Someone's loaning Gregor $6 million for his latest green scheme – may we ask 'who?'
Vancouver Sun City Hall reporter Jeff Lee broke the news this week about Gregor Robertson's plan to fund home energy retrofits, and allowing citizens to pay it down on their property taxes. In his original story he reported:
The city will seek requests for proposals from banking institutions that will administer the financing. But for now, a private businessman will kick-start the program by providing upwards of $6 million in seed financing, according to Johnston.
It struck Lee as strange that the financial details of the whole program were so vague. In the story's last paragraph he writes:
Left unclear in this project is how the private backer was identified, what his rate of return will be and whether there is a component that may have tax liabilities for Canadians even if the program is self-financing at the city level.
One of the questions I couldn't get an answer to was why they didn't put out a request for proposals for that $6 million in seed money they say they're getting from a mysterious businessman. (When I first started to do the story, the city characterized the money man as "a philanthropist" who would get interest on the money he is providing to the city. When I asked how someone can be a philanthropist if it's a business transaction, they changed the description to "businessman". I also asked and was told it isn't Joel Solomon, one of Robertson's major backers and mentor.)
It was smart of Lee to ask that question, although I doubt they would be stupid enough to directly involve Vision's bag man in a project like this. It may be someone connected to the Hollyhock mafia, or perhaps not at all.
As Lee points out, next year there's an election happening, so it's no surprise that since Vision will have a tough time running on their record, they'll be spending a lot of your money to curry favour. His latest blog on the subject of these home retrofits points out that the program has already been attempted in the USA, and not without big problems.
The idea...is modeled after a program called Property Assessed Clean Energy started in Berkeley, California that caught on swiftly with city governments in 22 states. Ah, but now we understand there's a bit of a catch.
It turns out that the Federal Housing Financing Agency, the U.S. regulator that oversees mortgage guarantors like the federal behemoths Fannie Mae and Freddie Mac, doesn't like the program because it puts retrofit loans at the top of the list of creditors on a property. This "first lien" threatens the stability of Fannie and Freddie-guaranteed mortgages, they say. So last July the FHFA clamped down, and Fannie and Freddie no longer insure mortgages on properties that have "first lien" retrofit loans.
What this all means for Vancouver is that it has fair warning that it needs to tread carefully in how it develops its own retrofit program. Already saddled with the financial problems of the Olympic Village, the city's good will well with the public is a tad shallow when it comes to new programs out of the norm.
Read Jeff Lee's follow-up story from Thursday – U.S. problems won't change energy retrofit plans – which many of us may have missed in all the fuss over BC Liberal leadership announcements.
Of course, the obvious question is this: why is the City of Vancouver getting into this program at all? There are plenty of other options for homeowners to get low interest loans and pay them down over the span of several years. Why does the City need to administer or even manage this in any way when the private sector can do it better?
There's also those 20,000 green jobs that Robertson plans to create within the decade. Will a trade putting weather stripping on your bedroom window count as a 'green' job? There's a lot of questions like these we'll be asking in the months ahead.
- post by Mike