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Stillborn—Ideological clash puts energy efficiency program’s survival in doubt

by Jordan Green

Dan Curry, the city of Greensboro’s community sustainability manager, stood before a capacity audience of nonprofit leaders, real estate investors and government officials at the Emerald Event Center in February and held up a can of foam insulation.

“I feel really pregnant here,” he said. “And I’m ready to deliver it. And the community is ready to deliver it.” It had been almost nine months since the city signed a contract with the federal government to receive a $5 million grant from the US Department of Energy to provide energy-efficiency upgrades to buildings. It had been more than three months since the Greensboro City Council approved the grant after sending staff back twice to pull together answers to satisfy their skepticism. Curry pledged that the city would retrofit 3,000 buildings over the next 24 months, resulting in more than $1 million in total energy savings for residents and business owners. “So, we have a baby in the delivery room; what can you do right now to help push?” Curry remarked, as a challenge to an audience that didn’t really need to be sold on the idea. “The successful delivery here is health and comfort, primarily. We create jobs. And we save everybody money.” In fact, the birth of what staff named the Energy Efficiency as a Pathway to Community Health and Wealth Program in its application to the federal government has been anything but easy. With financing and outreach components still not in place staff has rolled out an “early adopters” rebate program that has found few takers. Implementation is looking more like an underweight birth with low expectations for survival than a healthy program. Two weeks after Curry’s “pregnant” speech, the council voted down a contract to a local advertising firm that was intended to help spread the word about the program, and directed staff to put a financing plan in place first. From the start the grant program has been bedeviled by clashing imperatives between the conservative-leaning city council on one side and the Obama administration and the local nonprofit sector on the other, with city staff attempting to navigate the treacherous gulf between. The award announced by Vice President Joe Biden in April 2010 was premised on a neighborhood-based approach with a targeted area in east Greensboro that focused on aging housing stock at high risk of foreclosure. Under pressure from council, staff abandoned the neighborhood approach, and opened the program up to property owners across the city. City staff is proposing a redesign of the program that includes financial leveraging of commercial projects and some direct grants to retrofit low- and moderate-income households. Staff has identified three potential lending partners, and will likely see authority from the council to execute agreements to jumpstart the program. Early this week, senior city staff were leaning towards pulling a request for approval from council for a program redesign after learning that a changes made last fall to the geographic scope of the city’s program was not in compliance with federal guidelines. Last October, Curry received an e-mail from Lani Mcrae, an account manager with the Department of Energy’s BetterBuildings program stating, “The location should not be a problem at all, assuming you are still within the boundaries of Greensboro.” Based on that assurance, both Curry and Assistant City Manager Denise Turner told council members that the feds had approved expanding eligibility to participate in the program to property owners across the city. On May 13, Curry received an e-mail from project officer Steve Dunn stated, “The geographic scope of Greensboro’s project, as awarded, needs to adhere to the east Greensboro neighborhoods that Greensboro identified in the [statement of project objectives]. I understand the city is interested in expanding the geographic scope citywide. The approved scope, however, is intended to provide targeted services to neighborhoods in east Greensboro, and therefore this change in geographic scope is not allowable under your approved assistance agreement.” On Sunday afternoon, about 85 residents gathered at St. James Presbyterian Church in southeast Greensboro for a teach-in led by the Rev. Nelson Johnson and Joyce Johnson of the Beloved Community Center, along with Bob Powell, an assistant professor of engineering at NC A&T University. Chanting, “The ball is in our court,” the residents resolved to go to council and demand that the federal funds be returned to their original purpose.

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About 85 people gathered Sunday afternoon at St. James Presbyterian Church to rally support for returning the grant to east Greensboro. They would have likely been heartened to know what city officials had been discussing only two days earlier. “Following city council action on Tuesday and assuming we get the go-ahead, we will need to prepare a more detailed request to DOE for an award modification,” Curry wrote in an e-mail to Turner. “One approach would be to select a specific outreach provider to conduct the outreach and delivery of projects in east Greensboro (and maybe even prioritize that as the pilot) and another provider or other approaches in the rest of the city. That would work well for the group we met with yesterday but may not be easy to get approved by city council.” In the midst of all the confusion, frustrated progress and reversals, Curry, the lead city employee on the project, is retiring at the end of the month. Progress in implementation has varied among the 25 initial recipients of the federal energy efficiency grant. In Austin, Texas, which received the grant through its municipal utility, 564 homes were retrofitted through $675,000 in grant money leveraged into $4.4 million in private investment in the last quarter of 2010. The utility was able to quickly assemble a list of 47 contractors by engaging air-conditioning servicers, who typically see their work slow down in the winter months. In Seattle, no homes have been retrofitted, but about a hundred are in the pipeline. Danielle Byrnett, the program manager for the grant with the Department of Energy, said about 1,800 buildings have been retrofitted across the country, and she expects that when the numbers come in for the first quarter of 2011, they will show a significant ramp-up. In Greensboro, $127,000 had been spent out of the $5 million grant by the end of March, and not a single building had been retrofitted through the program. The city has received a couple applications for its “early adopter” program, which pays back a 20 percent rebate if the property owners can arrange their own financing. Both Curry and Byrnett acknowledge the Greensboro program is behind schedule. Under the original application, the city proposed to have a community education and outreach program in place, along with job training by the time of the one-year mark, which falls on May 23. That hasn’t happened. The city was also supposed to have 600 residential and commercial buildings retrofitted. Community organizers were expected to have been trained. Local contractors would have been approved. Ten thousand personal visits to homes and businesses would have been conducted. Under the original proposal, the city was to retrofit 3,600 buildings through the federal funding. Last November, the feds revised the target to 2,182 buildings. “When Greensboro was approved for this grant, we had the national reputation of having just about the best program in the country, one that everyone looked to as a model,” said Beth McKee-Huger, executive director of the Greensboro Housing Coalition. “And now we have no program moving ahead at all. And the clock is ticking with the Department of Energy to meet the deadline for the number of houses we need to weatherize. “As far as I can tell we’re way behind the benchmark,” she continued. “The council has not allowed this to move ahead. The community desperately needs this.” Much of what Department of Energy officials initially liked about the Greensboro grant application, as reflected by a list of “innovative approaches” posted on the agency website, was its engagement of community partners and geographic focus: “outreach through the religious community”; “strong integration of energy-efficiency and healthy homes due to high asthma rate in targeted neighborhoods”; “outreach will include links to refinancing through Self-Help Credit Union due to high foreclosure risk in area”; and “audits guided by Center for Energy Research and Technology” at NC A&T University. The life of the three-year grant so far has roughly followed the tenure of Mayor Bill Knight, and its fate has reflected the shift in political priorities after former Mayor Yvonne Johnson lost her reelection bid in November 2009 and a conservative faction consolidated control of the council. The city submitted its application in December 2009, the same month Knight took the oath of office. The language in the application doesn’t mince words in its reflection of staff’s intention to address longstanding inequalities. “We will focus on those communities that are the most inefficient users of energy and which tend to be low-income and minority communities,” the application promised. The original target area married east Greensboro with part of downtown, covering a compact swath east of Elm Street to the edge of the city, bounded by Cone Boulevard on the north and Interstate 40 to the south. The application pledged that the grant would “build an infrastructure and culture of democracy and empowerment that will transcend the life of the Recovery Act. And it will reduce the tension and conflict between various quarters of our community based on actual as well as perceived racial and other social inequities.” Backing for the grant came from a broad array of private and nonprofit players. The Department of Energy received support letters from the Beloved Community Center and the Greensboro Chamber of Commerce, from the Greensboro Community Sustainability Council and Duke Energy, from Holy Trinity Episcopal Church’s environmental stewardship commission and the Center for Research and Technology at A&T. “The grant was built around a concept of community organizing and community building,” the Rev. Nelson Johnson, said. “It was not only an opportunity to make homes and buildings more energy efficient, but it was also an opportunity to build infrastructure in communities… to recruit and train young people and employ them in their communities.” The outreach component of the grant received a test run before the award was even announced. Young people from Ignite Greensboro, Face to Face, the Beloved Community Center, A&T, UNCG and other colleges participated in a project called Let’s Raise A Million on the Martin Luther King Jr. Day of Service in 2010. They canvassed the East White Oak neighborhood and replaced incandescent light bulbs with the more energy-efficient fluorescents. The city also leant staff resources and moral support, with Assistant City Manager Denise Turner speaking at the event. The following year, the students repeated the performance in the Warnersville neighborhood. The mayor, for one, turned out to be ambivalent about the mix of groups that helped draw up the grant application and that endorsed it. “I started reading the grant application,” Knight said from the dais, before casting one of three dissenting votes against the grant last November. “There were some endorsers to that application; the mayor, for whatever reason, was not one of the endorsers. I don’t think I was asked to. But I have some concern about some of the parties endorsing that grant. I’ve been here almost a year now, and I’ve seen some confrontations, some disruptions. I’ve seen it in years gone by. And I’ve seen some names of individuals or organizations. I would hope that they would not be a part of this program.” Knight did not explicitly name the individuals or groups that he held reservations about, but Councilman Perkins said that in that meeting and in work sessions when the subject came up there was never any doubt about the object of the mayor’s distaste. “One of the problems is that individuals were concerned about the genesis of the grant,” Perkins said. “Frankly, it was Nelson Johnson’s involvement, and they wanted to make sure he didn’t get a piece.” Knight acknowledged grant supporters’ desire to help poor people. “By any stretch of the imagination, that’s where I came from,” the mayor said. “I grew up in east Greensboro in a 975-square foot home, and I know what you’re talking about.” He continued with a story about his father being approached by the city to take out a loan to make the family house on Mayfair Avenue energy efficient. Knight said his father complained about the loan payments until the day he died, and the promised benefits of energy savings did not materialize. “Fast-forward to today: I worry about our national debt,” he added. “At the local level we lose sight of the fact that we’re taking money down on an overdrawn credit card. I have concerns about that.” Calls to Knight requesting comment for this story were not returned. The two other dissenting votes came from at-large Councilman Danny Thompson and District 5 Councilwoman Trudy Wade. The vote was scheduled for a week after Election Day, in which Republican candidates with a limited-government philosophy swept state gubernatorial and legislative races across the nation. “It’s not like Washington DC had $5 million that they found under the seat cushions,” Thompson said. “It’s borrowed money. It’s printed money that we don’t have. And we’re continuing to establish this. And if I’ve learned anything over the past week, I don’t think America and I don’t think most citizens in Greensboro are up for continuing to borrow money to go and tell people to continue to take out loans to better their homes.” Perkins, who plans to challenge Knight for mayor in this year’s municipal election, because if we encourage that, that’s how we got into the problems we’re in now in the economy.” One of the requirements of the grant is that the recipients leverage the federal funds with a 5-to-1 match of private capital so that the impact of the grant will outlive the program. To address the council’s concern about the federal funds not reaching the intended population, staff is proposing to shift most of the leveraging burden to large commercial projects to reduce the residential leverage requirement to about 2 to 1. As an example, Moses Cone hospital would leverage private capital to finance retrofiting at a ratio of 19 to 1. Meanwhile, the grant would pay for up to $2,000 in basic energy upgrades at no cost to 445 low- and moderate-income homeowners and financing at attractive interest rates for more expensive upgrades. Danielle Byrnett with the Department of Energy said that the agency provided informal feedback on a number of financing options to city staff, but said she was not familiar with which of those options staff plans to present to council on Tuesday. While three conservative council members have raised the strongest objections to the grant, the two council members who represent east Greensboro districts expressed similar concerns early in the process. Many of the energy-efficiency programs funded by the Department of Energy around the country, including the successful one in Austin, have used the grant to create a loan-loss reserve fund. The city of Greensboro is proposing to use $645,000 from the grant to set up loan-loss reserve accounts, with an additional $127,500 set aside to increase funding for lenders that are successful in making loans. Byrnett said the typical default rate for energy-efficiency loans ranges from 1 to 3 percent. With that in mind, a loan-loss reserve fund might include public funding to compensate for the loss of 20 percent of the total loan portfolio to build confidence among lenders. With a loan-loss reserve fund in place, borrowers can take out loans without putting their homes up as collateral and risking foreclosure. “The basic concept is that the loan payments the property owners will take out — those payments will be no more than the cost of savings they’re achieving in their properties,” Curry told the council last year. “So, in effect, the net cost to the property owner will balance off against the savings they get in the utility bill.” The city would not be financially liable for the loans, Curry added. Based on similar programs across the country, interest rates for the loans could be expected to be in the range of 5 to 7 percent for all property owners, with a 3 to 5 percent arrangement for low- and moderate-income owners.’ Perkins said the current economic environment has complicated efforts to arrange financing for the program, but insisted a portion of the blame has to be shouldered by the council. “If the council, frankly, let [staff] alone and let them do their job, we would be further along,” he said. “We got involved from a philosophical and political standpoint. Staff is scared to breathe because of what council might do…. The micromanagement is slowing things down.” Perkins and Mayor Pro Tem Nancy Vaughan met recently with Beth McKee-Huger and Willena Cannon from the Greensboro Housing Coalition and with the Rev. Nelson Johnson. With the Greensboro Housing Coalition and the Beloved Community Center in the lead, an array of community groups are proposing that the city issue a Request For Proposals to select an organization to administer the east Greensboro portion of the grant. The successful bidder would be responsible for outreach to property owners, assisting them with choosing the loan arrangement best suited to their individual circumstances and providing quality assurance. The contracting organization would also be responsible for recruiting workers, getting them enrolled in training programs and placing them in jobs. The organization would be paid by the city according to how many buildings it successfully retrofitted and how many jobs were created. “The work that has not been done is organizing the neighborhoods to receive and benefit from this,” Johnson said. “It’s a three-year grant and we’ve already wasted a year. After awhile, if you spend the money, you have to spend it quickly and spend it with who’s ready. And who’s ready is who’s usually ready. And who’s not ready is who’s usually not ready. Whatever the intent, that’s structural racism.” Perkins indicated he is receptive to the community groups’ request. And Vaughan said at this stage she believes the community groups will have to take the lead to get the grant back on track. “The community played an awfully big role in getting that grant together,” she said. “I’ve been told that the people in Washington said it was by far the best grant that they received, and that this could be a model for the country.” Perkins said the city of Greensboro’s depth of expertise in housing and community development is unmatched. The question is whether a plan to move the program forward can get five votes on the nine-member council. “It’s hard to make it work when your elected body is not fully committed to a grant of this size and when staff gets mixed messages, and on top of it the financing environment is difficult,” Perkins said. “That could be overcome if you had a governing board that was fully behind it. “The five-to-four is not something that inspires the manager and staff to move with full force and vigor,” he continued. “It means they have to move carefully to avoid ticking off a council member and end up losing the program. Of course, the council almost voted to send the money back, and that could still happen.”

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Mayor Bill Knight has expressed misgivings about some of the community groups involved with the grant.

Update: At the request of staff, the Greensboro City Council voted on Tuesday to table the request for approval of a program redesign. The delay allows staff time to resolve questions about the geographic scope of the grant with the US Department of Energy.

Supporting documents (click on hyperlinks below to access):

>> Greensboro energy efficiency program, original grant application

>> E-mail from DOE approving city’s request to expand geographic footprint of program

>> Proposal by Beth McKee-Huger to get grant back on track

>> Changes proposed by city of Greensboro to DOE

>> DOE guidance on modification of geographic scope of program

>> Statement of Project Objectives, summary of 5/16/11 program revisions

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