Agenda Item #6A
June 30, 2015
Action
MEMORANDUM
June 26, 2015
TO:
FROM:
SUBJECT:
County Council
Amanda Mihill, Legislative Attorney
DJIVfJ:ia
Action:
Bill 18-15, Environmental Sustainability - Montgomery County Green
Bank
Transportation, Infrastructure, Energy and Environment Committee recommendation
(3-0):
enact with the following amendments:
• revise the purpose section to include a comprehensive description of the Green Bank's
capabilities;
• revise certain definitions to more closely align with the Commercial PACE legislation;
• make the Directors of Finance and Environmental Protection voting members of the
Board of Directors and allow the Executive to appoint up to 3 additional board
members, subject to Council confirmation;
• include energy service companies as members of the Green Bank Work Group;
• include language that requires the Green Bank to consider which non-energy or
supporting improvements should be considered in an energy efficiency or renewable
energy project;
• include language that requires the Green Bank to provide information regarding best
practices; and
• include language addressing assets of the Green Bank upon dissolution.
Bill 18-15, Environmental Sustainability - Montgomery County Green Bank, sponsored by Lead
Sponsor Councilmember Berliner and Co-Sponsors Councilmembers Leventhal, Hucker, Riemer,
EIrich, Rice, and Navarro was introduced on April 21, 2015. A public hearing was held on June 9
at which 2 speakers (including a representative of the Executive) supported Bill 18-15 (see
testimony and correspondence on ©20-32). A Transportation, Infrastructure, Energy and
Environment Committee worksession was held on June 15.
Bill 18-15 would:
(1)
authorize County government to designate a County Green Bank to promote the
investment in clean energy technologies;
(2) specify the process to designate a nonprofit corporation to function as the Green Bank;
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(3) define the nature and powers of the Green Bank;
(4) establish a Green Bank Work Group to review the application of Chapter 18A, Article
7 and make recommendations regarding the implementation of the Montgomery
County Green Bank; and
(5) generally amend the environmental sustainability law.
Issues/Committee Recommendation
l
1.
Purpose section.
Executive staff have suggested modifications to the purpose section
in 18A-44. According to the comments on ©21, this language was provided by the Coalition for
Green Capital and would offer a comprehensive description of the Green Bank's capabilities.
Specifically, Executive staff recommend deleting the following language from the purpose section:
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develop separate programs to support clean energy investment in residential,
municipal, small business, and larger commercial projects;
[mance investment in clean energy technologies in accordance with
~
comprehensive plan developed
Qy
i!
to foster the growth, development, and
commercialization of renewable energy sources and related enterprises;
provide [mancing for clean energy technologies;
Executive staff would then add the following at the beginning ofthe purpose section and renumber
the remaining existing purpose clauses:
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serve and support the deployment of clean energy technologies in any sector.
including residential single family homes and multifamily. commercial. industrial.
non-profit. municipal governments. universities and colleges. schools. and
hospitals:
offer a range of financing structures. forms and techniques. such as senior loans.
subordinate loans. credit enhancements. guarantees. warehousing. securitization.
and other techniques that can both lower the cost of financing and increase private
investment in clean energy technologies:
leverage private investment in energy projects through financing mechanisms that
support. enhance. or complement private investment:
ill
recognizing that equity investments carry more risk and may require longer
term commitment to a project. justifying compliance with strict investment
guidelines to be established by the Board of Directors:
2
accept capital from the county. the state. the federal government. from non-profits.
from foundations. and any other capital source that the Green Bank governance
deems to be attractive and useful:
recapitalize its funds by selling assets Cloans) through private placement or other
securitization:
1
In
addition to the Committee-recommended changes, Council staff notes that the County Attorney's office suggested
some technical amendments that are also incorporated into the attached bill on ©3, line 35 and. ©11, line 255.
2
Although Executive staff originally suggested a subpoint under proposed section (c), Council staff moved this
subpoint to a stand alone point.
2
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The Sierra Club recommended the purpose section of the bill be amended to specifically include
nonprofit projects (©24). Finally, the Apartment and Office Building Association of Metropolitan
Washington (AOBA) recommended that the Council consider providing statutory guidance to the
Board of Directors to prioritize the responsibilities set forth in this purpose section because of the
finite funding (©32).
Committee recommendation (3-0):
The Committee supported Executive staff's proposed
amendments, which also incorporated the Sierra Club's recommended amendment. However, the
Committee did not support AOBA's recommended amendment and supported staff's conclusion
that prioritizing responsibilities was more appropriately addressed by the Green Bank's Board of
Directors in setting the parameters ofthe Green Bank's program.
2.
Definitions.
As introduced, Bill
18-15
included specific definitions for clean energy
technologies, energy efficiency project, and renewable energy project. Executive staff have
proposed modifying these definitions and adding a definition for "energy efficiency and/or
renewable energy improvement". See ©22. Executive staff note that the proposed definitions
would more closely align with the Commercial PACE legislation definitions and assert that these
would be a "sector-neutral" set of improvements that could be made under Bill
18-15. Committee
recommendation (3-0):
amend Bill
18-15
to modify these definitions.
As introduced, the defmition of "energy efficiency project" encompassed improvements made to
single-family homes. The Sierra Club (©24) and AOBA (©32) recommended that the definition
of "energy efficiency project" be expanded
to
include multi-family properties. The Executive's
recommended defmition would include multi-family properties. AOBA also recommended
removing the word ''permanent'' from the definition. AOBA noted that some of the examples
listed, such as caulking and weather-stripping, are not permanent. In this context, "permanent" is
not intended to indicate that the project will be forever on the home; rather the intent is that the
project is not easily removed and is intended to be left on the property. Council staff noted that
this definition is consistent with other definitions in the Code.
Committee recommendation (3­
0):
retain the word "permanent".
Finally, as introduced,
Bill 18-15
includes a definition of "renewable energy sources" as follows
(©8, lines 171-181):
Renewable energy source means !! source of energy that naturally replenishes over !!
human, not!! geological, time frame and that is ultimately derived from solar power, water
power, or wind power. Renewable energy source does not include petroleum, nuclear,
natural
~
or coal. A renewable energy source comes from the sun or from thermal inertia
of the earth and minimizes the output oftoxic material in the conversion of the energy and
includes:
ill
non-hazardous, organic biomass material;
ill
solar electric and solar thermal energy;
ill
wind energy;
ill
geothermal energy; and
ill
methane gas captured from !! landfill.
3
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The Sierra Club recommended removing
(1)
and (5) from this definition because their status as
"clean, low carbon energy sources" is questionable. The Sierra Club noted that biomass is a
growing energy source that if done improperly can be harmful to the environment. They further
noted that using methane gas from landfills to generate electricity could have a beneficial climate
impact, but in practice the benefits are likely outweighed by increases in uncontrolled methane
emissions (©25-26). CQuncil staff noted that the definition in Bill 18-15 is consistent with the
definition in the recently-enacted PACE legislation and Executive staff noted that inclusion of
these sources is generally consistent with how the state classifies renewable sources and as a
practical matter, the Green Bank is unlikely to be involved in these areas. Committee
recommendation (2-1): retain this language. Councilmembers Floreen and Hucker preferred to
keep the definition as introduced for constituency. Councilmember Berliner preferred to remove
(1)
and (5) from the definition, noting that the Green Bank still had the flexibility to include these
types of projects.
3. Board
0/
Directors.
As introduced, Bill 18-15 the Green Bank would have a Board of
Directors of 11 members. The Directors of Environmental Protection and Finance would be ex­
officio non-voting members ofthe Board. Executive staff recommend that the Directors be voting
members and that the Executive appoint up to 3 additional Board members, subject to Council
confirmation (©23). Committee recommendation
(3-0):
amend Bill 18-15 as recommended by
Executive staff.
Bill 18-15 states that the voting members of the Board of Directors should include:
• representatives of residential or low-income groups;
• representatives of environmental organizations;
• representatives of business organizations;
• persons with experience in investment fund management;
• persons with banking and lending experience;
• persons with experience in the finance or deployment of renewable energy; and
• persons with experience in research and development or manufacturing of clean energy.
The Sierra Club urged that the Board include representatives ofresidential
and
low-income groups.
Also, the Sierra Club argued that the bill should require that efforts be made for the board to be
representatives ofthe County's racially and ethnically diverse population. Council staff agrees that
diversity is always an important goal, but does not recommend that amendment. Committee
recommendation
(3-0):
amend Bill 18-15 to include representatives of residential and
low-income groups.
4. Work Group membership.
Bill 18-15 would require the Executive to convene a Green
Bank Work Group to review the legislation after
it
is enacted and submit a report to the Council
and Executive with any recommended changes. As introduced, the Work Group would include
representatives from the County departments ofEnvironmental Protection, Finance, and Economic
Development; investment and financing industry, such as regional and national banks, property
trusts, and other lending institutions or companies; building owners and managers; industry trade
associations; nonprofit organizations; and utility companies (©12-13, lines 290-306). Executive
staff (©23), the Sierra Club (©25), and Efficiency First (©27) noted that absent among these listed
members is representatives of environmental organizations or energy service companies.
4
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Committee recommendation (3-0):
While these representatives could be included without
language changes, amend the membership criteria to include these members.
5. Non-energy job costs.
Efficiency First recommends that the "loan criteria" be amended to
include an allowance for non-energy items. Efficiency First provides several examples as to why
this allowance is important. For instance, a homeowner may need
to
repair a leaky roof in order
install insulation in the attic. Efficiency First suggests this allowance be 25% ofjob cost (©27-28).
Committee recommendation (3-0):
The Committee did not recommend including a specific
percentage in the legislation. Councilmember Floreen was specifically concerned that the bulk of
project financed should be energy-related. Language was added to address this concern (©2, lines
24-27)
6. Work specifICations.
Efficiency First noted that the legislation does not provide a work
specification or requirements for installers and recommends that the legislation ensure that
homeowners follow best practices when making improvements (©28).
Committee
recommendation (3-0):
Add language to address this concern (©3, lines 42-43).
7. Assets upon dissolution ofthe Green Bank.
After the Committee worksession, Council
staff spoke with Finance staff about the theoretical possibility that a Green Bank designated under
this law could cease to exist and that Bill 18-15 did not have any language regarding how the assets
would be handled. Since the County is preparing to provide the Green Bank with a substantial
influx of money from the PepcolExelon merger, this should be addressed in the legislation.
Language was added to address this concern (©1 0-11, lines 241-244). Committee members agreed
to incorporate this language into their Committee recommendation.
This packet contains:
Bill 18-15
Legislative Request Report
Fiscal and Economic Impact statement
Testimony and Correspondence
Executive testimony
DEPlFinance additional comments
Sierra Club
Efficiency First
Apartment and Office Building Association of
Metropolitan Washington
Circle
#
1
14
15
20
21
24
27
30
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Bill No.
18-15
Concerning: Environmental Sustainability
- Montgomery County Green Bank
Revised:
4/1612015
Draft No.
~
Introduced:
April 21. 2015
Enacted:
October 21! 2015
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ __
Sunset Date: ....N'-"o=n""'e-::-----:-_ _ __
ChI _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember Berliner
Co-Sponsors: Councilmembers Leventhal, Hucker, Riemer, EIrich, Rice, and Navarro
AN
ACT
to:
(1) authorize County government
to
designate a County Green Bank to promote the
investment
in
clean energy technologies;
(2) specify
the process to designate a nonprofit corporation to fimction
as
the Green Bank;
(3) define
the nature and powers ofthe Green Bank;
(4)
establish a Green Bank Work Group
to
review the application of Chapter
18A,
Article
7
and make recommendations regarding the implementation of the Montgomery County
Green Bank; and
(5)
generally amend the environmental sustainability law.
By adding
Montgomery County Code
Chapter
18A,
Environmental Sustainability
Article
7
Sections
18A-44, 18A-45, 18A-46, 18A-47, 18A-48, 18A-49,
and
18A-SO
Boldface
Underlining
[Single boldface brackets]
DQuble undedining
[[Double boldface brackets]]
., ., .,
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law
by
original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unqffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No. 18-15
1
2
Sec.
I.
Article 7 (Sections 18A-44, 18A-45, 18A-46, 18A-47, 18A-48, 18A-49,
and 18A-50) is added as follows:
Article
7~
Montgomery County Green Bank.
18A-44. Purpose.
3
4
5
6
7
8
The County Government should support the formation of
~
Montgomery
County Green Bank to promote the investment in clean energy technologies in the
County. The Green Bank must be able to:
[[(ill
develop separate programs to support clean energy investment in
9
10
11
12
13
residential, municipal, small business, and larger commercial projects;
ili1
fmance investment in clean energy technologies in accordance with
~
comprehensive plan developed
Qy
it to foster the growth, development,
and commercialization of renewable energy sources and related
enterprises;] ]
14
15
16
17
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serve and support the deployment of clean energy technologies in any
sector. including residential single family homes and multifamily,
commercial. industrial. non-profit. municipal governments. universities
and colleges. schools. and ho§pitals:
18
19
£lil
offer a range offmancing structures. forms and techniques. such as senior
loans. subordinate loans. credit enhancements. guarantees. warehousing.
securitization. and other techniques that can both lower the cost of
financing and increase private investment in clean energy technologies:
20
21
22
W
leverage private investment in energy projects through fmancing
mechanisms that support. enhance. or complement private investment:
23
24
25
un
consider the inclusion of any non-energy or supporting improvements
ancillary to the primary energy efficiency or renewable energy project,
up to a stated limit in scope or amount. in each program or mechanisms
26
27
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BILL
No.
18-15
28
29
~
accept capital from the CQUDty. the state. the federal government. from
non-profits. from foundations. and any other capital source that the Green
Bank governance deems to be attractive and useful:
30
31
ill
[[£}]]
recapitalize its funds by selling assets (loans) through private placement
or other securitization:
32
33
34
W
stimulate the demand for clean energy and the deployment of clean
energy technologies that serve end-use customers;
35
36
37
38
[[@]]
au
before making [[@]]
~
loan, loan guarantee, or other form offinancing
support for clean energy technologies, develop rules, policies, and
procedures to specify borrower eligibility and any other term or condition
offmancial support;
39
40
41
42
43
44
[[k}
provide financing for clean energy technologies;]]
[[00]]
ill
provide
hY
resolution for the issuance of [[negotiable]] revenue bonds
to finance clean energy technologies;
ill
(kl
provide information regarding best practices for overseemg energy
projects and other appropriate consumer protection information:
recognize that equity investments carry more risk and may require longer
term commitment to a project! justifying compliance with strict
investment guidelines to be established by the Board of Directors:
45
46
47
48
49
50
[[(g}]]
ill
assess reasonable fees on its financing activities to cover its reasonable
costs and expenses, as determined
hY
the Board of Directors appointed
under Section 18A-47;
[[(h)]] (m) make information regarding rates, terms, and conditions for all of its
fmancing support transactions available to the public for inspection,
including formal annual reviews
51
52
53
54
hY
both
~
private auditor and the
Director of Finance, and provide details to the public on the Internet
unless such disclosure includes
~
trade secret, confidential commercial
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BILL
No.
18-15
55
56
57
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59
infonnation, or confidential fmancial infonnation;
[[ill]]
Wl
provide leadership on environmental issues at both the County and
State levels;
Hill]]
(Q)
maintain close liaison with government agenCIes and elected
representatives at both the County and State levels to achieve the goals of
the Green Bank; and
60
61
62
63
[t:(k}]]
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undertake any other activities deemed
Qy
the Board of Directors to
support the mission of the Green Bank.
18A-45. Definitions.
In this Article, the following words have the meanings indicated:
Clean energy technologies
means energy resources and emerging technologies
that [[have significant potential for commercialization and]] do not involve the
combustion ofcoal, petroleum or petroleum products, municipal solid waste, or
nuclear fission.
Clean energy technologies
includes renewable energy sources,
renewable energy projects, energy efficiency projects, alternative fuels used for
electricity generation, alternative fuel vehicles and related infrastructure such as
electric vehicle charging station infrastructure, and smart
griQ
~~~~
64
65
66
67
68
69
70
71
72
73
74
75
76
77
Energy efjiciencyproject
means
~
pennanent improvement made to an existing
[[single-family home]] property that[[;]1 reduces consumption of energy.
[[ill
reduces the consumption of energy in the home, including:
CA)
ill)
caulking and weatherstripping doors and windows;
heating and cooling system efficiency modifications, including:
78
79
ill
Oi)
replacing
~
burner, furnace, heat pump, or boiler, or air
conditioner with
~
high efficiency model;
installing
~
device to modify flue openings that increases the
energy efficiency or the heating system;
F:\LAW\BILLS\1518 Green Banks\Bi114 Committee.Docx
80
81
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BILL
No.
18-15
82
(iii)
any electrical or mechanical furnace ignition system which
replaces
!!
standing gas pilot; and
83
84
(iv)
any tune-up that increases the operating efficiency;
85
86
87
88
89
(Q
ill)
!!
programmable thelTIlostat;
ceiling, attic, wall, or floor insulation;
whole house air sealing;
water heater tune-up, water heater insulation,
~
lID
®
(G)
insulation, or
change out to an ENERGY STAR qualified water heater;
storm windows or doors or ENERGY STAR qualified window or
door replacement;
90
91
92
aD
ill
air distribution system improvements, including duct insulation
and air sealing;
any device which controls demand of appliances and aids load
management; [and]
93
94
95
96
97
98
99
ill
any other conservation device, renewable energy technology, and
specific home improvement that reduces the consumption of
energy in the home; and
rn
meets safety and performance standards set
by!!
nationally recognized
testing laboratory for that kind of device, if these standards are
available.]]
100
101
102
[[Energy efficiency project
does not include
!!
standard household appliance,
103
104
such as
!!
washing machine or clothes dryer.]]
Energy efficienqy and/or renewable energy improvement
or
improvement
means
105
106
107
108
any equipment. device. or material that:
ill
meets safety and performance
standards
set by a nationally recognized
testing laboratory for that kind ofdevice. ifthese standards are available,
and
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BILL
No. 18-15
109
110
111
112
113
114
115
116
117
118
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122
123
124
125
126
127
128
129
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133
134
135
ill
is intended to decrease energy consumption or expand use of renewable
energy sources. including:
CA)
heating. ventilation. and cooling and distribution system efficiency
modifications. including modification or replacement. such as:
ill
Cii)
replacing existing equipment a burner. furnace. heat pump.
or boiler. or air conditioner with a high efficiency model:
installing a device or retrofit to existing equipment that
increase energy efficiency and conservation to modify flue
openings that increases the energy efficiency or the heating
system:
(iii) any electrical or mechanical furnace ignition system which
replaces a standing gas pilot:
Civ)
any tune-up or maintenance activity that mcreases the
operating efficiency:
!m
(Q
CD)
a programmable thermostat:
ceiling. attic. wall. roof. foundation. or floor insulation:
whole house air sealing:
water heater tune-up. water heater insulation. pipe insulation. or
change out to an ENERGY STAR qualified water heater:
iEl
if)
storm windows or doors or ENERGY STAR-qualified window or
door replacement:
(Ql
caulking and weather-stripping doors and windows:
air distribution system improvements. including duct insulation
and air sealing:
an
ill
any device or energy management system which controls demand
of appliances or equipment and aides load management manually.
remotely. and/or automatically:
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BILL
No. 18-15
136
137
138
139.
ill
!lQ
a measure that reduces the usage of water or rncreases the
efficiency of water usage:
an energy recovery system;
electric vehicle infrastructure. such as installation of electric
vehicle charging station(s) and any necessary installation or
upgrades to electrical wiring or outlets:
LLl
140
141
142
143
144
145
!Ml
WJ
commercial-scale lighting upgrades or daylighting system;
any measure or system that makes use of or expands a renewable
source of energy. including solar thennal and solar electric. wind
turbine. biomass. hydroelectric. geothermal electric. geothennal
heat pumps. anaerobic digestion. tidal or wave produced energy.
fuel cells using renewable fuels and geothennal direct-use: or
146
147
148
149
(0)
any other installation or modification of equipment. device.
infrastructure. structure. or other material necessary to:
150
151
152
ill
eii)
install. operate, or maintain the improvement being
installed: or
resolve any structural. mechanicaL electrical. or other issue
that directly jeopardizes the well-being or safety of the
building occupants, quality of the indoor environment. or
the durability or longevity of the structure on which the
project is being installed.
153
154
155
156
157
Green Bank
means the Green Bank that the County has designated to promote
the investment in clean energy technologies and provide financing for clean
energy technologies, including renewable energy and energy efficiency
proj ects.
158
159
160
161
162
Maryland Open Meetings Act
means the Maryland
Qrum
Meetings Act, codified
at Sections 3-101 through 3-501 of the General Provisions Article of the
o
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BILL
No.
18-15
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164
Maryland Code.
Renewable energy project
means
fl
[[project]] permanent improvement made to
an existing property
that[[~
165
166
167
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170
171
172
173
174
175
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177
178
179
180
181
182
183
184
185
186
187
188
189
ill]]
ill
ill
creates, converts, stores, or actively uses renewable energy[[;
is permanently installed on the home or property; and
meets safety and performance standards set
Qy
fl
nationally recognized
testing laboratory for that kind of device. if these standards are
available]]~
Renewable energy source
means
fl
source of energy that naturally replenishes
over
~
human, not
~
geological, time frame and that is ultimately derived from
solar power, water power, or wind power.
Renewable energy source
does not
include petroleum, nuclear, natural
~
or coal. A
renewable energy source
comes from the sun or from thermal inertia ofthe earth and minimizes the output
oftoxic material in the conversion ofthe energy and includes:
ill
ill
ill
ill
ill
non-hazardous, organic biomass material;
solar electric and solar thermal energy;
wind energy;
geothermal energy; and
methane gas captured from fllandfill.
18A-46. Designation.
W
The County Council must designate,
Qy
resolution approved
Qy
the
County Executive, fl single nonprofit corporation which complies with all
requirements and criteria of this Article as the County's Green Bank. If
the Executive disapproves the resolution within 10 days after receiving
.it
the Council may readopt the resolution with at least
.Q
affirmative votes.
(Q)
ill
Except as provided in (b
)(2),
any designation under this Section
expires at the end ofthe fifth full fiscal year after the resolution is
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BILL
No. 18-15
190
191
. 192
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adopted unless the Council extends the designation
by
adopting
another resolution under this Section.
ill
Ifthe Council President does not notify the Chair ofthe designated
Bank's Board of Directors, not later than June 30 ofthe fourth full
fiscal year ofthe designation tenn, that the Council may allow the
current designation to expire, the designation is automatically
extended for another 5-year tenn.
!£}
The Council at any time may suspend or revoke the designation of
~
corporation as the County's Green Bank
by
resolution, adopted after at
least
.li
days public notice, that is approved
by
the Executive,
QL.
if the
Executive disapproves the resolution within
10.
days after receiving
ib
is
readopted
by
~
vote of at least
§
Councilmembers.
@
To continue to qualify as the County's Green Bank,
~
corporation's
articles of incorporation and bylaws must comply with all requirements
of this Article.
18A-47. Board of Directors.
(ill
To qualify as the County's Green Bank,
Directors must have no more than
~
corporation's Board of
[[The
11
voting members.
corporation's bylaws should also allow the Directors of Environmental
Protection and Finance to serve as ex-officio non-voting members along
with any other nonvoting members authorized under the bylaws.]] The
comoration's bylaws should specify that the County Executive may
appoint up to 5 board members. including the Directors ofEnvironmental
Protection and Finance. subject to confinnation by the County Council.
212
213
214
215
216
®
Each voting member should be
~
resident of the County. The members
of the Board of Directors should include:
ill
representatives of residential [[or]] and low-income groups;
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BILL No. 18-15
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ill
ill
ill
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®
ill
LID
(2l
representatives of environmental organizations;
representatives of business organizations;
persons with experience in investment fund management;
persons with banking and lending experience;
persons with experience in the fmance or deployment ofrenewable
energy;
[[and]]
persons with experience m research and development or
manufacturing of clean energy;.
the Director of the Montgomerv County Department of
Environmental Protection or the Director's designee; and
the Director ofthe Montgomerv County Department ofFinance or
the Director's designee.
(£)
A member must not be paid for service on the Board but may be
reimbursed for necessary travel expenses.
@
A member is not subject to Chapter 19A because ofserving on the Board.
The Bank's bylaws must include provisions defining and regulating
conflicts of interest
Qy
Board members and Bank staff.
W
Notwithstanding any inconsistent provision of Section 19A-21,
~
member of the Board of Directors who engages in legislative or
administrative advocacy as part of that member's duties on the Board is
not required to register as
because of·that advocacy.
~
lobbyist under Article V of Chapter 19A
ill
(g)
The Board must direct the program, management, and finances of the
corporation.
The Bank's bylaws must provide that. upon dissolution of the Green
Bank. all assets must be transferred within 30 days from dissolution to
either its successor Green Bank as authorized by Resolution or to the
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BILL
No.
18-15
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County for use permitted by the Green Bank legislation.
18A-48. Status; incorporation; bylaws.
fu)
To qualify as the County's Green Bank, !! corporation's articles of
incorporation must provide that the corporation is:
ill
ill
ill
!! tax-exempt nonprofit corporation;
not an instrumentality of the County; and
incorporated for the sole purpose ofserving as the County's Green
Bank.
®
The Green Bank's bylaws may contain any provision, not inconsistent
with law or the articles ofincorporation, necessary to govern and manage
the Bank. The Green Bank may exercise all powers and is subject to all
[[requirements under]] applicable provisions ofthe Financial Institutions
Article ofthe Maryland Code.
ill
The Board must adopt and may amend the Green Bank's bylaws. The
Board must submit any proposed amendment to the articles of
incorporation or bylaws to the Executive and Council for review and
comment at least 60 days before the Board takes final action on the
amendment. The Board must submit!!
~
ofeach adopted amendment
to the Executive and Council within
~
days after adoption.
@
The bylaws must require the Green Bank to comply with the Maryland
~
Meetings Act and provide that all meetings of the Board of
Directors must be open to the public except when closed on !! recorded
vote of the Board for !! reason expressly listed in the state law.
18A-49. Work program; staff; support from County Government.
fu)
The Board ofDirectors must adopt !! work program each year to advance
the policy objectives and perfonn the activities listed in Section 18A-44.
®
The Green Bank's work program may include!! plan for sponsorship of
G
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BILL
No. 18-15
271
private investment, marketing, and advocacy initiatives.
(£)
272
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The Board must meet with the Executive and the Council at least semi­
annually.
@
The Department of Environmental Protection [[should]] may, if the
Board ofDirectors requests, provide incidental administrative support for
the Green Bank, including contracts, grants, or services in kind, subject
to appropriation.
W
Funding sources for the Green Bank may include:
ill
ill
federal, State, or County funds provided to
it.
charitable
gifts,
grants, or contributions and loans from
individuals,
corporations,
university
endowments,
and
philanthropic foundations; and
ill
earnings and interest derived from fmancing support activities for
clean energy technologies backed
Qy
the Green Bank.
The Green Bank may also raise private funds and may accept services
from any source consistent with its purpose.
lSA-50. Report
The Board of Directors must report annually on the activities and finances of
the Green Bank to the Executive and Council.
Sec. 2. Green Bank Work Group.
(a)
The Executive must convene a Green Bank Work Group. Members of
the Work Group must include representatives from the County
departments of Environmental Protection, Finance, and Economic
Development; investment and fmancing industry, such as regional and
national banks, property trusts, and other lending institutions or
companies; energy services companies; building owners and managers;
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BILL No. 18-15
297
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306
industry trade associations; nonprofit organizations; and utility
comparues.
(b)
The Work Group must:
(1 )
review the application of Chapter 18A, Article 7, as added by
Section 1 ofthis Act, in the context of relevant best practices and
local needs; and
(2)
submit a report to the County Council and County Executive by [1
year from date of enactment] with recommendations on
implementing Chapter 18A, Article 7, including any proposed
amendments to County Law.
307
308
Approved:
George Leventhal, President, County Council
Date
309
Approved:
310
Isiah Leggett, County Executive
Date
311
312
This is a correct copy ofCouncil action.
Linda M. Lauer, .Clerk ofthe Council
Date
313
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LEGISLATIVE REQUEST REPORT
Bill 18-15
Environmental Sustainability
-
Montgomery County Green Bank
DESCRIPTION:
Bill 18-15
would authorize County government to designate a County
Green Bank to promote the investment in clean energy technologies;
specify the process to designate a nonprofit corporation to function as
the Green Bank; define the nature and powers of the Green Bank;
establish a Green Bank Work Group to review the application of
Chapter I8A, Article 7 and make recommendations regarding the
implementation of the Montgomery County Green Bank; and
generally amend the environmental sustainability law
Investing in clean energy technologies can be a cost-effective way to
reduce greenhouse gas emissions. However, the lack of accessible
financing options is a barrier to many property owners and may
prevent them from making these energy efficiency improvements
To establish a program to provide property owners with a financing
option to invest in clean energy technologies.
Departments of Finance and Environmental Protection
To be requested.
To be requested.
To be requested.
To be researched.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Amanda Mihill, Legislative Attorney, 240-777-7815
To be researched.
N/A
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ROCKVIllE, MARYLAND
MEMORANDUM
May 11,2015
TO:
George
Leventhal;
President, County Council
Jenniier A. Hughes, Director, Office of
Man
ernent
andL&(!rO~e
Joseph
F.
Beach.
Director, Department
of
FROM:
SUBJECT:
FEIS
for
Bill 18-15,
Environmental
Sustainahility - Montgomery
County
Green
Bank
Please find attached the fiscal and economic impact statements f-or the
above­
referenced
legislation.
JAH:fz
cc:
Bonnie
Kirkland, Assistant Chief Administrative Officer
Lisa Austin, Offices of the County
Executive
Joy Nunni, Special Assistant to the County Executive
Patrick Lacefield.
Director, Public lnfonnation Office
Joseph F. Beach, Director,
Department
of
Finance
David Platt, Department of
Finance
Jed Millard,
Office
ofManagement
and Budget
Alex Espinosa, Office of Management and Budget
Naeem Mia,
Office
of Management
and
Budget
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Fiscal Impact Statement
Bm
18-15,
Environmental Sustainability - Montgomery County Green Bank
1.
Legislative Summary:
This legislation would 1) authorize Ceunty gcvernment to' designate a COUllty Green Bank
to'
promete the inve!>1ment in clean energy technelegies;
2)
spe.cify the process
to
designate
a
nonprefit corporation to' function as the Green Bank; 3) define the nature and pewers ofthe Green
Bank; 4) establish
a
Green Bank Work Group
to'
review the application ofChapter 18A, Article 7
and
make
recommendations regarding the implementatien ofthe Montgemery County Green
Bank; and
5)
generally amend the environmental sustainability law.
2. An estimate of changes in County revenues and expenditures regardless ofwhether the
revenues or expenditures are assumed in the recommended or approved budget. Includes
source of information, assumptions, and methodologies used.
The Department ofFinance estimates that in the first year development phase oftbe
establishment O.f a MO.ntgomery County Green Bank centractual bond counsel and professional
financial advisor services would
be
required. These services weuld be required to' review,
comment, and participate with the work group created by the legislatien to develep final plans for
establishment of a Green Bank.
The
Department estimates
a
total ef$25,000 fer 125 heurs
of
contracted bond counsel services at
$200 per hcur, An additional $50,000 would be
required
for nearly
225
hours of ccntracted
financial advisor services.
The
Department estimates that these services would be required only
in
the first year of development ofa Montgemery County Green Bank and will not incur any
additienal ongoing costs. The total fiscal impact
to
the Department of Finance is $75,000 in the
first year only.
The legislation states that ('the Department of Environmental Protection should, if
the
Board
of
Directors reque:.1s, provide administrative support fer the Green Bank, including centracts,
grants, or services in kind, subject to' appropriation." At this time,
it
is not possible to detennine
the fiscal impact for
the
Department of Environmental Protection as it is unknown ifthe Board of
Directors will request administrative support or what volume cf administrative support weuld be
requested.
The
legislatien also. states that funding sources for the Green Bank may include federal, State, er
County funds provided
to
it
If
later decisions are made
to'
provide County funds
to
the Green
Bank in any given fiscal year, that amcunt would constitute an additional fiscal impact. No.
additional revenues are expected as a result ofEiU 18-15.
3.
Revenue
and expenditure estimates
covering
at least the
next
6
fiscal
years.
In the first year of development of a Montgemery County
C:rreen
Bank, the Department cf
Finance would require $75,000 in contracted financial advisor and bond ceunsel services. There
are no ongoing costs beyond
the
first year for the Department ofFinancc.
As
stated above,
a
projection ofcosts over a six-year period for the Department ofEnvironmental
Protection
is
unable to
be
dctennined at
this
time.
4. An actuarial analysis through the entire amortization period for each bill that 'would a(fect
retiree pension or group insurance costs.
Net applicable.
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5. An estimate of expenditures related to County's information technology
(IT)
systems,
including EuterpriseResource Planning
(ERP)
systems.
Not applit:able.
6. Later actions that may affect future revenue and expenditures if the bill authorizes future
spending.
The Board ofDircGtors may request that the Department of Environmental Protection provide
administrative support. This could potentially require additional resources for the Department of
Environmental Protection; however, it is unknov.n at this time jf
~llpport
would
be
requested or at
what level. The BiII also allows for County funds to be provided to the Green Bank. If later
decisions are made to provide County funds
to
the Green Bank. this would constitute an
additional fiscal impact.
7.
An estimate of the staff time needed to implement the bill.
The
Department
of
Finance would require
125
hours ofcontracted bond counsel and
225
hours of
contracted financial advisor services.
It
is unknown at this time
what
level ofadministrative
support may need to be provided by the Department of Environmental Protection because the
Board of Directors of the Green Bank would have to request such support.
8.
An explanation of how the addition of new staff responsibilities would affect otber duties.
At this time, there will be no impact to current
staff
duties and responsibilities as a result of
approval of Bill 18-15. However, if the Board of Directors requests administrative support from
the Department of Environmental Protection, additional
staff
resources may
be
required if the
Department is not able to provide the level ofrequested support within its approved personnel
complement.
9. An estimate of costs when an additional appropriation is needed.
Not applicable.
10. A description
of
any variable that could affect revenue and
cost
estimates.
See #6 above.
11.
Ranges of revenue or expenditures that
are
uncertain or difficult to projed.
ft
is difficult
to
detennine the
co!>1
of
additional
administr'~tive
support that may
be
provided
by
the Department of Environmel1tal Protection. Additionally. the amount ofCoul1ty funds provided
to the Green Bank in any given fiscal year is uncertain and not possible to project at this time.
12. If
a
bill
is
likely
to
have
no fiscal impact, why that
is
the
case.
Not applicable.
13. Other fiscal impacts or comments.
Not
applicable.
14. The following contributed to and concurred with this analysis:
Joe Beach, Rob Hagedoorn, and Mary Casciotti: Department of Finance
Jedediah Millard: Office of Management and Budget
/'
Date
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Eeonomic Impact Statement
BiIl1S-:-1S, Environmental
Sustaiubility-Moiltgomery County.
Green Bank
Background:
This legislation would 1) authorize County government
to
designate a County Green
Bank to promote
the
investment
in
clean energy technologies; 2) specify the
process
to
designate a nonprofit
~rporation
to .function as the Green Bank; 3} define the nature
and
powers oftbe Green Bank; 4) establish a Green Bank Work Group to review the
application
of
Chapter
IRA.
Article
7
and make recommendations regarding
the
implementation of the Montgomery County Green
Bank;
and. 5) generally amend the
environmental sustainability law.
1. The
$OQl'Ces
of information, assumptiom, and methodologies
U8~.
.
The
sources of information include
the
Coalition for Green Capital, Maryland
Commission for Clean Energy (MCEC). and
the
Connecticut Grecn Bank.
2. A description of
any
variable that could affect the
economic
impaa estimates.
Based on the experience
in
the State ofConnecticut. the
Green
Bank
was
able to increase
the amount ofprivate contributions
$10
for every
$1
of GreenBank
funding.
Also
according to 2013
daU4
Connecticut>s Green Bank is credited
with
$220 million being
invested
in
renewable energy,
the
creation of
1,200
jobs. and
a
reduction ofmore
than
250,000 tons ofgreenhouse gas emissions.
The
variable
1hat
could most affect
the
economic impact estimate is the amount of
annual
investment capital available to
capitalize
the Green Bank. The success of the Connecticut
Green Bank can be seen as attributable
to
the approximately $40.0 million
Qf
annual .
funding.
It is unclear if the Montgomery County GreenBank will have
~cate<l
annual
funding.
The County Executive
has
requested approxinuiteJy a $20.0 million direct one­
time contribution from the Pepco-Exelon settlement specifically for establishing a Green
BanlL Recurring
annual
funding contributions
may be
necessary for the successful long­
tenn
operation of a Green Bank in Montgomery County.
The State of Maryland is exploring the development of a Green Bank. The Maryland
Clean Energy Center (MCEC) was tasked
by
SB 985 to evaluate the
need
for a Green
Bank. Phase I, which
studied
the structure and organization of Green Banks established
in
other
states,
was
completed
in
December
2014.
Phase II, which is to
examine and
recommend
the
sources of
capital
for a Green Bank and the
best
method for establishing
a
Green
Bank, is scheduled to be completed
by
December 2015. Having a State and a .
Montgomery County Green
Bank
may either serve to further stimulate energy
investment, or merely substitute funding sources, Therefore,
it
is unknown
what
the
economic impact
would be of
having
a Green Bank at both governmental levels.
Other variables
that
may impact economic estimates include: the cost of energy savings
technology; the market demand for energy saving technology;
the
availabiUty of
companies manufacturing
and
installing such technology; the ability to make energy
improvement paybacks within a reasonable time period; and the degree
to
which the
Page 1
of2
@
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Economic
Impaet Statement
Bill IS-iS, Environmental Sustainability-Moatgomery County Green Bank
private
financial markets will be
motivated to
participate
in
such energy
investments
for
residential
and
commercial projects.
Given
all
ofthese
variables~
no definitive estimate of
the
economic impact of
this
proposed legislation is possible
at
this time.
3. The
BiB's positive
or oegative effect,
if
aay oa employmeatt
spending,
savillg,
investment, incomes,
and property
values
in the
County.
It
is
unknown
ifthe
County would
be
able
to
replicarethe
level
of
private
investInent
that
the Connecticut Green Bank has achieved. However,
it
is generally IiUlticipated
that
a
Green
Bank will
~ve
a
positive economic benefit to the County on einployment.
investments, and
prOperty
values. If
Montgomery
County
receives
$20.0
million from
the Pepco-Exelon settlement and could achieve the 10
to
1 ratio of
investment
returns
that
ConnecticUt
has
achieved,
it
would mean
that
the S2() million initial
funding
could .
provide
5200
million ofenergy
savings
investment
in
Montgomery County.
The
specific
details ofthe planned
Green
Bank. program as well as tbeproposed
level
of one-time
and
annual
funding
would be
needed in
order to estimate
the
true economic impact of a Green
Bank for Montgomery
County.
4.
If
a Bin is likely to have no etoBomic impact,
wby
is
that
the .case?
See response 3.
5. The following tontributed to or concurred with
this
aaalysis:
David
Platt~
Mary
Casciotti and Rob
Hagedoo~.
Finance.
Jo
~
Director
Department of Finance
~""1-AA--
Date
Page2of2
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TESTIMONY ON BEHALF OF COUNTY EXECUTIVE ISIAH LEGGETT ON
COUNCIL TED BILL 18-15, ENVIRONMENTAL SUSTAINABILITY -GREEN
BANK
June 9, 2015
Good afternoon, my name is Joseph Beach, Director of the County Department of
Finance, and I am here on behalf of County Executive Isiah Leggett to testify in support
of Bill 18-15, Environmental Sustainability - Montgomery County Green Bank.
County Executive Leggett negotiated substantial funding for the Green Bank
through the ExelonlPHI Merger, recently approved by the Maryland Public Service
Commission. Those negotiations resulted in over $31 million in funding for energy
efficiency programs and investment in energy technologies, the bulk of which will be
used to seed the Green Bank.
Given the constrained County tax-supported resources, the only way to fund the
Green Bank at this time is through the funding we negotiated as part of the merger. Bill
18-15 will simply assist us in creating the infrastructure to implement the Green Bank.
Establishment of a Montgomery County Green Bank would be an important next
step in the development of the County's effort at financing energy efficiency and
renewable energy projects. We have successfully completed our first financing and
construction of an energy efficiency project at the Health and Humans Services
headquarters in Rockville through the use of Qualified Energy Conservation Bonds and
are expecting to proceed with at least two more substantial projects in Fiscal Year 2016.
We have established public private partnerships to fund solar photovoltaic installations
on over 12 County facilities using private investment. We are in the process of
implementing the Commercial PACE legislation to facilitate green energy retrofits in
commercial property.
The Green Bank would allow the County to expand its sustainability efforts into
other promising areas including support of Commercial PACE, resources for a residential
loan loss reserve fund to support residential PACE, fmancing for clean energy
technologies, and additional energy efficiency investment in public facilities. Funds from
the merger will also allow us to expand weatherization programs and establish an energy
coach network. The Energy Coach Network will work with the Green Bank by
promoting community awareness and access to energy efficiency programs.
Thank you for permitting me the time to address the County Council on this
important matter.
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Additional Comments on Bill 6-15 Green Bank
June 10, 2015
Departments of Environmental Protection and Finance have taken a more detailed
review of the legislation, and we offer the following suggestions. We have given
particular thought to areas raised by stakeholders in testimony and experts, including
Efficiency First, Sierra Club, the Coalition for Green Capital, and Harcourt Brown
&
Carey.
We offer four areas of comments:
1.
Purpose
-
We received some helpful language from Coalition for Green Capital,
and have done our best to integrate/add this in. We believes this language is a
helpful way to frame and educate about the concept of the Green Bank.
2.
Definitions
-
Definitions focus on residential energy efficiency, despite the
scope of the Green Bank being broader. Guided by the structure of the
Commercial PACE legislation, we suggest broader definitions.
3.
Board of Directors
-
Convert the DEP and FIN Directors' appointments to the
Board of Directors from ex officio (nonvoting) to voting members and the County
Executive has the authority to appoint up to 3 additional board members subject
to council approval
4.
The Work Group
-
The list of required representation missed a key stakeholder:
energy service companies, which we suggest is added.
PURPOSE
In lieu of sub-points (a), (b), and (e), we recommend the following are inserted at sub­
point (a). We recommend leading with this language provided by Coalition for Green
Capital as it offers a comprehensive description of the Green Bank's capabilities and
provides context for the remainder of the Purpose section.
Add subpoints:
(a) serve and
SllppOit
the deployment of clean energy technologies in any sector, including
residential single family homes and multifamily, commercial, industrial, non-profit,
municipal governments. universities and colleges. schools, and hospitals;
(b) offer a range of financing structures, forms and techniques, such as senior loans,
subordinate loans, credit enhancements, guarantees, warehousing, securitization, and
other techniques that can both lower the cost of financing and increase private investment
in clean energy technologies;
. (c) leverage plivate investment in energy projects through tinancing mechanisms that
supp0l1, enhance, or complement private investment;
(i)
recognizing that equity investments carry more risk and may require longer term
commitment to a project, justifying compliance with strict investment guidelines
to be established by the Board of Directors;
(d) accept capital fi"om the
COllllty,
the state, the tederal government, from non-profits, from
foundations, and any other capital source that the Green Bank governance deems to be
attractive and useful;
(e) recapitalize its funds hy selling assets (loans) through private placement or other
securitization;
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DEFINITIONS
Under definitions, we propose clarifying the hierarchy of "clean energy technologies" to
"energy efficiencylrenewable energy project" to "improvements" similar to the PACE
legislation. We also added in "improvements" covered under the PACE legislation's
definitions so the two sets of definitions are more consistent. This results in a sector­
neutral set of improvements that can
be
made under the Green Bank.
Clean energy technologies
includes renewable energy sources, renewable energy projects, energy
efficiency projects, altel11ative fuels used for electricity generation, alternative fuel vehicles and
related infrastructure such as electric vehicle charging station infrastructure, and smart grid and
battelY storage.
Clean energy technologies
means energy resources and technologies that ha¥e
significant potential for commercializatioA aAd do not involve the combustion of coal, petroleum
or petroleum products, municipal solid waste, or nuclear fission.
Energy efficiency Im?/ect
means a permanent improvement made to an existing propelty that
reduces consumption of energy.
Renewable energy project
means a permanent improvement made to an existing property that
creates, converts, stores. or actively uses renewable energy.
Energy efficiency and/or renewable energy improvement
or
improvement
means any equipment,
device, or material that:
( I)
meets safety and perfonnance standards set by a nationally recognized testing
laboratory for that kind of device, if these standards are available, and
(2)
is intended to decrease energy consumption or expand use of renewable energy
sources, including:
heating, ventilation, and cooling and distribution system efficiency
modifications, inchtding:modification or replacement, such as:
(i)
replacing exist.ing equipment a burner, furnace, heat pump, or boiler, or air
conditioner with a high efficiency
modeJ~
Oi)
installing a device or retrofit to existing equipment that increase energy
efficiency and conservationto modify flue openings that iAcreases the energy
emeienc:,!' or the heating
s;stem;
(iii)
any electrical or mechanical furnace ignition system which replaces a
standing gas pilot;
(iv) any tune-up or maintenance activity that increases the operating efficiency;
(8)
a programmable thermostat:
(C)
ceiling, attic, wall, roof, foundation. or floor insulation;
(D)
whole house air sealing;
(E)
water heater tune-up, water heater insulation, pipe insulation, or change out to an
EN ERGY STAR qualified water heater;
(F)
stonn windows or doors or ENERGY STA R:qualified window or door
replacement;
(G)
caulking and weather-stripping doors and windows;
(H)
air distribution system improvements, including duct insulation and air sealing;
(A)
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(r)
any device or energy management system wh ich controls demand of app1 iances
or equipment and aides load management manually, remotely, andlor
automatically~
(J)
(K)
(L)
(M)
(N)
(0)
a measure that reduces the usage of water or increases the efficiency of water
usage;
an energy recovelY system:
electric vehicle infrastructure, such as installation of electric vehicle charging
station(s) and anv necessarv installation or upgrades to electrical wiring or
outlets;
.
commercial-scale lighting upgrades or davlighting svstem;
any measure or system that makes use of or expands a renewable source of
energy, including solar thennal and solar electric, wind turbine, biomass,
hydroelectric. geothennal electric, geothennal heat pumps, anaerobic digestion,
tidal or wave produced energy, fuel cells using renewable fuels and geothermal
direct-use; or
any other installation or modification of equipment, device, infrastructure,
structure. or other material necessary to:
(i)
install, operate, or maintain the improvement being installed; or
OJ) resolve any structural, mechanical, electrical, or other issue that directly
jeopardizes the well-being or safety of the building occupants, quality of the
indoor environment, or the durability or longevity of the structure on which
the project is being installed.
BOARD OF DIRECTORS
To strengthen the connection and accountability of the Green Bank to the County and its
goals and intent of the Green Bank, we recommend that the Directors of Environmental
Protection and Finance serve as voting members. Add that the County Executive has
authority to appoint up to three additional board members subject to Council Approval
Can strike the second sentence under
18A-47. Board of Directors (a)
and include
under
(b)
with sub-bullet (1):
(I) Montgomery County Director of Environmental Protection
(2) Montgomery County Director of Finance
WORKGROUP
As mentioned in a previous meeting, it was noted that energy service companies were
inadvertently missed in the list of required representatives. We recommend they are
explicitly listed and included.
a) The Executive must convene a Green Bank Work Group. Members of the Work Group
must include representatives from the County departments of Environmental Protection,
Finance, and Economic Development; investment and financing industry, such as
regional and national banks, property trusts, and other lending institutions or companies;
energy service companies; building owners and managers; industry trade associations,
nonprofit organizations, and utility companies.
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2-1
Testimony of the Montgomery County Sierra Club Regarding Montgomery County Bi1118:J5
June 9, 2015
President Leventhal and Council Members. My name is Michal Freedman and I
am
here
as a member of the Montgomery County Sierra Club Executive Committee representing the
more than 5,000 Sierra Club members in Montgomery County. I am here to express the Club's
support for Bi111805 establishing the Montgomery County Green Bank, and to
recommend a few amendments to the bill.
As you know, our world is facing an immense and complex challenge: the need to
establish, in the very near future, thousands of clean energy projects to transition the world's
fossil fuel economy to one that is based on clean, renewable energy. In order to accomplish this,
financing obviously is essential. Direct government investment, government grants and
subsidies, and private investment all have critical roles to play in defraying the up ::front costs of
building the new 10w::Carbon economy. But these sources may not be enough, especially since
clean energy projects face special financing challenges that conventional energy projects do not.
Thus, it is important to look for new ways in which to accomplish the fmancing that is needed.
Recently, several states, including Connecticut and Hawaii, have pioneered the concept
of creating "green banks." This entails the establishment of new institutions
to
enable
government and the private sector to combine and leverage public resources with privateCSector
funds to fund clean energy projects. These green banks are already promoting cheaper, cleaner,
and more reliable energy.
Accordingly, we in the Sierra Club are excited that Montgomery County is poised to join
the greenJJank movement. Bill 18
!J
5, if enacted and adequately funded, will be of tremendous
benefit to county residents who need help in turning to clean energy. The Sierra Club supports
the bill's statement of purposes for the new green bank, the bank's organizational structure, and
the establishment of a Green Bank Work Group to develop recommendations for implementing
the bank.
We also have several recommendations for clarifying and improving the bill.
First, we recommend that the Purpose Section of the bill, which lists the kind of projects covered,
be expanded to explicitly reference nonprofit projects. Nonprofit facilities such as childcare centers and
religious institutions, many of which are in use weekday, evenings and weekends, would stand to benefit
substantially by reducing utility costs ..
Second, we recommend broadening the definition of "energy efficiency project", which as
currently drafted, is restricted to single '..family homes. We urge deleting this restriction so that efficiency
projects encompass multi '..family housing and other projects. Several studies document how increasing
energy efficiency in multi:1amily housing offers mUltiple major benefits in terms ofreduced emissions,
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reduced energy bills for lowCincome residents (thus making housing more affordable) and healthier
environments. According to a recent NRDC Report, "Energy expenditures
per
square foot in renteo
multifamily apartnlents are 38 percent higher than in ownerwccupied single[Jamily detached homes.
Despite this, energy efficiency measures are
far
less likely to be found in multifamily apartments
compared to other housing types." This is an important area for the Bank to support
Third, while we agree that membership on the board of directors should be broad and
diverse, we suggest a few small changes in this regard. Instead of specifying that the board
include "representatives of residential or low income groups," we think it preferable to try to
include representatives of both types of groups, at least in part because the issues related to
multi[family housing often differ from those of single family home owners. We also think that
the bill should provide that efforts be made for the board to be representative of the County's
racially and ethnically diverse population.
Fourth, we
think
that the Green Bank Work Group would benefit by including at least
one representative of environmental organizations.
Lastly, we are greatly concerned by the specific inclusion of two types of renewable
energies whose status as clean, lowillarbon energy sources is in doubt. These are biomass and
methane gas captured from a landfill. Both biomass and methane gas are caroon[@ased energy
sources, unlike solar and wind.
As
recounted in the recent article in the Washington Post, biomass is a growing energy
source both here in the United States and in Europe. However, if done improperly, the use of
biomass for energy production can produce significant
harm
to the environment. Biomass, if
done in moderation, is potentially sustainable and carbon neutral but only if the amount of
regrowth balances the emissions, and only ifbiomass does not rely on unsustainable forestry and
agricultural practices. Unless very carefully managed, the harvesting ofplants and trees for
biomass operations may damage soil health or fail to assure sustainable regrowth. Biomass
projects that
grow
plants to be harvested as fuel or energy sources require individualized,
projectCbycproject, evaluations of land use, allocation of water resources, the use of any
fertilizers or other agricultural chemicals, and the proposed combustion technology.
Reliance on landfill gas to generate electricity
is
even more problematic. Landfills that
contain decomposable organic products produce a substantial volume of methane gas. Methane,
in
tum,
is essentially carbon dioxide on steroids in terms of its climate impact
In
theory, using
this methane gas
to
generate electricity could have a beneficial climate impact.
In
practice,
however, that is highly questionable.
This
is because the benefits obtained are likely greatly
outweighed by increases in uncontrolled ("fugitive") methane emissions resulting from the
landfill management methods apparently practiced at many projects that
aim
to increase revenues
by increasing and accelerating the amount of methane being produced.
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More information may be found regarding using biomass and landfill methane to
generate electricity in policy statements included on the national Sierra Club's website.
http://www.sierraclub.org/policy/energy.
For these reasons, we urge Montgomery County to be cautious in endorsing the financing
of biomass or landfill methane projects through a green bank. Specifically, we recommend that
instead of affIrmatively defining "renewable energy source[ s]" to include biomass and landfill
methane, the bill should take a middle position by neither including them nor excluding them. In
other words, these two energy sources should be omitted from the list of "renewable energy
source[s]" but would not be named (along with petroleum, nuclear, natural gas, and coal) in the
list of excluded energy sources. This would allow the Green Bank Work Group, and perhaps the
bank's board of directors thereafter, flexibility in deciding whether to use any of the bank's funds
to promote these two energy sources.
In conclusion, the Montgomery County Sierra Club fully supports the county's effort to
establish a Montgomery County Green Bank, and recommends the inclusion of the bill
amendments that I have described in my testimony today.
Thank you for allowing us to participate in this important endeavor, and we look forward
to continuing to work with the County to bring a county green bank into full operation.
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www.efficiencyfirst.org
June
1. 2015
Dear Montgomery County T&E Committee Members:
Efficiency First Maryland is a nonpartisan nonprofit trade association that represents energy
efficiency contractors in public policy discussions at the state and local levels to promote the
benefits of energy efficiency for the residential and small businesses sectors. The Maryland
Chapter includes 45 companies with over 600 employees. and we represent an emerging
industry that includes hundreds of firms in the home improvement. HVAC. and lighting
industries. About one third of our members are based in Montgomery County. and two thirds
of our members serve Montgomery County home owners.
Efficiency First Maryland strongly supports Bill
18-15,
Environmental Sustainability­
Montgomery County Green Bank, with amendment
We would like to make four comments.
1. Efficiency First Maryland would like to participate in the Green Bank Working Group.
Our members have significant experience with selling loan products directly to home
owners seeking energy efficiency upgrades. and we have ideas and insights on how to
operationalize and optimize this process. Please include our Chair. Brian Toll. in the
working group.
2. The Green Bank paradigm is based on the idea that home owners will seek out
~energy
efficiency projects." While this idea is consistent with how utility and government
program managers talk about this industry. this idea is somewhat out of sync with how
customers make buying decisions. In fact. most energy efficiency projects in Maryland
are pursued for other reasons. Enhancing indoor comfort is the most common reason.
Improving health and safety is another. Lowering energy bills is a distant third.
The Green Bank's funds are currently restricted in ways that could create significant
problems for home owners who are trying to solve real issues in an energy efficient
way. For example, Building Performance Institute standards. which are used by Home
Performance Contractors, require that every project conform to ASH RAE Standard
62.2-2013 -
Ventilation in Low Rise Buildings. These standards require the installation
1
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of health and safety measures that are not on the approved list.
We would encourage a re-writing of the loan criteria to include an allowance, such as
25% of job cost, for non-energy items. For example, a customer needs to repair a leaky
roof before insulation can be installed in their attic. Or, a customer has a back drafting
flue pipe that needs to be repaired. A third example could be a customer seeking an
indoor air quality solution for their asthmatic child. Weatherized homes are healthier
homes because they allow better control of humidity, which can prevent the growth of
molds. bacteria and dust mites. This solution requires advanced filtration and
ventilation, neither of which appears on the existing list of measures. The legislation
needs to recognize that while projects can save energy, that not every item within the
project will save energy. Yet they are essential to the goals of the customer.
It would create significant friction for companies selling solutions to be faced by projects
that are partially-eligible if customers need to secure two loans before moving forward. If
a situation exists where a second loan is required, we hope the Green Bank will develop
a cooperative agreement with Banks such that the same loan application could be used
to obtain credit for the second loan within the same timeframe, and that a seamless
process could be created so that contractors will not lose business.
3. The Green Bank legislation does not provide a work specification or any requirements
for installers. For example, the Home Performance with ENERGY STAR program
partiCipants complies with Building Performance Institute standards. Individual installers
need to be certified by the Building Performance Institute. The Department of Energy
also maintains specifications for improvements to existing homes. The legislation should
ensure that home owners are following best practices that will ensure the project is
successful and that home owners will be safe and healthy in their improved homes.
Thus, Efficiency First Maryland would oppose the use of funds for products self-installed
by home owners who do not have demonstrated expertise (certification). The Green
Bank's energy efficiency projects should include oversight to ensure compliance with
BPI or similar work specifications. BPI Goldstar contractors, which are companies
whose internal processes and work results are overseen by BPI itself, are an excellent
source of high quality, compliant work product.
4. Contractors in Maryland have had success with the Maryland Home Energy Loan
Program (MHELP) managed by the Maryland Clean Energy Center. We recommend
incorporating best practices from the MHELP program into the Green Bank where
possible.
In summary, we strongly support Bill 18-15, Montgomery County Green Bank, with
amendments.
2
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Sincerely.
Brian P. Toll
Chair, Efficiency First Maryland Chapter
President, ecobeco
brian@ecobeco.com
(240) 396-2141 x704
Josh Notes
Vice-Chair, Efficiency First Maryland Chapter
Chief Operating Officer, greeNEWit
josh@greenewit.com
James Otterbacher
Treasurer, Efficiency First Maryland Chapter
Division Manager, Energy Services Group
jameso@energysvc.com
Tony Crane
Steering, Efficiency First Maryland Chapter
Principal, Efficient Home
tonyc@efficienthomellc.com
Tim Jones
Steering, Efficiency First Maryland Chapter
Vice-President, Glory Energy Solutions
tim.jones@glorvenergysolutions.com
Rob Minnick
Steering, Efficiency First Maryland Chapter
President, Minnick's Heating and Air
rob@minnicks.net
,/
~
Chris Pfund
Steering, Efficiency First Maryland Chapter
Principal, Zerodraft Maryland
cpfund@zerodraftmd.com
3
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~
,
I
--=---=.. •
• _.
H.!
III'
~
~.
I
••
-APARTMENT AND OFFICE­
08~
BUILDING ASSOCIATION OF
METROPOLITAN WASHINGTON
WRITTEN STATEMENT OF THE APARTMENT AND OFFICE BUILDING
ASSOCIATION OF METROPOLITAN WASHINGTON
FOR THE JUNE 9, 2015 PUBLIC HEARING ON
BI8-15, Environmental Sustainability-Montgomery County Green Bank
B25-15 Economic Development-Reorganization­
Montgomery County Economic Development Corporation
B22-15 Housing Policy - Policy Implementation - Income Restricted Housing Website
B21-15 Finance - Renters' Property Tax Relief Supplement
The Apartment and Office Building Association of Metropolitan Washington (AOBA) is
a non-profit trade association representing more than 112,000 apartment units and over 30
million square feet of office space in suburban Maryland, the majority of which, including
57,204 apartment units and 24,809,066 square feet of office space, is in Montgomery County.
AOBA is pleased to submit a statement on the following bills:
(1)
B18-15, Environmental
Sustainability - Montgomery County Green Bank; (2) B25-15 Economic Development ­
Reorganization - Montgomery County Economic Development Corporation; (3) B22-15 Housing.
Policy - Policy Implementation - Income Restricted Housing Website; and (4) B21-15 Finance­
Renters' Property Tax Relief Supplement.
I.
BI8-15, ENVIRONMENTAL SUSTAINABILITY - MONTGOMERY COUNTY
GREENBANK
AOBA supports Bill 18-15 Environmental Sustainability - Montgomery County Green
Bank:. The legislation proposes the creation of a County Green Bank to promote clean energy
investment in larger commercial properties, residential, small business and municipal projects.
The Green Bank will be authorized to provide financing for clean energy technologies. Notably
the bill defines "clean energy technologies" to encompass a wide range of projects including
alternative fuel vehicles and related infrastructure such as electric vehicle charging station
infrastructure. The legislation also directs the Executive to establish a Green Bank Group,
composed of key stakeholders including building owners and managers and industry trade
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associations, tasked with examining best practices and local needs and filing a report with its
recommendations, including any proposed amendments. AOBA and its members look forward to
serving as active participants.
The possibility of a new financing mechanism represents an exciting opportunity to
impact energy use in commercial and multifamily bUildings.
1
While building owners can
implement low..cost measures to reduce their energy costs, many energy-efficiency projects
require a significant financial investment. Finding the dollars for energy-efficient building
improvements to commercial and multifamily buildings can be difficult in the best fmancial
times, which is made more difficult in a declining economy. Financing energy efficiency
projects is particularly challenging for housing providers. One must also consider that desirable
energy-efficiency upgrades for older residential buildings frequently require cost-prohibitive
solutions. The establishment of a Green Bank may provide yet another vehicle to allow building
owners to move forward with "shovel ready" high impact energy efficiency projects.
While AOBA is generally supportive of the concept before the Council, the legislative
proposal raises questions about the funding source for the costs to establish the Green Bank. The
bill is silent with regards to the funding source for monies necessary to establish the bank, but
AOBA understands that the County will utilize an approximately $20 million
one-time
contribution available from the County's recent settlement with Pepco and Exelon.
2
The
legislation, as currently drafted, proposes a self-funding mechanism by which
operating costs
will be financed by assessing fees on the bank's financing activities. While the bill proposes a
financing mechanism for operating costs, the Economic Impact Statement raises questions about
whether the County may turn to other sources to supplement the funds generated by these fees.
Specifically, the Economic Impact Statement notes that "[r]ecurring annual funding
contributions may be necessary for the long-term operation of a Green Bank in Montgomery
County." If the County does in fact intend for the program to be self-funding, then the Council
should revise the bill to explicitly state that the enactment of the proposed statutory scheme,
including all operational costs,
will not have any fmancial or economic implications beyond the
activities specified in the legislation. AOBA strongly advises, for example, against imposing a
surcharge on aU ratepayers who mayor may not benefit from Green Bank activities. Any
ongoing costs associated with the creation, operation, and activities of the Green Bank should be
recovered through the revenue generated by the lending services derived from those persons or
businesses utilizing its services to ensure that the Green Bank is truly a "self-funding" entity.
There exists a multitude of available and possibly duplicative energy fmancing programs
at both the state and local level all designed to achieve a laudable goal - providing access to
necessary financing for significant energy efficiency and renewable energy financing needs.
3
As
IAccording to the
u.s.
Green Buildings Council, buildings account for 73% of electricity consumption and 38% of the energy
use in the United States."
Green Building Facts,
U.S. Green Buildings Council, www.usgbc.orglarticles/green-building-facts.
2See
Maryland Public Service Conunission Case No. 9361, Order No. 86990, p. 54 ("Exelon shall also provide in equal
installments over 3 years, a total of$18.3 million of the CIF funding to Montgomery County to be administered by Montgomery
County or an agency designated by Montgomery County. Pepco shall cooperate with Montgomery County on the development
and implementation of energy efficiency programs for Pepco customers within Montgomery County. These programs will
include the Montgomery County Green Bank,
the Energy Coach Network, and the Expanded Weatherization Programs.")
3The economic impact statement, for example, notes that the state of Maryland may also establish a Green Bank and that
"[h]aving a State and a Montgomery County Green Bank may either serve to further stimulate energy
investment or merely
substitute resources,"
See, for example, Chapter 4- Overview ofMaryland's Existing Clean Energy Finance Programs,
Blueprint
for Bui/ding Energy Economy
in
Maryland
-
Green Bank Findings Report, (Blueprint)
December 1, 2014, Maryland Clean
2
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the Council considers creating another vehicle designed to facilitate available fmancing for
energy efficiency projects, AOBA encourages the County to consider bringing the Green Bank,
PACE and similar programs under one umbrella organization for residential and commercial
property owners to access in order to maximize resources and dollars. This entity could serve as
a "one-stop" shop for access to much-needed dollars for building energy efficiency
improvements. Consider, for example, the Connecticut Green Bank, California Alternative
Energy and Advanced Transportation Financing Authority (CAEATFA), and Florida Solar and
Energy Loan Fund (Florida SELF), all of which provide loans as part of and in addition to local
PACE programs.
4
Creating a centralized resource, with links to State programs, for access to
energy efficiency fmancing, is critical to lender, property owner and other stakeholder
participation.
Finally, AOBA recommends several amendments designed to ensure that the Green Bank
will meet its stated purpose - promoting investment in clean energy technologies. First, the
Council should amend the bill to further clarify the categories of properties eligible to submit
"energy efficiency projects." Currently, the bill defmes "energy efficiency projects" to mean a
"permanent
improvement made to an existing
single-family home."
AOBA recommends
striking the phrase "single family home" to reflect the stated legislative intent in Sec. lSA-44(a)
to create a bank that will "develop separate programs to support clean energy investment in
residential, municipal, small business and larger commercial projects."
The Council should also
strike the reference to "permanent" since the list of eligible projects
in
Sec. 18A-45 is much
more expansive and includes projects, such as caulking and weather-stripping of doors and
windows that will achieve desired energy savings but which are not "permanent." Additionally,
with finite funding to finance clean energy investments, the Council may wish to consider
providing statutory guidance to the Bank's Board of Directors on effectively prioritizing the
stated responsibilities and goals set forth in Sec. lSA-44. Such direction from the Council could
help the Green Bank maximize available dollars consistent with legislative intent in a focused
marmer.
II.
B25-15 ECONOMIC DEVELOPMENT - REORGANIZATION - MONTGOMERY
COUNTY ECONOMIC DEVELOPMENT CORPORATION
Bill
25-15
Economic Development - Reorganization - Montgomery County Economic
Development Corporation proposes to delegate some of the functions currently performed by the
Department of Economic Development to a non-profit entity designated as the Montgomery
County Economic Development Corporation ("Corporation"). The Corporation's core functions
will be funded by the County, but the proposed structure will also allow it to raise and receive
private funds, including grants.
AOBA first wants to commend the County Executive for his continued efforts to create a
more robust economic development program that will enhance the County's competitive position
Energy Center; msa,maryland,gov/megafilelmsa/speccol/sc5300/sc5339JOOO113/020000/020980/unrestricted120150433e,pdf. See
also, page I (noting
that
Maryland's current programs are insufficient
to
meet the State's multi-billion dollar efficiency and
renewable energy financing needs,"
"Table I: Green Bank Overview, Blueprint
at
p, 20
3