T&E ITEM #2
June 15,2015
Worksession
MEMORANDUM
June 11,2015
TO:
Transportation, Infrastructure, Energy and Environment Committee
Amanda Mihill, Legislative Attorney
FROM:
SUBJECT:
~
Montgomery County
Worksession:
Bill 18-15, Environmental Sustainability
Green Bank
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 ©16-28).
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;
(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 for Committee Discussion
1.
Purpose section.
Executive staff have suggested modifications to the purpose section .
in 18A-44 (©1-2, lines 4-38). According to the comments on ©17, 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;
finance investment in clean energy technologies in accordance with
~
comprehensive plan developed
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i!
to foster the growth, development. and
commercialization of renewable energy sources and related enterprises;
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provide financing for clean energy technologies;
Executive staff would then add the following at the beginning ofthe purpose section and renmnber
the remaining existing purpose clauses:
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~
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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 fmancing 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;!
accept capital from the county. the state. the federal government. from non-profits.
from foundations. and anv other capital source that the Green Bank governance
deems to
be
attractive and useful:
recapitalize its funds by selling assets (loans) through private placement or other
securitization:
Council staff does not object to these revisions. The Sierra Club recommended the purpose section
of the bill be amended to specifically include nonprofit projects (©20-22). Council staff does not
object to this and notes that the Executive's proposed paragraph (a) includes that sector.
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 (©26­
28). Council staff believes that this is more appropriately addressed by the Green Bank's Board of
Directors in setting the parameters of the Green Bank's program.
2. Dl!jinitions.
As introduced, Bill 18-15 includes definitions for clean energy technologies
(©3, lines 41-47), energy efficiency project (©3-4, lines 48-77), and renewable energy project
(©5, lines 85-89). Executive staff have proposed modifying these definitions and adding a
definition for "energy efficiency and/or renewable energy improvement". See ©17-19. Executive
staff note that the proposed definitions would more closely align with the Cornmercial PACE
legislation definitions and assert that these would be a "sector-neutral" set of improvements that
could
be
made under 18-15. Council staff does not object to these revisions.
As introduced, the definition of "energy efficiency project" encompassed improvements made to
single-family homes. The Sierra Club (©20-22) and AOBA (©26-28) recommended that the
Although Executive staff have suggested a subpoint under proposed section (c), Council staff suggests moving this
subpoint to a stand alone point between current
(f)
and (g) (02, lines 21-25).
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definition of "energy efficiency project" be expanded to include multi-family properties. The
Executive's recommended definition would include multi-family properties. AOBA also
recommended removing the word "permanent" from the definition. AOBA notes that some of the
example 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. This
definition is consistent with other definitions in the Code and staff recommends retaining the word
"permanent" .
Finally, as introduced, Bill 18-15 includes a definition of "renewable energy sources" as follows
(©5, lines 90-100):
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 gas, or coal. A renewable energy source comes from the sun or from thermal inertia
ofthe earth and minimizes the output of toxic material in the conversion of the energy and
includes:
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non-hazardous, organic biomass material;
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solar electric and solar thermal energy;
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wind energy;
ill
geothermal energy; and
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methane gas captured from
~
landfill.
The Sierra Club recommends removing (4) 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 (©21). Council staff notes that the definition in Bill 18-15 is consistent with the
definition in the recently-enacted PACE legislation. Executive staff note 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.
3. Board of 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 (©6, lines 125-129). Executive staff recommend that the Directors be
voting members and that the Executive appoint up to 3 additional board members, subject to
Council confirmation
17). Council staff concurs with this recommendation.
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
3
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• 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
representati ves ofthe County's racially and ethnically diverse population. Council staff agrees that
diversity is always an important goal, but does not recommend that amendment.
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 be
composed of 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; building owners and managers;
industry trade associations; nonprofit organizations; and utility companies(©9, lines 198-212).
Executive staff (©16), the Sierra Club (©20), and Efficiency First (©23) note that absent among
these listed members is representatives of environmental organizations or energy service
companies. While these representatives could be included without language changes, Council staff
recommends amending 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 (©24).
Council staff believes that this is more appropriately addressed by the Green Bank's Board of
Directors in setting the parameters of the Green Bank's program. Importantly, Council staff does
not see anything in the legislation that would prevent the Green Bank's Board of Directors from
including this in the loan criteria.
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 (©24). Council staff believes that
this, too, is more appropriately addressed by the Green Bank's Board of Directors and not in Bill
18-15.
This packet contains:
Bill 18-15
Legislative Request Report
Fiscal and Economic Impact statement
Testimony and Correspondence
Executive testimony
DEP/Finance additional comments
Sierra Club
Efficiency First
Apartment and Office Building Association of
Metropolitan Washington
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• 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 of the County's racially and ethnically diverse population. Council staff agrees that
diversity is always an important goal, but does not recommend that amendment.
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 be
composed of 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; building owners and managers;
industry trade associations; nonprofit organizations; and utility companies(©9, lines 198-212).
Executive staff (©16), the Sierra Club (©20), and Efficiency First (©23) note that absent among
these listed members is representatives of environmental organizations or energy service
companies. While these representatives could be included without language changes, Council staff
recommends amending 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% of job cost (©24).
Council staff believes that this is more appropriately addressed by the Green Bank's Board of
Directors in setting the parameters of the Green Bank's program. Importantly, Council staff does
not see anything in the legislation that would prevent the Green Bank's Board of Directors from
including this in the loan criteria.
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 (©24). Council staff believes that
this, too, is more appropriately addressed by the Green Bank's Board of Directors and not in Bill
18-15.
This packet contains:
Bill 18-15
1
10
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
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Bill No.
18-15
Concerning: Environmental Sustainabilitv
- Montgomery County Green Bank
Revised:
4/16/2015
Draft No.
_3_
Introduced:
April 21! 2015
Enacted:
October 21 2015
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ __
Sunset Date:
---,N,-",o=n"",e_~
_ _ __
Ch. _ _, Laws of Mont. Co. _ __
J
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 function 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-50
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[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 unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No. 18-15
1
Sec.
1.
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.
The County Government should support the formation of
~
2
3
4
5
Montgomery
6
7
8
County Green Bank to promote the investment in clean energy technologies in the
County. The Green Bank must be able to:
W
@
develop separate programs to support clean energy investment in
residential, municipal, small business, and larger commercial projects;
fmance investment in clean energy technologies in accordance with
~
9
10
11
12
comprehensive plan developed
.by
it to foster the
growth,
development,
and commercialization of renewable energy sources and related
enterprises;
13
14
15
16
17
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@
stimulate the demand for clean energy and the deployment of clean
energy technologies that serve end-use customers;
before making an 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 of fmancial
support;
18
19
20
21
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ill
(g)
,provide financing for clean energy technologies;
provide
.by
resolution for the issuance of negotiable revenue bonds to
finance clean energy technologies;
assess reasonable fees on its financing activities to cover its reasonable
costs and expenses, as determined
.by
the Board of Directors appointed
under Section 18A-47;
22
23
24
25
26
au
make information regarding rates, terms, and conditions for all of its
financing support transactions available to the public for inspection,
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BILL
No. 18-15
28
including fonnal annual reviews
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both g private auditor and the
Director of Finance, and provide details to the public on the Internet
unless such disclosure includes g trade secret, confidential commercial
infonnation, or confidential financial information;
29
30
31
32
33
34
35
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provide leadership on environmental issues at both the County and State
levels;
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
36
37
38
39
00
undertake any other activities deemed
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the Board of Directors to
support the mission ofthe Green Bank.
18A-45. Definitions.
In this Article, the following words have the meanings indicated:
Clean energy technologies
means energy resources and emerging technologies
40
41
42
43
44
45
that have significant potential for commercialization and do not involve the
combustion of coal, 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
~
Energy e(ficiencyproject
means g pennanent improvement made to an existing
46
47
48
49
50
51
52
53
54
single-family home that:
ill
reduces the consumption of energy in the home, including:
(A)
caulking and weatherstripping doors and windows;
heating and cooling system efficiency modifications, including:
(ID
ill
replacing g burner, furnace, heat pump, or boiler, or air
conditioner with g
high
efficiency model;
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No.
18-15
55
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(ii)
installing a device to modify flue openings that increases the
energy efficiency or the heating system;
57
(iii)
any electrical or mechanical furnace ignition system which
replaces
~
standing gas pilot; and
58
59
(iv)
any tune-up that increases the operating efficiency;
60
61
(Q
(D)
~
programmable thermostat;
ceiling, attic, wall, or floor insulation;
whole house air sealing;
water heater tune-up, water heater insulation,
~
62
63
64
ill)
(E)
insulation, or
change out to an ENERGY STAR qualified water heater;
(G)
storm windows or doors or ENERGY STAR qualified window or
door replacement;
65
66
67
an
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air distribution system improvements, including duct insulation
and air sealing;
any device which controls demand of appliances and aids load
management; and
68
69
70
71
72
73
ill
any other conservation device, renewable energy technology, and
specific home improvement that reduces the consumption of
energy in the home; and
74
ill
meets safety and performance standards set
Qy
~
nationally recognized
75
76
testing laboratory for that kind of device, ifthese standards are available.
Energy efJiciencvproject
does not include
~
standard household appliance, such
77
78
as
~
washing machine or clothes dryer.
Green Bank
means the Green Bank that the County has designated to promote
79
the investment in clean energy technologies and provide financing for clean
energy technologies, including renewable energy and energy efficiency
projects.
80
81
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No. 18-15
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Maryland Open Meetings Act
means the Maryland
~
Meetings Act, codified
at Sections 3-101 through 3-501 of the General Provisions Article of the
Maryland Code.
Renewable energy project
means
~
project that:
85
86
87
88
89
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
~
nationally recognized
testing laboratory for that kind of device, ifthese standards are available.
Renewable energy source
means
~
90
91
92
93
94
95
96
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
of toxic material in the conversion ofthe energy and includes:
97
98
99
100
101
102
103
104
105
106
107
108
ill
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ill
ill
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non-hazardous, organic biomass material;
solar electric and solar thermal energy;
wind energy;
geothermal energy; and
methane gas captured from
f!
landfill.
18A-46. Designation.
.cru
The County Council must designate,
Qy
resolution approved
Qy
the
County Executive,
~
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
®
ih
the Council may readopt the resolution with at least
Qaffirmative
votes.
ill
Except as provided in (b)(2), any designation under this Section
expires at the end of the fifth full fiscal year after the resolution is
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No. 18-15
109
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adopted unless the Council extends the designation
l?y
adopting
another resolution under this Section.
111
112
113
114
115
116
ill
Ifthe Council President does not notify the Chair ofthe designated
Bank's Board ofDirectors, 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.
!£l
The Council at any time may suspend or revoke the designation of
~
corporation as the County's Green Bank
l?y
resolution, adopted after at
least
12
days public notice, that is approved
l?y
the Executive,
~
if the
Executive disapproves the resolution within 10 days after receiving
it.
is
readopted
l?y
~
vote of at least
Q
Councilmembers.
117
118
119
120
121
122
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To continue to qualify as the County's Green Bank, !! corporation's
articles of incorporation and bylaws must comply with all requirements
ofthis Article.
123
124
18A-47. Board of Directors.
125
126
127
W
To qualify as the County's Green Bank,
~
corporation's Board of
Directors must have no more than
11
voting members. The 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.
128
129
130
131
132
133
134
135
{Q)
Each voting member should be!! resident of the County. The members
ofthe Board of Directors should include:
ill
ill
ill
ill
representatives ofresidential or low-income groups;
representatives ofenvironmental organizations;
representatives of business organizations;
persons with experience in investment fund management;
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No.
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144
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152
153
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156
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162
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persons with banking and lending experience;
persons with experience in the fmance or deployment ofrenewable
energy; and
m
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@
persons with experience m research and development or
manufacturing of clean energy.
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 defming and regulating
conflicts of interest
Qy
Board members and Bank staff.
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 ofthat advocacy.
~
lobbyist under Article V of Chapter 19A
ill
The Board must direct the program, management, and finances of the
corporation.
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
ili)
~
tax-exempt nonprofit
corporation;
not an instrumentality ofthe 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 of incorporation, necessary to govern and manage
the Bank. The Green Bank may exercise all powers and is subject to all
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No.
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requirements under the Financial Institutions Article of the 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 !!
~
of each 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 ofthe 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 perform the activities listed in Section 18A-44.
(hl.
The Green Bank's work program may include !! plan for sponsorship of
private investment, marketing, and advocacy initiatives.
ill
@
The Board must meet with the Executive and the Council at least semi­
annually.
The Department of Environmental Protection should, if the Board of
Directors requests, provide administrative support for the Green Bank,
including contracts, grants, or services in kind, subject to appropriation.
ill
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
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No.
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205
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207
208
209
210
211
212
213
ill
earnings and interest derived from ffiancing 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.
18A-50. Report
The Board of Directors must report annually on the activities and ffiances 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 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.
(b)
The Work Group must:
(1 )
review the application of Chapter 18A, Article 7, as added by
Section 1 of this 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.
F:\lAW\BILLS\1518
Green
Banks\BiII 3.Docx
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LEGISLATIVE REQUEST REPORT
Bill 18-15
Environmental Sustainability
-
Montgomery County Green Bank
DESCRIPTION:
BillI8-IS
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 fimction as
the Green Bank; defme the nature and powers of the Green Bank;
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
generally amend the environmental sustainability law
PROBLEM:
Investing in clean energy technologies can be a cost-effective way to
reduce greenhouse gas emissions. However, the lack of accessible
fmancing 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.
Amanda Mihill, Legislative Attorney, 240-777-7815
To be researched.
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITIDN
MUNICIPALITIES:
PENALTIES:
Nt
A
®
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ROCKVIllE, MARYLAND
MEMORANDUM
May 11,2015
TO:
FROM:
SUBJECT:
George Leventhal; President, County Council
Jennifer A.
Hughes, Director, Office
OfM~anment
and
~aget
11M;
Joseph
F.
Beach, Director. Department of
e
~~-/
FEfS
for
Bill 18-15, Environmental Sustainability - Montgomery County Green
Bank
Please find attached the fiscal and economic impact statements for the above­
referenced
legislation.
JAH:fz
cc; Bonnie Kirkland, AssistlUlt Chief Administrative Officer
Lisa Austin. Offices oftbe County Executive
Joy Nurmi, Special Assistant
to
the County Executive
Patrick Lacefield, Director, Public lnfonnation Office
Joseph F. Beach, Director, Department of Finance
David Platt, Department ofFlnance
Jed Millard, Office of Management and Budget
Alex Espinosa, Office ofManagement and
Blldget
Naeem Mia, Office of Management and Budget
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Fiscal Impact Statement
Bill 18-15,
Environmental Sustainability-Montgomery County Green
Bank
1. Legislative
Summary:
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 corporation to function as the Green Bank;
3)
define the nature and powers of the Green
Bank; 4) establish
a
Green Bank Work Group
to
review
the
application ofChapter 18A, Article 7
and make recommendations regarding the implementation ofthe Montgomery County Green
Bank;
and
5)
generally amend the environmental sustainability
law.
2. An estimate of changes in County revenues and expenditures regardless of whether the
revenues or expenditures are assnmed in the recommended or approved budget. Includes
source of information, assumptions, and methodologies used.
The Department of Finance estimates that
in
the fIrSt year development
pha~
ofthe
establishment
of
a Montgomery County Green Bank contractual bond counsel and professional
financial advisor services would
be
required. These services would
be
required to review,
comment, and participate
with
the work group created
by
the legislation to develop final plans for
establishment of a Green Bank.
The Department estimates a total of $25,000 for 125 hours ofcontracted bond counsel services at
$200 per hour. An additional $50,000 would
be
required for nearly
22S
hours ofcontracted
financial advisor services. The Department estimates that these services would
be
required only in
the first year of development of a Montgomery County Green Bank and will not incur any
additional 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 requests, provide administrative support for the Green Bank, including contracts,
grants, or services in kind, subject to appropriation." At this time, it is not possible to detennine
the fiscaJ impact for the Department of Environmental Protection as it is unknown if the Board of
Directors will request administrative support or what volume of administrative support would
be
requested.
The legislation also states that funding sources for the Green Bank may include federal, State, or
County funds provided to
il If
later decisions are made to provide County funds
to
the Green
Bank in any given fiscal year, that amount would constitute
an
additional fiscal impact. No
additional revenues are expected as a result of Bill 18-15.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
In
the
first year of development of a Montgomery County
C:rrccn Bank,
the Department of
Finance would require $75,000 in contracted financial advisor and bond counsel services. There
are
110
ongoing costs beyond the first year for the Department ofFinance.
As
stated above,
a
projection of
costs
over
a
six-year period for the Department of Environmental
Protection
is unable
to
be detennined at this time.
4. An
actuarial analysis through the entire
amortization
period
for
each bill that would
affect
retiree Ilcnsion or group insurance costs.
Not applicable.
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5. An estimate of expenditures related to County's information technology
(IT)
syStems,
including Enterprise Resonrce Planning (ERP)
systems.
Not applicable.
6. Later actions that may affect future revenue aud expenditures if the bill anthorizes future
spending.
The Board of Directors may request
that the
Department of Environmental ProteCtion provide
administrative support. This could potentially require additional resources
tor
the Department of
Environmental Protection; however,
it
is unkno\\n at this time ifsupport would
be
requested or at
what level. The BiU also allows for County funds to
be
provided to the Green Bank. If later
decisions are made to provide County funds to the Green Bank, this would constitute an
additional fiscal impact.
7.
An estimate
or
the staff
time
needed to
implement
the bill.
The Department of Finance would require 125 hours ofcontracted bond counsel and 225 hours of
contracted financial advisor services. It is unknown at this time what level of administrative
support may need to be provided by the Department ofEnvironmental Protection because the
Board ofDirectors ofthe Green Bank would have to request such support.
8.
An explanation of how the addition of new staff rcsponsibiHtie$ would affect other duties.
At
this
time, there
will
be no impact to current staff duties and responsibilities as a result of
approval
ofBm
18~
15. However. if the Board of Directors requests administrative support from
the Department of Environmental Protection. additiona1 staff resources may
be
r~qujred
ifthe
Department is not able to provide the level of requested support within
its
approved pemmnel
complement.
9. An
estimate of (osts
when an
additional appropriation
is
needed.
Not applicable.
10. A des(ription of any variable that could
affect
revenue and
cost
csti,mates.
See #6 above.
t
1.
Ranges of
revenue or expenditures that are uncertain or difficult
to project.
It is difficult to determine the cost of additional administrative support
that
may be provided
by
the Department of Environmental Protection. Additionally, the amount of County 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
IISCal
impact.
why
that
is
the case.
Not applicable.
13.
Other fiscal impacts or comments.
Not appJ icable.
14. The .following contributed to and concurred with this analysis:
Joe Beach, Rob Hagedoom, and Mary Casciotti: Department of Finance
Jedediah Millard: Office of Management and Budget
/'
Date
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EeoDomic Impact Statement
Bill18~15,
Enviromnental
SUitainability-Mol1tgomery
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 corporation to function as
the
GreeJ1.Bank;
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 ofthe Montgomery County Green Bank; and. 5) generally amend the
.
environmental
sustainability
law.
1. The sources
of
information, assumptions, and methodologies
us~d.
.
The sources of information include the Coalition for Green
Capital~
Maryland
Commission for Clean Energy(MCEC). and the Connecticut Green Bank.
2.
A
description
of
ally
variable that could affect the
eeononIie impad estimates.
Based on the experience
in
the State
of
COllnecticUt,
the
Green
Bank was able to
increaSe
the amount
ofprlvate contributions $10 for every $1 of
Green
Bank funding.
Also
according to 2013
~
Connecticut's
Green
Bank is credited
with
$220 million
being
invested in renewable energy, the creation of 1,200 jobs
t
and a reduction of more than
250,000 tons ofgreenhouse gas emissions.
The variable that could
most
affect the economic impact estimate is the amount of annual
investment capital available to
capitalize
the Green Bank. The success ofthe CotlJleCticut
Green Bank can be seen as attributable tothe approximately $40.0 miUion ofannual .
funding,
It
is unclear
if
the Montgomery County Green
Bank.
will have dedicate4 annual
funding. The County Executive has requested approximately a $20.0 million
dir~t
one­
time contribution from the Pepco-Exelon settlement specifically for establishing
a
Green
Bank. Recurring annual
funding
contributions may be necessary for the successful long..
term 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
organi2:atioh
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
t
it
is unknown what
the
economic impact would
be
ofhaving 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 availability 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 18-15,
Environmental
Sustainabi1ity~Montgotnery
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 defmitive estimate ofthe economic impact
of
this
proposed
legislation
is
possible at Ibis time.
3. The Bill's positive or negative effeet,
if
aDY
on
employment,
spending.
saving.
investment,
incomes, and
property
values
in
the
COUDty.
It
is
unknown
if
the County would
be
able
to
rep1ic~.tethe
level of
private
investinent
that
the
Connecticut Green Bank
has
achieved. However,
it
is generally anticipated
that
a
Green Bank will
~ve
a positive economic benefit
to
the
County on einployment.
investments,
and
property values. IfMontgomery County receives $20.0 million from
the
Pepco~Exelon
settlement and could achieve the 10 to 1ratio
of
investment returns
that
ConnecticUt has achieved,
it
would
mean
that the $20
million
initial
:fundi.ng
could
provide 5200
million ofenergy
savings
investment
in
Montgomery County.
The specific
details
ofthe planned Green Bank program as well as
the
proposed level of
one~time
and
annual funding would
be
needed
in
order to estimate
the
true economic
impact
ofa Green
Bank
for Montgomery County.
4. H
a
BiD
is
likely
tobave
no eeonomic
impact,
why
is
that
the ease?
See
response 3,
5. The
following e<)ntributed to or concurred
with
this analysis.: David Platt,
Mary
Casciotti and Rob
Hagedoo~
Finance.
Date
Department ofFinance
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 ExelonIPHI 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 fmancing 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
slJppOIi
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
10811S,
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 private investment in enerf,'Y projects through financing mechanisms that
support, enhance. or complement pdvate investment;
(i)
recognizing that equity investments
CatTY
more risk and may require longer tenn
commitment to a project,justifying compliance with strict investment guidelines
to be established by the Board of Directors;
(d) 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;
(e) recapitalize its funds by 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, altemative fuels used tor electricity generation, altemative 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
htwe
significant potentia] for
commerciali~tiofl
and do not involve the combustion of coal, petroleum
or petroleum products, municipal solid waste, or nuclear fission.
Energy efficiency project
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 rene11!(lble 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 ofrenewable energy
sources, including:
heating, ventilation, and cooling and distribution system efficiency
modifieations, including:modification or replacement, such as:
(i)
replacing existing equipment a burner, furnace, heat pump, or boiler, or air
conditiofler with a high efficiency model;
(ii)
installing a device or retrofit to existing equipment that increase energy
efficiency and conservationto
modifY
flue openings that increases the energy
effie.i.ency or the heating system;
(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;
(B)
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
ENERGY STAR qualified water heater;
(F)
stolln windows or doors or ENERGY STAR: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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(I)
any device or energy management system which controls demand of appliances
or equipment and aides load management manually, remotely. and/or
automatically~
(1)
a measure that reduces the usage of water or increases the efficiency of water
an energy recovelY svstem;
electric vehicle infrastructure, such as installation of electric vehicle charging
station(s) and any necessmy installation or upgrades to electrical wiring or
outlets;
commercial-scale lighting upgrades or davlighting system;
any measure or system that makes lise 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 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
Oi) resolve any structural, mechanical, electrical, or other issue that directly
jeopardizes the welt-being or safety ofthe building occupants, quality of the
indoor environment or the durability or longevity of the structure on which
the project is being installed.
(K)
(L)
(M)
eN)
(0)
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):
(1) 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 ofthe Work Group
must include representatives from the County depaliments of Environmental Protection,
Finance, and Economic Development; investment and tinancing 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 Bill
18iJ5
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 Bill
18iJ5
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 []j'ront costs of
building the new 10wCCarbon 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 greenlDank movement Bill
18]
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 defmition of "energy efficiency project", which as
currently drafted, is restricted to single Diarnily homes. We urge deleting this restriction so that efficiency
projects encompass multi iJamily housing and other projects. Several studies document how increasing
energy efficiency in multiiJarnily housing offers multiple major benefits in terms of reduced emissions,
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reduced energy bills for Iow!Jncome residents (thus making housing more affordable) and healthier
environments. According to a recent NRDC Report, "'Energy expenditures per square foot
in
rented
multifamily apa.rtnlents are 38 percent higher than
in
owner [Occupied singlelJfamily 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
multiCfamily 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 ofenvironmental organizations.
Lastly, we are greatly concerned by the specific inclusion oftwo types ofrenewable
energies whose status as clean, 10wCCarbon energy sources is in doubt. These are biomass and
methane gas captured from a landfill. Both biomass and methane gas are carbonCDased 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.,
projectCDy[project, evaluations ofland 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
turn,
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 Montgomety County to be cautious in endorsing the financing
of biomass or landfill methane projects through a green bank. Specifically, we recommend that
instead of affmnatively 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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~
Efficiency-First
Maryland
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 ASHRAE 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.
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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
iameso@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@gloryenergysolutions.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
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- APARTMENT AND OFFICE­
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
DIS-15, Environmental Sustainability-Montgomery County Green Dank
D25-15 Economic Development-Reorganization­
Montgomery County Economic Development Corporation
D22-15 Housing Policy - Policy Implementation - Income Restricted Housing Website
D21-15 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) BI8-15, 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.
BIS-I5, 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.
l
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 tum 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 financial or economic implications beyond the
activities specified in the legislation. AOBA strongly advises, for example, against imposing a
surcharge on all 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 fmancing needs.
3
As
'According 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.orgfarticles/green-building-facts.
2See
Maryland Public Service Commission Case No. 9361, Order No. 86990, p. 54 ("Exelon shall also provide
in
equal
installments over 3 years, a total ofSl8.3 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
substitme resources."
See, for example, Chapter 4- Overview ofMaryland's Existing Clean Energy Finance Programs.
Blueprint
for Building Energy Economy in Maryland
-
Green Bank Findings Report, (Blueprint)
December I, 2014, Maryland Clean
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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 (CAEATF A), 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 financing, 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 defines "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. lSA-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. ISA-44. Such direction from the Council could
help the Green Bank maximize available dollars consistent with legislative intent in a focused
manner.
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.maryiand.gov/megafile/msalspeccol/sc5300/sc53391000113/0200001020980/unrestricted/20150433e.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
J:
Green Bank Overview, Blueprint at p. 20
3