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WatchSonoma Watch

Sonoma County home energy upgrades to live on

By BRETT WILKISON
THE PRESS DEMOCRAT

Sonoma County intends to forge ahead with a government program that allows residents to pay for energy-saving home retrofits through property taxes despite the county’s having lost a prolonged court battle recently to protect the program.

SolarThe fight was over tighter federal lending requirements that county officials and others say hamper such programs by scaring off homeowners.

The nearly three-year court battle came to an end this week when the Board of Supervisors formally decided not to appeal the case to the U.S. Supreme Court. The step came after a federal appellate court in March upheld the guidelines issued by the Federal Housing Finance Agency, saying it had acted within its authority.

The California Attorney General’s Office, which also filed suit to block the 2010 lending guidelines and assumed the role of lead plaintiff in the combined case, is not filing an appeal.

Sonoma County officials said their decision doesn’t mean the end of the county’s four-year-old energy retrofit program, the first countywide effort in the country.

Even with the tighter lending guidelines, enough homeowners appear to be taking advantage of the program that it should continue regardless of the court loss, officials said.

“If the numbers weren’t there, I’d be the first to say we should wind it down or change focus,” said Board of Supervisors Chairman David Rabbitt. “But the numbers are still strong.”

The county’s Energy Independence Program has financed more than 1,900 projects worth upward of $66 million on homes and businesses, including solar panels and plumbing and heating improvements. Officials credit it with creating a least 80 local construction jobs, supplying business to an industry hit hard in the recession.

But federal officials say the program and more than two dozen others like it across the country present “significant safety and soundness concerns” to recession-wracked mortgage giants Fannie Mae and Freddie Mac.

That’s because, in the event of a foreclosure, the programs prioritize repayment of property tax liens for the upgrades over home loans controlled by the mortgage giants.

The Federal Housing Finance Agency directed the two lenders, who control more than half of all home mortgages, to impose significantly tighter loan requirements for both participating homeowners and communities with a government-financed energy upgrade program.

For some homeowners, that meant having to pay off the entire amount of an upgrade before a refinance or sale. County officials and local bank officers said they were aware of only a handful of instances where local homeowners had to take such measures.

They were not aware of any broader action in Sonoma County or elsewhere by the government-chartered lenders to lower loan limits for an entire community because of a retrofit program.

The guidelines spurred lawsuits by public and private entities across the country and scared off residential business. Monthly applications to Sonoma County’s program dropped by half and left its future, at least on the residential side, in some doubt.

Only this year has home retrofit business through the program begun a slow and steady rebound. Upgrades for businesses have not been affected by the lending conflict because the guidelines did not apply to the commercial sector.

Three federal appellate courts, including the 9th U.S. Circuit Court of Appeals in Sonoma County’s case, upheld the federal housing agency’s action.

County officials conceded their odds before the U.S. Supreme Court would have been long.

They nevertheless defended the case, saying it established a clear record of support for retrofit programs, including evidence they present little risk to lenders.

“That was the point of the lawsuit,” said Supervisor Shirlee Zane, “to show that these programs are successful and are not risky for defaults.”

The case involved more than 800 hours worked by county attorneys, equating to a cost of $173,000 based on county billing rates, according to the County Counsel’s office.

A spokeswoman for the Federal Housing Finance Agency said officials there had not decided whether to continue a rulemaking process ordered by a lower court but no longer mandatory. The agency’s draft rule unveiled last year would more narrowly direct Fannie and Freddie not to purchase any mortgage or consent to any primary lien connected with a government-financed retrofit program.

Building industry representatives welcomed news that Sonoma County will continue its program.

“It’s been particularly helpful in this bad economy,” said Keith Woods, chief executive officer of the North Coast Builders Exchange, a Santa Rosa trade group. “We think it ought to continue.”

You can reach Staff Writer Brett Wilkison at 521-5295 or brett.wilkison@pressdemocrat.com.





13 Responses to “Sonoma County home energy upgrades to live on”

  1. andrew simpson says:

    Dear Ms. Koire

    Great. If you will send me your email address at aksimpson8@hotmail.com I will ask the County to copy you directly on whatever they provide me on SCEIP.

    Secondly I’ve just sent out the third in this series to a variety of folks via email and will copy you if you wish to send me your email.

    Part I: County governance roadmap: perception vs reality
    Part II: An idea of the Future: the County we could have
    Part III: The vital opportunities in Roads and Sonoma Clean Power
    Part IV: Examples of dysfunction: Water Agency payoffs, lies and fraud
    Part V: Diagnosis and Rx for the County

    Should any reader of this space wish to be copied on this series of emails kindly contact me at aksimpson8@hotmail.com.

  2. Mac E. Velli says:

    To Andrew Simpson:
    Thank you very much for your excellent analysis, and for the time you’ve devoted to getting to the truth on SCEIP and, by extension, Sonoma County Clean Power.

    Sonoma County will take about 3 weeks to respond to you. When the Water Agency and BOS respond we would like the opportunity to share your findings on our website–Santa Rosa Neighborhood Coalition. On that site you will find information on SCEIP and the Water Agency/Michael Allen conflict of interest, as well as comments on another Water Agency program that was in the works before Michael Allen was reported to the FPPC and found guilty of conflict of interest. At the time, Senator Pat Wiggins was suffering from dementia. Her field director, Michael Allen, may have been responsible for legislation sponsored by Sen. Wiggins: SB 730. This legislation would have REQUIRED that all buildings in Sonoma County convert to solar hot water heaters. The program for this would have been managed by the Sonoma County Water Agency. Michael Allen had longstanding links to the electrical unions and he was a founder of Solar Sonoma County. Concurrently with our complaint being filed with the FPPC on Michael Allen and the Water Agency, the legislation was pulled.

    Please let me know if there is anything that we can do to assist you, and please feel free to email me directly through our website.

    Thank you,
    Rosa Koire
    Santa Rosa Neighborhood Coalition

  3. andrew simpson says:

    to: David Rabbitt
    date: Tue, Jun 11, 2013 at 2:08 PM

    subject: California Public Records Act Request

    Dear Dave

    This is a California Public Records Act Request. Kindly provide, preferably via email but in hard copy if necessary, the following:

    1. cite the legal authority of SCEIP from SCEIP’s inception: is it a separate legal entity? Is it a division of some County agency?

    2. provide the audit records and financial reports of SCEIP from inception
    provide the list of SCEIP governance persons

    3. provide the list of SCEIP management persons

    4. provide the list of SCEIP advisory board members

    5. provide the list of SCEIP outside advisors including attorneys, accountants and vendors of services?

    6. provide the list of SCEIP investments
    provide the list of SCEIP contractors and amounts they were paid

    7. provide copies of SCEIP checks for all purposes since inception

    8. provide copies of all SCEIP documents relating to funding sources: loan agreements, bond prospectuses, power points to banks, subscription agreements

    9. provide all email correspondence from/to Supervisors, Water Agency officers, SCEIP directors, advisors and managers

    10. provide copies of Auditor Controller and SCERA reports to County retirees relating to the performance of their pension fund including any references to SCEIP or related investments

    11. provide all descriptive memoranda relating to the legal and financial structure and control of SCEIP

    12. provide all descriptive memoranda relating to the alternative means of financing and refinancing SCEIP

    13. provide all internal County memoranda relating to SCEIP strategy, business operations, risks and financial status

    14. provide all County excel spread sheets and similar material showing the cash flows in and out of SCEIP from SCEIP including but not limited to: funds taken directly or indirectly from County pension fund retirees; County tax payers via General Funds or other subsidy: from Water Agency rate payers; and from any other sources

    Thank you

    Andrew Simpson

  4. andrew simpson says:

    to: Gary Bei
    date: Tue, Jun 11, 2013 at 1:57 PM
    subject: California Public Records Request

    Dear Mr. Bei

    This is a California Public Records Request

    Kindly send me, ideally via email but in hard copy if need be:

    1)the list of all SCERA investments on a monthly basis (or quarterly basis if monthly not available) since 2009. I would prefer getting these in excel spread sheet form.
    2)Your monthly and/or quarterly performance and compliance reports to regulatory and supervising bodies since 2009.
    3) Your audited and interim financial statements on a monthly basis since 2009.
    4) Written memoranda, power points, and other commentary made to any person or body regarding SCERA’s goals, performance, risks and outlook since 2009
    5) governance: kindly furnish documents describing your legal organization, charter, mandate, to whom you report, and your governance body: to whom do you report and under what terms of reference, whether statutory or custom? Kindly provide these for the period 2009 through present.
    6) management: kindly furnish documents describing your management structure including organization charts and changes in organization since 2009
    7) Water Agency, SCEIP and other County departments and agencies: kindly provide reports, references, meeting minutes on any and all SCERA investments, fundings,, bridge loans: direct or indirect via money managers, in County, County Agency, County Department or County affiliated operation including the Water Agency or SCEIP
    8) Kindly answer this question: has SCERA, either directly or via its money managers invested, loaned or placed funds of any nature in Water Agency, SCEIP or Sonoma Clean Power activities?

    Thank you.

    Sincerely

    Andrew K. Simpson

  5. Well Informed says:

    When will the BOS learn that what is important to people are jobs, roads, education, and housing.

    They are off on this crazy jag about green this, bicycle that, sanctuary this, and impose that.

    Enough already!

  6. andrew simpson says:

    This is for Gary Stubblebine, who was kind enough to offer these observations:

    “Some people really don’t like SCEIP. Too bad the comments here are long on accusations but short on facts. The foil-hat nature of the ICLEI/Agenda 21 comments speak for themselves. My attempts to verify SCEIP’s connection to the pension fund only revealed numerous earlier (and lengthy) WSC comments from “andrew simpson” asserting this. It may true but I couldn’t find it. Even if it is true, it is not automatically sinister.”

    May I respond?

    1. You’re right. I really don’t like SCEIP.

    2. You’re right. My comments are long on accusations; see my email response below to Gary Bei, County Pension Fund Administrator, who emailed me today about this matter.

    3. Foil-hat/ICLEI/Agenda 21: Nah.

    4. My name really is “Andrew Simpson”

    5. You’re right. It is not automatically sinister: The proof is in the pudding, demonstrable bad acts. Kindly see next.

    to: Gary Bei Gary.Bei@sonoma-county.org

    cc: shirlee.zane@sonoma-county.org, susan.gorin@sonoma-county.org, efren.carrillo@sonoma-county.org, mikemcguire@sonoma-county.org, David Rabbitt , sbartley@srcity.org, ecarlstrom@srcity.org, “Combs, Julie” ,eolivares@ci.santarosa.ca.us, swinth@srcity.org,socky@sonic.net

    date: Mon, Jun 10, 2013 at 2:53 PM

    subject: Re: FW: SCEIP article in today’s PD: Water Agency credentials for Sonoma Clean

    Mr. Bei

    Thank you for taking the time to email me.

    Maybe this is my misunderstanding.

    Here’s what I thought:

    • that the Water Agency set up SCEIP and funded its working capital

    • that the Water Agency ran SCEIP

    • that SCEIP’s real intent was to become the demonstration project for Sonoma Clean Power

    • that the Water Agency took $45 million of County retiree pension money through various disguises

    • that this money was put into 20 year illiquid loans for energy retrofits for SCEIP customers

    • that this use of retiree money was HUGELY in contradiction of pension fund policy in favor of short term liquid investments

    • that the Supervisors overrode pension fund policy investment policy in favor of short term investments and you went along with it, on the promise by the Water Agency that the pension fund financing was in essence a short term bridge loan to be refinanced by the banks

    • that the pension fund’s long term loans via the Water Agency to fund SCEIP turned out, in fact, to be long term loans in contravention of pension fund policy because the Federal Housing Finance Agency declared these loans ineligible for secondary mortgage market trading

    • that these loans, having been declared toxic by arm of the federal government, became virtually impossible to refinance in the secondary mortgage markets

    • that these loans, by virtue of their illiquidity and exposure to interest rate risk–not to mention their official status as toxic–lost value

    • that you, the Supervisors, County Counsel, the Auditor Controller, and the Water Agency decided not to tell your retirees that their pension fund had lost market value in this $40 million-or-so bad loan

    • that you, the Supervisors, County Counsel, the Auditor Controller and the Water Agency are complicit not only in breach of fiduciary duty but in pension fraud.

    • the reason you folks did this was because SCEIP is the tens-of-millions of dollars goose that lays the billion dollar golden egg of Sonoma Clean Power: you didn’t want SCEIP to be revealed as a mere goose egg–this would wreck Sonoma Clean Power

    But you just advised me:

    “Your questions regarding the SCEIP Program are best directed to the County. I would appreciate you correcting future communications to remove any pension fund linkages to the issues you are raising.”

    Here’s the challenge.

    The Supervisors, The Water Agency, the Auditor Controller and County Counsel seem to be doing the wine country version of Sargent Schultz from Hogan’s Heroes:

    (I SEE NOTHING I HEAR NOTHING I KNOW NOTHING)

    So, I will happily comply with your request to direct my queries to the County on what appears to be massive fraud with the Sonoma County retirees’ money.

    I just don’t know who to ask.

    Would you be kind enough to forward this emaill, and copy me, to someone in the County who can answer the following under a California Public Records Act Request?

    Kindly:

    1. cite the legal authority of SCEIP from SCEIP’s inception: is it a separate legal entity? Is it a division of some County agency?
    2. provide the audit records and financial reports of SCEIP from inception
    3. provide the list of SCEIP governance persons
    4. provide the list of SCEIP management persons
    5. provide the list of SCEIP advisory board members
    6. provide the list of SCEIP outside advisors including attorneys, accountants and vendors of services?
    7. provide the list of SCEIP investments
    8. provide the list of SCEIP contractors and amounts they were paid
    9. provide copies of SCEIP checks for all purposes since inception
    10. provide copies of all SCEIP documents relating to funding sources: loan agreements, bond prospectuses, power points to banks, subscription agreements
    11. provide all email correspondence from/to Supervisors, Water Agency officers, SCEIP directors, advisors and managers
    12. provide copies of Auditor Controller and SCERA reports to County retirees relating to the performance of their pension fund including any references to SCEIP or related investments
    13. provide all descriptive memoranda relating to the legal and financial structure and control of SCEIP
    14. provide all descriptive memoranda relating to the alternative means of financing and refinancing SCEIP
    15. provide all internal County memoranda relating to SCEIP strategy, business operations, risks and financial status
    16. provide all County excel spread sheets and similar material showing the cash flows in and out of SCEIP from SCEIP including but not limited to: funds taken directly or indirectly from County pension fund retirees; County tax payers via General Funds or other subsidy: from Water Agency rate payers; and from any other sources
    I appreciate your referring this to somebody in the County who can actually give some factual guidance on SCEIP.

    I’ll keep you posted on what I find out.

    Kind regards

  7. Mac E. Velli says:

    Andrew Simpson is our new hero.

    SCEIP is a Water Agency racket and fraud.
    Calling a home improvement loan an ‘assessment on your property taxes’ is a joke.

    Putting home improvement loans in front of the primary home loan would never be acceptable to the lender. That’s why it’s called a ‘second mortgage’—it’s in second position.

    But this concept was inconvenient for the fraudsters at the Water Agency, so they had the Board of Supervisors file a suit against the lenders. Funny. The Water Agency IS the Board of Supervisors.

    Now we have to pay. How much besides the $173,000 for legal work? Clerical work? The other side’s legal fees? Paperwork fees? Filing fees? What’s the big number?

    Fire the Board of Supes.

    And by the way, Rod Dole, the former Auditor/Controller for the County who retired with the county’s highest pension, remember him? He pushed SCEIP big time. What did he do after he retired? Went to work for Ygrene, the SCEIP kings: Dennis Hunter and Alan Strachan. Scammers of Santa Rosa who moved on to Sacramento.

    We’ve got gang problems here in Santa Rosa. The organized kind.

    Mac E. Velli sayin: Won’t get fooled again?????

  8. James Bennett says:

    Using code enforcement (ultimately with police powers) for mandatory green building requirements has all kinds of baggage; all of it bad for the property owner.

    How come our ‘public servants’ don’t share all the forthcoming details?

    We’ve covered this subject with The ‘Green building Retrofit Program’ at length in the past on this board.

    i hate to be a broken record, but this is more ICLEI directed crap. Designed to undermine property ownership, by making it too expensive. Create an excuse to have officials on your property, everything they long for.

    The days of the ‘tin foil hat’ comments should be over.

    We’d need lots of tin foil for the entire RNC, hundreds of states and cities that have rejected the implementation of UN Agenda 21/Sustainable Development based on it’s detrimental effects on their sovereignty, property rights, fiscal health and much more.

  9. David Stubblebine says:

    Wow! Some people really don’t like SCEIP. Too bad the comments here are long on accusations but short on facts. The foil-hat nature of the ICLEI/Agenda 21 comments speak for themselves. My attempts to verify SCEIP’s connection to the pension fund only revealed numerous earlier (and lengthy) WSC comments from “andrew simpson” asserting this. It may true but I couldn’t find it. Even if it is true, it is not automatically sinister.

    The courts did not say SCEIP was not “proper.” The courts did not say SCEIP was an “illegal scheme.” The courts did not say the Feds will “impose sanctions” if SCEIP continues. The courts only said Fannie & Freddie could use their own guidelines about how they would treat SCEIP-type loans. As the article said, the full impact of what that means is not yet clear. Interestingly, the article also says SCEIP applications are rebounding despite the court ruling.

    I am neither an advocate for SCEIP or against it. I am just an advocate for factual, responsible comments that further the intelligent public discussion of local issues. Inflammatory vitriol does not fit in with that.

  10. Beef King says:

    Again, the correction tool is the vote.

    The County has been directly harmed by the decision of the Supervisors to proceed with their illegal schemes.

    SCEIP must end or the Feds will impose sanctions that will cost more than any imagined benefit to the County.

    Vote the BOS out.

    New brains at the BOS are required if the County is going to do more than languish as we have for the last few years.

  11. andrew simpson says:

    Sonoma County Energy Independence (“SCEIP”) is the subject of this article. SCEIP was created and run by the Water Agency.

    SCEIP didn’t work.

    But it’s a useful reference check on the Water Agency’s qualifications to run Sonoma Clean Power, a project 20 times bigger.

    Think of how you might reference check an electrician on Angie’s List. You might ask:
    • Have they done this kind of work before?
    • Did they perform competently?
    • Were they honest and reliable?
    • Would you hire them again?

    Here’s what you’d hear if you were reference checking the Water Agency’s ability to run a clean energy project like Sonoma Clean Power.

    • Has the Water Agency done prior work on clean power? Yes. They spent over $60 million in pension fund and rate payer money on SCEIP.

    • Did the Water Agency perform competently? No. They bungled almost every element of the project.

    • Was the Water Agency honest and reliable? No. They lied repeatedly to cover up their mistakes.

    • Would you hire them again? No.

    Here’s the real narrative.

    The Water Agency borrowed $45 million from County retirees to jump start SCEIP. That retiree loan—a long term loan—made to the Water Agency was against retiree pension fund policy.

    That policy said: stick to short term liquid investments we can easily roll over or trade.

    The Supervisors overrode pension policy to enable the loan to Water Agency. They did so because the Water Agency said: don’t worry. This so called long term loan is really just a short term bridge loan. We’ll refinance it via the banks.

    Butthen the federal government intervened and said: these loans are stinky.

    As a result of that federal intervention, the Water Agency couldn’t find anybody to buy these now- toxic loans.

    The pension fund was now a stuckholder in a bad loan portfolio.

    Which meant that not only was SCEIP a failure. But that SCEIP’s failure would mean that Sonoma Clean Power—son of SCEIP—would be discredited from the outset by the Water Agency’s mismanagement.

    However: the Water Agency came up with a solution.

    The solution was: let’s pretend that SCEIP is a big success. Let’s not tell the pension fund that they own tens of millions of stinky loans.

    Let’s cover this whole thing up by taking another $15 million or so, this time from the rate payers, so we can keep SCEIP afloat. So we can keep making bad loans!

    Compounding this misfortune, the financial markets came up with no money down solar leases that were a better deal than SCEIP. Even if the Water Agency hadn’t been made to wear a dunce cap by the federal government, the freely competitive markets would have decimated SCEIP.

    Further: SCEIP costs more to run than it makes. The taxpayers and rate payers of Sonoma County are now funding a million a year in operating losses for a program that was ill conceived, mismanaged, discredited by the federal government; and rendered redundant—economically useless—by free market competition.

    If that weren’t enough: SCEIP’s nominal justification by the Water Agency was that SCEIP would drive down CO2 emissions and create jobs.

    Those claims are nonsense.

    The County’s CO2 reduction goal is to drive CO2 emissions to 25% below 1990 levels.

    That would be a reduction of 1.5 million tons CO2 emissions annually. SCEIP, at a cost of over $60 million, drove down CO2 emissions by 6,000 tons annually.

    That’s 6,000/1,500,000= less than one half of one percent of the County goal. SCEIP’s CO2 reduction cost about $60 million to achieve 6000 tons annual CO2 reduction.

    So SCEIP cost about $60 million/6,000 tons= about $10,000 a ton.

    What does that mean? It means to get to the County’s goal of 1.5 million tons annual CO2 reduction at a cost of $10,000 a ton, it will cost about FIFTEEN BILLION DOLLARS.

    It means the Water Agency has spent about $60 million of pension fund and rate payer money—money far more productively spent on roads or education, for example—and accomplished, precisely, nothing in terms of clean air.

    What about jobs? The County claims 80 jobs were created by SCEIP. That would have been at a rate of about $30 million a year spent on SCEIP in its peak years of 2010 and 2011.

    So the cost per job created was about $30 million/80 jobs=$375,000 per job.

    How many teachers jobs’ could we have saved for $375,000? Five? How many kids would have been affected by each of those teaching jobs saved? 30 kids each?

    But we’re not talking about 30 Sonoma County kids getting a better education.

    We’re talking about saving the jobs of 400 teachers—for $30,000 million a year—and then multiplying those 400 teacher jobs by 30 kids per teacher.

    It’s over 10,000 kids.

    10,000 Sonoma County kids could have had better educations if that money had been invested in their futures, instead of buying 80 jobs at $375,000 each; instead of trying to reduce carbon emissions at a cost of $10,000 a ton.

    Finally, there is fraud.

    The pension fund loan to the Water Agency, originally $45 million, was declared toxic by the federal government.

    The Water Agency couldn’t get anyone to refinance that loan at anything close to face value. They might have sold it to a “vulture fund” at a deep discount: the same way a grocer would discount a crate of apples-turning-mushy, to get rid of them.

    The Water Agency elbow-twisted the Auditor Controller –who is now overseer of those rotting loans—to not report to the pension fund that those loans had lost value.

    But the Auditor Controller has a legal duty to make that report. The Auditor Controller didn’t make that report.

    That’s not just breach of fiduciary duty.

    That’s fraud.

    That’s your reference check on the Water Agency as sponsor for Sonoma Clean Power.

  12. Steveguy says:

    The Courts said that it wasn’t proper, so lets do it anyways. OK

    The ‘greenies’ don’t care about the Courts, unless it stops their narrow agendas. ( Well broad Agenda, as in 21.

    By the way, those ” NGO’s” are ” non-profit” while they whistle all the way to bank with OUR money for nothing, maybe they get chicks for free ?

  13. James Bennett says:

    This is what a rogue government looks like.

    This is part of the ICLEI imposed Climate Action Plan.

    Through the black magic of incrementalism, eventually solar will be used as an instrument to financially burdon property owners.

    This is symptomatic of what’s REALLY going on in our Country. Transforming our energy, social, civil, economic landscape, everything.

    It’s not a Left/Right thing (although Democrats have been more adherent).

    It’s a treason thing.

    Like when traitor Leon Panetta went to Congress to INFORM them of the UN’s intentions to go to war.

    That’s what’s REALLY goin’ on.

    It’s a loyalty thing, a morality thing.

    It’s not a bad judgement thing, ’cause it’s not their judgement. They are following directive from this UN sponsored NGO.

    In case we forgot, that’s NON GOVERNMENTAL Organization.