and tribes for green projects
  • Public Housing – Billions of dollars for the Public Housing Capital Fund to support improvements for public housing, including authority or priority for energy efficiency incentives and projects
  • Green Job Training – Billions of dollars to spend on job training programs, with preference or requirements that a portion be used for training in green sectors

While critics may continue to laud that the proposed economic recovery package is nothing more than more government spending, two facts remain true: 

  1. Our nation’s infrastructure is failing
  2. When reinvesting in infrastructure we must invest in energy efficiency and renewable energy sources to increase our energy independence.

Perhaps in the short-term, it may seem like the federal government’s expenditures in green initiatives does little for the economy; but these investments are sure to pay off in the long run.

 

 

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