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Another Berkeley FIRST

By: Mayor Tom Bates

March 01, 2009

Many urban eco-game changing ideas are born in Berkeley California. Despite some initial skepticism, many of our programs go on to be adopted in cities everywhere. Just a sampling of these Berkeley-spun ideas includes: a ban on Styrofoam, a switch to biodiesel for city vehicles, and curbside recycling. The City's latest first, however, may be it's most important innovation in relation to climate change.

What is Berkeley FIRST?
Berkeley FIRST (Financing Initiative for Renewable and Solar Technology) is an innovative renewable energy financing program designed to overcome the barriers to property owners' adoption of renewable energy technologies. Berkeley FIRST was inspired by the fact many energy conscious property owners do not invest in energy efficiency because of the high upfront costs and long-term financial commitments. University of California/Berkeley Professor Dan Kammen uses a telling metaphor to explain this dilemma — he asks: "How many of us would have cell phones if we had to buy 20 years of minutes up front?"

In November 2007, the Berkeley City Council unanimously approved my proposal to develop Berkeley FIRST. The pilot program provides the upfront cost (projected average installation cost of about $25,000) of PV solar installation through the sale of municipal bonds. The bonds will be repaid over 20 years through the participant's property tax bills. Participation in the program is 100% voluntary and property owners pay for only the costs of their energy project.

The advantages of the Berkeley FIRST program for property owners are:

· Relatively little up-front cost to the property owner.

· Up-front costs for the solar system are paid through a special tax on the property, and are amortized over 20 years.

· The tax obligation stays with the property, so if the property is transferred or sold, the new owners will pay the remaining tax obligation.

The advantage of Berkeley FIRST for local municipalities include:

· NO city subsidy or exposure to the City's General Fund because FIRST is based on California's Mello-Roos financing law.

· Partnership with a third party finance administrator, protecting the municipality from financial risk.

· This mechanism contributes to a municipality's climate and energy goals.

· All FIRST program costs can be paid out of bond proceeds.

· The program promotes the green economy.

The Hottest Ticket in Town?
Initial signs look good for the program's long-term success. At 9:00 a.m., November 5, 2008, in partnership with Renewable Funding LLC, Berkeley's third party administrator, the City of Berkeley opened the application process for its $1.5 million pilot program. At 9:10 a.m. the pilot sold out. To date, thirty-eight solar installation projects, evenly distributed throughout the city, have funding committed by Berkeley FIRST. During this pilot phase the City (with help from UC Berkeley's Renewable and Appropriate Energy Lab) will evaluate the program and determine whether another round of funding can be made available. The data collected during the evaluation phase will also be used to create a "How To" guide to be used by cities hoping to set up similar programs.

Where Did this Come From?
In November 2006, Berkeley voters forged a mandate for the City to aggressively reduce greenhouse gas emissions by passing Measure G with over 81% of the vote. Since the passage of Measure G, I have worked with City staff and the community to prepare Berkeley's Climate Action Plan (CAP) — an emissions reduction plan with a goal of reducing Green House Gas (GHG) emissions by 80% by 2050.

Berkeley FIRST will play a very important role in working toward the goals of Measure G. Electricity and natural gas consumption in Berkeley's homes, businesses, industries and public institutions (including the City government) results in over 342,000 tons CO2e per year emitted into the atmosphere — about 53% of Berkeley's total GHG emissions. Residential energy consumption contributes about half of the total emissions from building energy use while energy consumption in non-residential buildings contributes the other half.

To achieve its interim emissions reduction target Berkeley must reduce the emissions that result from building energy use by 35% by 2020. Improving energy efficiency and adding solar photovoltaic (PV) and solar thermal systems to Berkeley's buildings will go a long way toward reaching these ambitious goals. Without FIRST, our powerful financing tool, these goals would be very difficult to achieve.

Is There More?
If the initial pilot program is deemed successful, Berkeley staff will look to fund a second and larger round of financing for a phase two of the FIRST program. Our phase two goal is for participants to be able to fund energy efficiency improvements with this mechanism, including improved ducting, attic insulation, and hot water heaters. We also plan to include the ability to fund solar thermal (hot water) installation in future FIRST rollouts.

Who's Next?
As America moves into a new era of federal leadership, the need to lower our GHG emissions is coming to the forefront of political and economic discussions. To date, much of this dialogue has been centered on technological fixes to lower carbon emissions without much attention to the importance of innovative financing as a key lever of change. Berkeley FIRST will help fill this void and, could be Berkeley's single greatest contribution to reducing GHG emissions.

The impact of Berkeley FIRST is already expanding beyond our borders and one of the greatest advantages of this program is its scalability. Laws in several cities and states now provide a FIRST-style financing mechanism, and other states are pursuing legislation to enable the use of clean energy municipal financing. For example, programs in Palm Dessert, California, Boulder, Colorado and Babylon, New York have adopted Berkeley's financing initiative.

I am happy to report that perhaps yet another homegrown Berkeley FIRST will be coming to a city near you soon.

Tom Bates is the three-time Mayor of Berkeley, California.

Special thanks to Nils P. Moe, Assistant to the Mayor, Office of Mayor Tom Bates and Steve Rasmussen, Berkeley resident.

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