Northeast Iowa’s Winneshiek Energy District Shows How Communities Can Capture Local Energy Dollars – Episode 35 of Local Energy Rules


In the follow-up from our new community-owned renewable energy report, Beyond Sharing: How Communities Can Take Ownership of Renewable Power, we are releasing the second in a series of Local Energy Rules podcasts that informed the writing of this report.

Andy Johnson works with the soil. When younger, he served in Peace Corps in Central America for three years, working on conservation practices. Then he worked in the Natural Resource Conservation Service for years, the same agency that his father Paul Johnson headed by appointment from Bill Clinton in 1993.  After moving back to northeast Iowa in 2007, he started farming christmas trees and grass-fed beef cows, but thinking about how the concept of conservation applied to his community’s energy use and economy.

When stimulus money became available in 2009, Andy used his knowledge of soil and water conservation districts to promote the idea of using those funds toward a energy district around Decorah, IA. The idea became more popular than he imagined, as he and an assembled board of directors won a federal grant.

In December 2015, Johnson talked with ILSR’s John Farrell about the Winneshiek Energy District and how they promote energy efficiency and renewable energy for all county residents, as well as what the future holds for distributed energy everywhere.

Savings and Solar

Soil and water conservation districts grew out of the Dust Bowl era, when poor farming practices exacerbated dust storms and extended droughts. Sped into law by President Franklin Roosevelt, these districts were local-state-federal partnerships that provided farmers with technical and financial assistance in sustainable land usage.

The Winneshiek Energy District — the first of its kind in the nation — works much the same way, only instead of keeping the soil on the ground, it keeps the money spent on energy within the county. The organization estimates that $100 million dollars largely leaves the county every year to reimburse the out-of-state energy interests.

The District’s primary work is home energy assessments, helping owners implement energy efficiency improvements as well as renewable energy. They’ve helped 600 houses so far, saving participants an estimated $3 million dollars. Their conversion rate, or the percentage of customers that go on to make suggested improvements, ranges from 50 to 95 percent, says Johnson.

In all, Winneshiek County has more than 190 watts of solar per person, according to numbers provided by Johnson. The county would rank second among the solar-friendliest cities in the United States.

Source: Environment America & Andy Johnson

Source: Environment America & Andy Johnson

Little Help From the Utility

Johnson understands that investor-owned utilities such as Alliant Energy have to make a profit for investors. But those profits don’t stay in the community.

“It’s a tough question,” he says about working with Alliant. The utility hasn’t been much of an ally, and has stalled on the idea of a community solar array in Decorah. “It’s been a tough uphill battle.”

The Winneshiek Energy District works with the utility, but mostly below it, with the utility’s ratepayers. It’s different from other energy districts, which are governmentally-formed zones, driven by legislation in the past decade, that create funding opportunities for renewable energy and energy efficiency — Connecticut and Ohio support some of the best examples here. Winneshiek, on the other hand, is a nonprofit, and supports more than just a municipality or a specific subset of people, says Johnson. That enabled it to offer free energy efficiency services to more than 500 households in recent years, while working with the utility on offering more general measures such as community solar gardens.

Winneshiek has met with Luther College, local governments, and other large electric customers to put pressure on the utility. Another route is participating in the proceedings of the state regulatory agency, the Iowa Utilities Board — something Johnson is doing now to defend net metering and the value of solar — or talking to state lawmakers.

Local control of energy, at the very least, can be helped most by the municipal or cooperative utilities of the state, or even encouraging a town to form their own utility. Johnson predicts that most municipal utilities and co- ops will be working sooner or later toward 100% renewable energy. “Hopefully the utilities, in the rapidly changing energy world, will increasingly and more and more rapidly work with their customers,” he says. “But if not we have to do what we can with our communities.”

Thanks largely to the Winneshiek Energy District, renewable energy is on a tear in Decorah, representing what a little bit of local energy planning can do for people. Now Johnson is talking to other people in other states who want to do the same thing.

“Energy districts are essentially meant to be the boots on the ground as well as the preachers of what can happen.”

This is the 35th edition of Local Energy Rules, an ILSR podcast with Director of Democratic Energy John Farrell that shares powerful stories of successful local renewable energy and exposes the policy and practical barriers to its expansion. Other than his immediate family, the audience is primarily researchers, grassroots organizers, and grasstops policy wonks who want vivid examples of how local renewable energy can power local economies.

It is published intermittently on ilsr.org, but you can Click to subscribe to the podcast: iTunes or RSS/XML

This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter or get the Energy Democracy weekly update.

Photo Credit: Good Free Photos via CCO/Public Domain License

Incinerator News: From Baltimore, MD, to Arecibo, Puerto Rico


On March 17 the permit for the 4,000 ton per day garbage incinerator planned for the Curtis Bay-Brooklyn Park-Hawkins Point area of south Baltimore, MD, was declared invalid by the Maryland Department of Energy and Environment, finally ending years of protest by local residents and their allies from all parts of the city and region (see previous story from ILSR here).

The company proposing the plant, Energy Answers International, had failed to break ground on the facility within the time frame established in the permit.

Energy Answers also has obstacles in Arecibo, Puerto Rico, where another plant similar to the one proposed in Baltimore is also being proposed.

click for source and more information.

First and foremost the plant needs garbage to burn. To date the cities surrounding Arecibo in the San Juan metropolitan area have refused to agree to send their trash to the plant. Mayors in Puerto Rico are very powerful and they have refused to consider a $40 per ton tip fee in addition to the 80 mile round trip from the densely populated San Juan metro area. Puerto Rico’s Solid Waste Authority has approved the plant through a contract that the municipalities threaten to challenge in court since this agency does not control the flow of garbage in the island’s cities. “The company knows this project is not viable, yet they are trying to force this incinerator through the back door putting political pressure on agencies.  We all know this is a bad project that will have a negative effect on human health and the environment”, says Ingrid Vila, President of CAMBIO and a coordinator for the effort to stop the plant.

The Puerto Rico Sierra Club and environmental organization Mision Industrial support this effort as well.

Yet another problem facing the plant is a source for water. To date no source has been successfully identified. Government authorities have rejected one source, extracting water from the Caño Tiburones Wetland Natural Reserve.

click for source and more information

The facility also has to find financing amidst the worst economic crisis the island has faced in decades. The US government is considering a financial package to help the Commonwealth address its multi billion-dollar debt. Additional debt for the plant will be in the hundreds of millions of dollars. Paid off over 20 years the capital costs would reach over $1 billion. Energy Answers has asked the Rural Financial Services of the USDA to provide loan guarantees for the project. “From the information we have gathered this agency has never guaranteed a garbage to energy plant like this one,” points out Vila. The agency specializes in water infrastructure improvements in Puerto Rico.

In many US cities and counties, after citizens and small businesses defeat proposals for garbage incinerators, policy pivots on recycling as in Los Angeles, Austin, Alachua County, FL, Seattle and King County, WA, Portland, OR and Worcester, MA. Anti incinerator organizers in both Baltimore and Arecibo are not only working to stop bad plants but also working for recycling, economic development and zero waste as their alternative.

The anti-incineration movement in Puerto Rico is pushing for the adoption of a Zero Waste strategy to promote reduction of waste generation and increase recycling on the Island. In that effort they supported the plastic bag ban adopted by law in 2015; they are promoting the adoption of a bottle-bill and are pushing for the development of needed regulation for compositing and electronic waste.

Puerto Rico currently recycles only 14% of its waste stream that provides for ample room for job creation and industry development in this area.

Neil Seldman and ILSR has worked with locally based grass roots environmental justice and professional organizations in Puerto Rico as well as the Commonwealth’s Solid Waste Authority and US EPA Region 2 promoting recycling and economic development and zero waste.

Strength in Numbers, April 2016


Indie-week-twitter-QDruckerCorporate Subsidies on the Wane? Advocacy groups in New Jersey and Pennsylvania are the latest to urge politicians to stop bestowing gifts on large corporations. Work by these groups, national allies like Good Jobs First — whose report on the topic we featured in our March newsletter — and many AMIBA affiliates at the local […]

Energy Democracy Media Roundup – week of April 25, 2016


This week in Energy Democracy:

The story of a Microgrid in Brooklyn, learning how ComEdison took aim at a solar power law in Chicago, and, finally, another week, another set of ballot initiatives on the solar energy debate.

Featured Stories:

Sharply higher rooftop solar potential increases potential for energy self-reliance by John Farrell, CleanTechnica

A Microgrid grows in Brooklyn by Morgen E. Peck, Scientific American

One of the biggest hurdles, according to both Grimley and Orsini, is the fact that every community has different needs and brings a different mix of assets to the equation. Brooklyn Microgrid, for example, chose a block in Park Slope because it boasts a high density of rooftop solar panels.

“Everything has to be driven by the needs of the community,” Grimley says. “And so, what this funding does is basically just bring in all these different community vendors and utilities all at the same table.”

Re-Member-ing the cooperative way: Part 2 – The Opportunities by John Farrell, CleanTechnica

How ComEd zapped a rule that aimed to boost solar power in the Windy City by Steve Daniels, Crain’s Chicago Business Journal

Arizona utilities back initiative to counter Solar City-supported ballot proposal by Herman K. Trabish, UtilityDive

 

Energy Democracy News in the States

Arizona

Arizona solar ballot initiative launched by super PAC by Ryan Randazzo, AZ Central

Initiative aimed at killing new rooftop solar fees by Howard Fischer, Arizona Daily Sun

The initiative measure filed Friday by Kris Mayes would block regulated utilities like Arizona Public Service, Tucson Electric Power, UniSource Energy Services and a host of cooperatives from imposing “demand charges” on customers who generate their own power.

It also would preclude efforts to let utilities reduce the amount they credit customers who generate more energy than they use. Instead, companies would effectively “pay” customers the same charge per kilowatt hour as they would bill the customers.

Arizona voters could decide future of rooftop solar market by Will Stone, KJZZ

Arizona utilities back initiative to counter Solar City-supported ballot proposal by Herman K. Trabish, UtilityDive

 

California

City’s 100% green plan seeks overhaul in electricity buying by Anne C. Mulkern, E&E Publishing

This month, it will release the first outline on how it will roll out its effort. Backers include Republican Mayor Kevin Faulconer, who said the aim is “ambitious” but “achievable.” Others say it’s impossible to accomplish in the time allotted. Supporters and critics alike acknowledge that the path forward will be arduous.

California passes bill to level residential solar playing field by Daniella Ola, PV-Tech

San Francisco will require new buildings to install solar panels by Michael J. Coren, Quartz Magazine

 

Colorado

Solar garden backers may seek bill to improve accessibility by Aldo Svaldi, Denver Post

 

Connecticut

Microgrids coming online with help of state funding by Gregory B. Hladky, Hartford Courant

 

Florida

Consumers for Smart Solar spends nearly $268,000 in March by Mitch Perry, Florida Politics

 

Illinois

How ComEd zapped a rule that aimed to boost solar power in the Windy City by Steve Daniels, Crain’s Chicago Business Journal

 

Iowa

Cedar Rapids bus barn getting solar panels by B.A. Morelli, The Gazette

A 90 kilowatt solar array will be installed on the Cedar Rapids northwest transit bus garage, after Cedar Rapids City Council approved a contract on Tuesday. Eagle Point Energy-4, LLC, of Dubuque, will provide and own the solar photovoltaic system on the roof of the 30,216 square foot bus facility, 427 Eighth Street NW.

 

Massachusetts

Massachusetts Gov. Charlie Baker signs net metering bill by Shira Schoenberg, MassLive

The new law was the result of a compromise bill crafted during five months of negotiations between the House and the Senate. The final result is still only a short-term fix. It has drawn some concerns both from sides – the solar energy companies and the utility companies, who have been battling over this issue.

But lawmakers said the compromise bill was the only way to allow solar projects to continue being built in Massachusetts for at least another year while lawmakers and the administration continue to consider what incentives are necessary in the long term to keep the solar industry growing while not over-charging other electricity ratepayers.

Massachusetts raises cap on solar net metering by Jason W. Allen, Thomas McCann Mullooly, and Justus J. Britt, National Law Review

Harvard law School group pushes virtual power plants in Massachusetts by Elisa Wood, Microgrid Knowledge

 

Michigan

State’s largest solar garden operational in West Michigan by Amanda Jarrett, WOOD-TV

 

Minnesota

Report faults Xcel’s handling of solar garden project by Mike Hughlett, Minneapolis Star Tribune

How Minnesota is approaching grid modernization as a vertically-integrated state by Herman K. Trabish, UtilityDive

PUC gets Minnesota Power solar project plan by John Myers, Duluth News Tribune

 

Nebraska

Central City solar garden receives Earth Day honor by Robert Pore, Grand Island Independent

 

Nevada

Here’s how to restore Nevada’s place in the sun by Jeremy Susac, Las Vegas Sun

This isn’t about a cost shift; it’s about a paradigm shift. Solar is more than simply an alternative energy source; it’s a disruptive and potentially transformative technology providing significant societal benefits such as decreased dependence on foreign energy sources and an environmentally sustainable power supply that preserves the planet for future generations.

Things to know on a ballot measure to end NV Energy monopoly by Michelle Rindels, Reno Gazette Journal

 

New Hampshire

New Hampshire legislature doubles net metering cap to 100 MW by Herman K. Trabish, UtilityDive

 

New Mexico

New Mexico to hit solar tax credit limit this summer by The Associated Press

 

New York

NY utilities, solar companies propose transition away from retail net metering by Krysti Shallenberger, UtilityDive

New partnership proposes changing solar net metering compensation model by Allison Dunne, WAMC

A Microgrid grows in Brooklyn by Morgen E. Peck, Scientific American

Can N.Y. solar-electric deal recharge U.S. green-energy effort? by Bill Loveless, USA Today

“The solar industry and the utility industry can come up with solutions that work for everyone and that allow for a good transition, one that gets us to a large scale that actually helps the grid and at the same time helps the utility. It’s possible to do it.”

There’s no doubt that such a collaboration is more likely in New York, where state officials have called for sweeping reforms in the electric power sector, than in other states.

NYC mayor announces steps to cut greenhouse gas emissions by Karen Matthews, The Associated Press

 

North Carolina

North Carolina regulators reject solar third party ownership test case from green group by Herman K. Trabish, UtilityDive

 

Ohio

FirstEnergy, AEP bailouts reward companies’ bad calls by Thomas Suddes, Cleveland.com

Rally urges end to clean-energy standard freeze by Dan Gearino, Columbus Dispatch

Why this impending bailout for Ohio coal plants is bad news for America by Dick Munson, Environmental Defense Fund

 

Oklahoma

Oklahoma utility’s solar tariff plan turned down by The Associated Press

 

Texas

The mystery of wind energy in Texas by Kyle Downey, Law Street Media

Texas solar shoppers seeing lowest prices in the US by Katherine Tweed, GreenTech Media

The average gross cost of a solar energy system was $3.21 per watt, significantly lower than the national average of $3.69 per watt, according to EnergySage’s second Solar Marketplace Intel Report . In the Southwest region, including Texas, Arizona and New Mexico, three-quarters of the quotes were below $3.50 per watt.

Despite the low cost of solar in the state, the nine-year payback period in Texas is still slightly higher than the national average of just over eight years, according to EnergySage.

Enchanted Rock goes solar powered, reduces energy use by 50% by Dave Byknish, KXAN

From peanuts to power by Caitlyn Jones, Denton Record-Chronicle

Solar energy war: Utilities set their sights on rooftop solar by Travis Hoium, My San Antonio

 

Washington D.C.

Cost of solar energy falls every time the sun rises by Audrey Hoffer, Washington Post

 

Nationwide Energy Democracy

IEEFA Data Bite: A deepening decline by Seth Feaster, Institute for Energy Economics & Financial Analysis

The Santa Fe Strategy: How small cities can act on climate and inequality by Justin Talbot Zorn, Huffington Post

Rural electric cooperatives: 3 different approaches to reducing the cost of community-scale solar by Kevin Brehm and Thomas Koch Blank, Rocky Mountain Institute

In a previous blog post, we explained how rural electric cooperatives could become a multi-GW market for community-scale solar by 2020. Co-ops want solar to save money, diversify energy supply, meet renewable portfolio standard (RPS) requirements, and meet member needs. Yet in order for the co-op solar market to achieve its potential, co-ops need to better understand the value of community-scale solar and need to access compelling community-scale offerings.

Below we describe three rural electric cooperatives that are accessing compelling community-scale solar offerings. While each co-op has adopted a different approach, their collective experience shows that costs can be reduced through utility-supported development—when utilities proactively support aspects of the development process—and aggregation—when multiple community-scale projects are aggregated into a portfolio.

How cheap does solar power need to get before it takes over the world? by Brad Plumer, Vox

Community storage: A new way to cut grid 2.0 costs? by Mark Dyson, GreenBiz

SunEdison’s epic failure had little to do with clean energy by Katie Fehrenbacher, Fortune Magazine

But SunEdison’s downfall isn’t rooted in the failure of solar and wind. Instead the company’s tale of woe stems from overreaching ambition and core business decisions that led it to try to grow too big, too fast, and in too many directions. Companies in any industry—from drugs to mining to airlines—could, and have met, the same fate.

US Senate passes bill that supports grid-connected and hybrid microgrids by Elisa Wood, Microgrid Knowledge

Instead of Lobbying, Top 25 Utilities Could Have Doubled U.S. Solar Capacity


placeholderThe Investor Responsibility Research Center Institute just released a report analyzing the top 25 U.S. investor-owned electric utilities, and one of the highlights is finding that these 25 largest utilities collectively spent over $400 million of money (from their ratepayers) lobbying in the past four years. In many cases, this involved lobbying against net metering, renewable energy standards, or incentives for solar energy.

What could that money have bought if instead spent on the things that most electric customers want, such as solar energy?

$400 Million Buys a Bit of Solar

If utilities spent the $400 million directly, they could purchase about 133 megawatts of distributed solar. Against the more than 25,000 megawatts already installed, that’s a paltry amount. Even if the utilities bought utility-scale solar, at about half the upfront cost (and ignoring any need for transmission infrastructure), the money would still get just 266 megawatts.

But getting solar installed hasn’t just been a story of using utility money, but rather more than half the installed capacity has come by motivating private capital (e.g. customers installing with their own money). If the utilities instead offered a $1.00 per Watt rebate for customer-owned solar installations, the $400 million would instead support 400 megawatts of solar. At 50¢ per Watt, it would support 800 megawatts. That’s a goodly amount more.

But as California has shown with its now-expired Solar Initiative program, people there and in many other jurisdictions don’t require additional solar incentives to go solar. Instead, customers need attractive low-interest financing or “zero money down” options such as those provided by solar leasing companies. There’s a particularly potent tool that could get us more solar for our money, called on-bill repayment or on-bill financing. Several utilities have offered on-bill financing for energy efficiency or on-site renewable energy (see map below). Many more could  offer this tool to repay a loan to install solar via the utility bill.

Trnsprt On Bill Financing Map

How much solar could be installed if the $400 million spent on lobbying were instead spent on creating a solar financing opportunity?

$400 Million Backstops a Helluva a lot of Solar Financing

Let’s say a utility offers an on-bill repayment program with the money used to secure lenders in the event of customer’s failing to pay the bill. The best design of such a program would not credit screen applicants (nor should it, since the default risk to the lender is zero), and would require zero money down. If we withhold 1% of the money to cover administrative costs, we still have $396 million to backstop solar loans. Since the default rate of on-bill repayment programs is a tenth that of consumer loans (0.3%, although we’ll use 0.5% to be conservative), the $396 million in loss reserve covers $79.2 billion in solar financing.

At zero money down, and installed costs of $3 per watt, our $400 million would finance 26.4 GIGAWATTS of solar, or more than the entire installed capacity in the entire U.S. through 2015.

It’s worth repeating: if the top 25 electric utilities have spent their $400 million lobbying budget on solar loans through on-bill repayment programs, they could have doubled the installed solar capacity in the U.S.

The question isn’t whether utilities could have spent the money better. Of course they could. The question is why we let these monopoly companies make these choices with our money.

If you care to share, we made this post into an infographic, as well:

lobbying or solar from us utilities ilsr

This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter or get the Energy Democracy weekly update.

Destiny Watford Wins Recognition for Work Fighting Curtis Bay Incinerator


Destiny Watford of the Curtis Bay community in Baltimore, MD just became the second anti garbage incinerator activist to win The Goldman Environmental Prize; a prestigious award given annually to one leader from each continent. Rossano Ercolini, a school teacher from the town of Capannori Italy in Tuscany won the prize for Europe in 2013 for his efforts on informing the public on health and environmental risks of garbage incineration and for his efforts in promoting zero waste.

Ms. Watford became an anti incineration activist as a 17 year old student at Ben Franklin High School. She and her student colleagues assisted by United Workers of Baltimore formed Free Your Voice which released a series of videos and rap songs highlighting the callous danger posed by a proposed 4,000 ton per day facility planned for the heart of an already polluted community. These  actions convinced local governments, school districts and museums to drop their plans to purchase electricity from the proposed facility, eventually leading to the Maryland Department of the Environment to rescind the permit for the facility. The community is now pursuing a zero waste strategy for its residents and businesses.

The activism started at Ben Franklin High School acquired support from diverse groups and individuals in the Baltimore region including Physicians for Social Responsibility, Energy Justice Network, Environmental Integrity Project, Global Anti Incineration Alliance, ILSR and numerous community organizations within Curtis Bay and Brooklyn Park communities.

More Information

 

 

Press Release: Skyrocketing Rents Threaten Independent Businesses, New Report Explores Solutions


placeholder
FOR IMMEDIATE RELEASE
Contact: Stacy Mitchell, smitchell@ilsr.org

ILSR’s new report examines how high rents are shuttering businesses and stunting entrepreneurship, and explores 6 strategies that cities are using to create an affordable built environment where local businesses can thrive. 

Image: Report cover.Minneapolis, MN — The cost of leasing commercial space is soaring in many cities, threatening the future of independent businesses, finds a report released today from the Institute for Local Self-Reliance (ILSR). In cities as diverse as Oakland and Nashville, Milwaukee and Portland, Maine, retail rents have shot up by double-digit percentages over the last year alone. As the cost of space rises, local businesses are being displaced by national chains and urban neighborhoods that have long provided the kind of dense and varied environment in which entrepreneurs thrive are becoming increasingly inhospitable to them.

ILSR’s new report examines what’s causing commercial rents to skyrocket and explores six broad policy strategies that elected officials and community leaders are proposing to address it. A one-page factsheet on the findings, a map of rising rents, and the full report, “Affordable Space: How Rising Commercial Rents Are Threatening Independent Businesses, and What Cities Are Doing About It,” are available at https://ilsr.org/affordable-space/.

The report finds that the sharp rise in rents isn’t limited to affluent neighborhoods. It’s happening across a range of communities, with some of the most intense pressure falling on businesses in lower income neighborhoods. The trend also isn’t limited to retailers. The price of industrial space is rising rapidly too, jeopardizing a budding renaissance in urban manufacturing.

A complex web of causes lies behind rapidly growing and increasingly unaffordable commercial rents, the report finds. These include a speculative run-up in urban commercial real estate prices, growing demand from national chains seeking city locations, a limited and declining supply of the small spaces most suitable to local businesses, and a preference for national companies over independent businesses in commercial real estate financing.

The report outlines six broad policy solutions, highlighting a range of ideas that elected officials, business owners, and community leaders have come up with for keeping space affordable and ensuring that entrepreneurs continue to thrive. Among the examples in the report are Salt Lake City’s investigation into creating a “Buy Your Building” program to help local businesses purchase their property, New York City’s efforts to give small business owners certain rights when it comes time to renew their leases, San Francisco’s ordinance encouraging commercial diversity, and Seattle’s plans to lease city-owned property to local businesses with favorable terms.

“Cities have a strong public interest in maintaining affordable commercial space,” said Stacy Mitchell, ILSR’s co-director.  “By creating a built environment that enables local businesses to thrive and offers plenty of room for new entrepreneurs, cities can advance several important policy objectives, including expanding jobs, reducing inequality, and strengthening the social fabric of neighborhoods.”

###
The Institute for Local Self-Reliance (ILSR) is a 42-year-old national nonprofit research and educational organization. ILSR’s mission is to provide innovative strategies, working models, and timely information to support strong, community rooted, environmentally sound, and equitable local economies.

New Report: How Rising Commercial Rents Are Threatening Independent Businesses, and What Cities Are Doing About It


placeholder

ILSR’s new report examines how high rents are shuttering businesses and stunting entrepreneurship, and explores 6 strategies that cities are using to create an affordable built environment where local businesses can thrive. 

Image: Report cover.In cities as diverse as Nashville and Milwaukee, Charleston and Portland, Maine, retail rents have shot up by double-digit percentages over the last year alone. As the cost of space rises, urban neighborhoods that have long provided the kind of dense and varied environment in which entrepreneurs thrive are becoming increasingly inhospitable to them. Local businesses that serve the everyday needs of their communities are being forced out and replaced by national chains that can negotiate better rents or afford to subsidize a high-visibility location.

This new report from ILSR offers elected officials insights on what’s causing commercial rents to skyrocket, and explores six broad policy solutions, with practical examples, that cities can use to keep commercial space appropriate, accessible, and affordable for independent businesses.

The report finds that the sharp rise in rents is happening across a range of communities, with some of the most intense pressure falling on businesses in lower income neighborhoods. And the trend isn’t limited to retailers. The price of industrial space is rising rapidly too, jeopardizing a budding renaissance in urban manufacturing.

There’s a public interest in the commercial side of the built environment, the report concludes, and smart city policy has an important role to play in creating an urban landscape in which locally owned businesses can thrive.

Read: ONE-PAGE FACTSHEET  |  Press release  |  Full Report  |  MAPPING RISING RENTS

 

Introduction

For 22 years, Lisa Monson ran her business out of a building she rented in Salt Lake City’s 15th and 15th business district. The 2,800-square-foot space was a good size for her hair salon, and she liked being in a neighborhood of locally owned businesses.

Like many business owners, though, the more Monson continued to invest in her business, the more wary she became of losing her space. Her landlord wouldn’t offer her a long-term lease, and every three years, she faced a tough renegotiation. Meanwhile, national chains had started moving into the neighborhood, including a Starbucks and an Einstein’s Bagels that bought out a local bagel shop.

“It kept me in a place where I was completely at risk of being thrown out,” Monson explains. “I knew that if he got an offer for a lot more money, I wouldn’t be able to match it.”

The cost of commercial space is spiking upward around the country, driven both by run-away real estate speculation and the growing popularity of urbanism. As a new generation discovers the appeal of walkable and mixed-use neighborhoods,[1] demand for small commercial spaces in those neighborhoods is far outpacing supply, and rents are rising to match. Locally owned enterprises, which thrive in these areas, are increasingly threatened with displacement from the neighborhoods that they’ve made vibrant, and getting replaced by national chains that can negotiate better rents or afford to subsidize a high-visibility location. As high rents shutter longtime businesses, they also create an ever-higher barrier to entry for new entrepreneurs, stunting opportunity and leading to a scarcity of start-ups in cities once known for their business dynamism.

“The rents have come to be the most critical issue in the survival of locally owned businesses,” says Betsy Burton, president of the American Booksellers Association and a founder of the independent business advocacy group Local First Utah.

When once-thriving blocks become colonized by generic national brands, local business owners lose. But so do cities and the people who live in them. The businesses on the front lines of rising rents are the grocers and hardware stores, the neighborhood-serving businesses selling everyday goods with little padding on their margins. When these businesses get displaced, residents lose the ability to walk to the store for their shopping, to bump into neighbors, and to chat with the business owners, who often attend to a variety of community needs that go well beyond making sales.

Cities also stand to lose, because the strength of the independent business sector is closely tied to other policy aims. At a time when more than 30 major U.S. cities and counties have committed to reducing their greenhouse gas emissions by 80 percent or higher,[2] having local food markets, pharmacies, and other stores in neighborhoods has been shown to sharply reduce the amount of driving households do, and even to spur more people to commute to work by public transit.[3]  Locally owned businesses also sustain much of the social fabric of neighborhoods, and recent research has found a strong relationship between their prevalence and community well-being, including higher income growth and lower poverty rates, as well as increased levels of civic engagement.[4] And for cities looking to increase jobs, fostering a built environment that’s small in scale and hospitable to local enterprises has been shown to support stronger levels of positive economic, social, and cultural activity across metrics from number of jobs per square foot to diversity of residents.[5]

Image: Two-pager.

Click to download a one-page factsheet on the findings.

The displacement of local businesses isn’t just an issue in trendy, affluent neighborhoods. Among New York City’s boroughs, the Bronx has seen the biggest jump in court-ordered evictions of small businesses,[6] and over the last year it also experienced the largest percentage increase in the number of chains.[7] Among these newly arriving chains is a Boston Market, slated to open on a busy corner previously occupied by Zaro’s Bakery, a beloved business founded by a Polish family in 1927 and given just a few weeks notice that its lease would not be renewed.[8] Across the Harlem River, in Washington Heights, numerous longstanding businesses have recently been evicted or handed hefty rent increases. One is the nearly 40-year-old Liberato Foods, a Dominican grocery store with two-dozen employees, which is reportedly facing a tripling of its rent.[9]

“I think affordability is a very high issue if not the highest issue that businesses face,” says Vicki Weiner, deputy director of the Pratt Center for Community Development, of local businesses in New York City. “What they make compared with what they have to pay in rent seems to be out of scale in every neighborhood, no matter what the market conditions are.”

Some cities and community leaders are beginning to grapple with the ways that public policy can offer solutions. They are coming up with innovative ideas, from tax abatements for new developments that set aside space for local retail to low-interest loan programs that help local businesses buy their buildings, all with the aim of creating and maintaining a built environment that’s affordable, appropriate, and accessible for locally owned businesses.

“We know that small businesses, particularly those that are neighborhood-based, are important contributors to the identity of Seattle, and the diversity and what makes it attractive to be here,” explains Ken Takahashi, who works in the Office of Economic Development in Seattle, of the perspective of one city. “So we don’t want to just let the market do what the market does, and we want to see if there are ways that we can intervene.”

 

PART 1: Understanding the Problem

“We’ve been priced out of a ZIP code that we’ve been in for the past 18 years,” wrote a local retailer in Austin in the comments of ILSR’s 2016 survey of independent businesses. “I don’t mean rents slowly creeping up; I mean we would be paying more than double.”

This business owner isn’t an outlier. In that survey, which was distributed to local businesses across North America, 59 percent of retailers reported being worried about the increasing cost of rent, and one in four described it as a top challenge.[10]

“I get calls every week,” says Rebecca Melançon, the executive director of the Austin Independent Business Alliance. “Our members are not seeing a 10, 15, 20 percent rise. Their rents are doubling, tripling, and quadrupling, and the economy is good, but they’re not bringing in four times their revenue. It’s basically forcing them out.”

Some locally owned businesses, like those with multiple locations or a higher-end product, can handle those increases. “It’s the older, smaller businesses that really built the city in a lot of ways that I see hurting,” Melançon says. It’s also impacting who can start a business. “Austin’s extremely entrepreneurial, but if you don’t have deep pockets, the threshold for entry has gone way up,” continues Melançon. “There isn’t anyone out there it’s not affecting.”

The average annual rent for a 2,000-square-foot store in the U.S. increased 2 percent in 2015, according to the real estate statistics firm Reis, Inc. Start drilling into cities and towns, and the numbers climb faster. In Charleston, for instance, citywide retail rents skyrocketed 26 percent between Feb. 2015 and Feb. 2016;[11] in Cleveland that figure was 12 percent,[12] and in Nashville, 20 percent.[13] Even in smaller communities, like Grand Rapids, Mich., the retail rents are “unprecedented.”[14]

Look at the rents for the kinds of walkable, mixed-use neighborhoods that have traditionally provided the best environment for locally owned businesses, and the numbers jump again. In Louisville, Ky., for instance, the lease rate for big-box retail space was $7.28-per-square-foot at the end of 2015.  For “small shop” space, it was $16.68-per-square-foot, a 129 percent premium.[15] A 2012 study from the Brookings Institution found that Washington, D.C., neighborhoods that scored well on an index of walkability and urban design, called the State of Place Index, also had higher real estate values. “A one point increase in a neighborhood’s State of Place was related to increases of… $0.35/sq. ft. in retail rents, [and] four percent in retail revenues,” the report found. “Clusters of neighborhoods with an above average State of Place Index commanded nearly… 47 percent more in retail rents… than a neighborhood with an above average State of Place Index that ‘stood alone.’”[16]

Within particular business districts, often the ones that local businesses have made vibrant and valuable through their own investment and labor, the increases in rent are the sharpest of all. In Philadelphia’s downtown district, Center City, rents for prime retail space increased 87.5 percent over seven years, including 15 percent in 2015 alone. Along some streets, increases were as high as 214 percent over the last decade. “Some local merchants have been pushed off of Walnut [St.] as international and national brands move in,” notes a report from the commercial real estate firm CBRE.[17] “Center City offers a unique diversity of retailers, services, and restaurants in an easily accessible, dense, walkable, safe setting… in contrast, many malls and shopping centers have grown stale.”

Map of rising rents.

Click to enlarge.

Behind these rising rents are a complex constellation of causes that span new urbanism and global capital. On the demand side, cities are booming, and there’s an increased demand for the small-scale, walkable storefronts in which independent businesses thrive. National chains, too, are entering the hunt for space in cities, drawn by rising populations and, having saturated the suburbs, seeking new markets. On the supply side, as older buildings—which were generally designed to have small-scale, ground-level retail space—are getting razed for new development, those new projects often don’t replace them, instead containing commercial space that’s larger-format and designed for a national chain.

For the real estate developers behind these projects, securing a single large ground-floor tenant makes a project easier. A name-brand tenant is a faster ticket to financing for a project, especially within a banking system that’s increasingly national and international in scope. “The way that projects are financed, they go to a safe way of doing development and they have large tenant spaces that make the banks happy that are lending to them,” says Ken Takahashi, in the Seattle Office of Economic Development. This bias toward large spaces in new construction further skews the built environment in favor of bigger companies, and compounds the issue of rising rents. “In a lot of places, the spaces are not the right size for smaller businesses that really only need a fraction of what’s available, and they can’t afford to pay rent on a much larger space,” Takahashi says. Another challenge is that real estate developers and the brokers they hire are often themselves national in scale. They lack knowledge of the local businesses in the market, but already have ongoing relationships with many national brands.

Similar incentives, driven by how buildings are financed, also lead property owners to favor chains.  While there is a perception that national chains pay higher rents, that’s not necessarily true. In some cases, it’s local businesses that have to pay higher rents in order to prove themselves, while national chains are given a discount for their perceived stability and credit-worthiness. “A formula retail tenant may not be paying more per square foot, but it adds some credit-worthiness to the balance sheet for the landlord, and it makes your bank happy,” says Rodney Fong, president of Fong Real Estate Company in San Francisco and a member of the San Francisco Planning Commission.  Banks and other lenders often provide lower interest rates or better terms if a building owner has signed a national brand.  When property owners and investors can get better terms by leasing to a business like a Target, Fong explains, “Target will win every day.”

Structural incentives and geographic biases like these are further distorting the commercial real estate market for locally owned businesses, and making it difficult for them to compete on their own merits. At the same time, property values are soaring, for reasons that include financial speculation and, in the present low interest-rate climate, real estate becoming an increasingly popular place for global investors to park their capital.[18] Combined, these factors are creating rent increases that local businesses can’t absorb. Many of them are forced through the expense and challenge of relocating their business, or closing altogether. In one survey of businesses along Magazine Street in New Orleans, 76 percent of local business owners reported fearing that soaring rents would force them off of the street.[19] A March 2016 report from the city of Boston found that among the city’s primary gaps in its small business ecosystem, “Some gaps, such as a lack of available, affordable real estate, are pervasive and affect most small businesses in the city.”[20]

Continue Reading: to see six broad policy solutions to the problem, and many on-the-ground examples, download the full report.

Notes:
[1] See, for instance: “Cities erupt in youthquake: Millennials swell populations.” Greg Toppo and Paul Overberg, USA Today, May 23, 2013.
[2] “Measuring Up 2015: How U.S. Cities Are Accelerating Progress Toward National Climate Goals.” ICLEI-USA and World Wildlife Fund, Aug. 2015.
[3] “Neighborhood Stores: An Overlooked Strategy for Fighting Global Warming.” Stacy Mitchell, Institute for Local Self-Reliance, Aug. 19, 2009.
[4] “Key Studies: Why Local Matters.” Stacy Mitchell, Institute for Local Self-Reliance, Jan. 8, 2016.
[5] “Older, Smaller, Better: Measuring how the character of buildings and blocks influences urban vitality.” Preservation Green Lab and National Trust for Historic Preservation, May 2014.
[6] “Bronx Leads All Boroughs In Court Evictions of Businesses, Up 30%.” Peter Milosheff, The Bronx Times, Oct. 16, 2015.
[7] “State of the Chains, 2015.” Center for an Urban Future, Dec. 2015.
[8] “Zaro’s Bakery in Parkchester—Iconic Bronx Store—To Close Its Doors.” Welcome2TheBronx, Dec. 22, 2015.
[9] “Landlords Can’t Stop Evicting Latino-Owned Businesses in Washington Heights.” Anita Abedian, The Village Voice, Feb. 9, 2016.
[10] “2016 Independent Business Survey.” Institute for Local Self-Reliance, Feb. 2016.
[11] “Asking Rent Retail for Lease Charleston, SC.” Retail Property Asking Rent — Lease Trends. LoopNet. Accessed April 2016.
[12] “Asking Rent Retail for Lease Cleveland, OH.” Retail Property Asking Rent — Lease Trends. LoopNet. Accessed April 2016.
[13] “Asking Rent Retail for Lease Nashville, TN.” Retail Property Asking Rent — Lease Trends. LoopNet. Accessed April 2016.
[14] “Retail Market Continues to Tighten, Rental Rates Soar.” CBRE Grand Rapids, H1 2015.
[15] “Louisville Retail, H2 2015.” CBRE Research, H2 2015.
[16] “Walk this Way: The Economic Promise of Walkable Places in Metropolitan Washington, D.C.” Christopher B. Leinberger and Mariela Alfonzo, Brookings Institution, May 25, 2012.
[17] “Surging Demand for Urban Retail: Center City Philadelphia.” CBRE, Sept. 2015.
[18] See, for instance: “As Commercial Real-Estate Prices Soar, Fed Weighs Consequences.” Jon Hilsenrath and David Harrison, Wall Street Journal, Dec. 11, 2015; “The Great Wall of Money.” Cushman & Wakefield, March 2016.
[19] “Chain stores, rising rents may make Magazine Street the victim of its success.” Mark Strella and Travis Martin, The Lens NOLA, April 18, 2014.
[20] “City of Boston Small Business Plan.” Mayor Martin J. Walsh, City of Boston, March 2016.

 

Preview: Beyond Sharing – How Communities Can Take Ownership of Renewable Power


The electric utility monopoly is breaking up, but will renewable energy become another form of wealth extraction or will community renewable energy enable communities to capture their renewable power?

ILSR’s Energy Democracy initiative will release its latest report, “Beyond Sharing – How Communities Can Take Ownership of Renewable Power” Tuesday, April 26. If you’d like an advanced copy of the report, email communications manager Rebecca Toews at rtoews@ilsr.org.

In anticipation of the report, we’ve published a Local Energy Rules podcast with Timothy DenHerder-Thomas of Cooperative Energy Futures. In the episode, John and Timothy discuss the Shiloh Temple Community Solar Garden, and what community-owned power means for the energy industry and everyday people.
You can also get a sneak preview of the report by reading the executive summary, below.

Download the Executive Summary

Listen to the Podcast

Executive Summary

In the past five years, the opportunity for community renewable energy has coalesced around “shared solar,” where participants share the electricity output from a nearby solar array in the form of credits on their electricity bill. Some forecasts suggest that shared solar could supply 5-10 gigawatts of new power capacity in the next 5 years.

Trnsprt Growth in Community Renewable

But shared solar is just a small slice of the community renewable energy opportunity, which could include many other renewable technologies such as wind or geothermal, but also community-owned projects that would allow greater local capture of economic benefits. While shared solar is a model shown to avoid several of the pitfalls typical for community renewable energy, these pitfalls could be bridged to much more broadly expand the economic opportunity.

U.S. Barriers to Community Renewable Energy

Three major barriers still inhibit widespread expansion of community renewable energy, much as they did when ILSR published its community solar report in 2010.

  1. Federal and state securities laws, meant to shield ordinary people from Ponzi schemes and bad investments, are often too onerous for community-scale renewable energy projects.
  2. Federal tax incentives require specific and sufficient tax liability, in ways that often precludes ordinary community investors.
  3. Finally, legal limitations to sharing electricity output from community-based renewable energy projects mean only states with explicit exemptions are likely to see substantial growth in community renewables.

Trnspt 14 State with VNM policies

[Back to Top]

For timely updates, follow John Farrell on Twitter or get the Energy Democracy weekly update.

The Victory Over Proposed Incinerator in Logansport, Indiana


For the past 40 years organized citizens and small businesses have successfully defeated proposed incinerators in over 400 cities and counties in the US. Each confrontation was unique even as they shared common elements: Opponents of garbage incineration used facts against the administration’s public relations, focused at the local level where elected officials are most vulnerable to public outcries, stayed polite and professional in the face of ad hominem attacks, and relied on community meetings and social media to get around black outs by local media.

This article is a brief description of what happened in Logansport, IN, from 2012 to 2015.

The Victory Over Proposed Incinerator in Logansport, Indiana

“Each community victory is a victory for all of us,” explained Italian anti garbage incineration activist Rossano Ercolini, the Goldman Prize winner for Environmental Leadership.

In November 2015, a town of 18,000 in Indiana saw their Mayor, Clerk/Treasurer and six of seven City Council members lose their elected positions after pushing a series of proposals for garbage incineration. Logansport’s city administration claimed that incineration would produce cheap, clean electricity. Incineration opponents stuck to the simple request that the administration show examples of incinerators performing as promised. The administration, of course, was unable to provide such an example, even though they appeared convinced—and still appear convinced today–that they were doing what was best.

“Some people say that we ruined Logansport’s future. They think that if we had just kept quiet, by now Logansport could offer cheap, clean electricity, and our existing employers could expand and we could attract new employers,” stated Mercedes Brugh, one of the citizen leaders. “But most people came to believe that they had been robbed and deceived, and they expressed that belief when they voted. The anti-incineration fight set the stage for the election campaign. The new mayor won with 61% of the vote, even though he was outspent five-to-one.”

It all started with Logansport’s coal-fired electric generating plant. For decades it had cost more to produce electricity from the city’s plant than it did to buy power wholesale from Duke Power, but the local plant provided good jobs and the City continued to use it. However, the expense of tighter pollution controls mandated for 2018 would put continuing to run the plant with coal out of reach.   One possible solution was to retrofit the coal-fired plant to burn natural gas.

logansport-tpd chart Kevin B 131004In November of 2012, city officials received a report showing the cost of converting to natural gas was too high (It was later shown that the numbers were inflated in at least two ways). Consultant William-Lynn James presented a “proposal” for what would have been the largest trash incinerator in the world. The proposal contained no examples of incinerators that actually do produce cheap, clean electricity. This proposal marked the beginning of a three-year fight that culminated with the election campaign in 2015.

During those three years, taxpayer dollars were paid to the Indiana Speaker of the House to smooth the way for incineration. Logansport’s Clerk/Treasurer paid $1.223 million in claims to William-Lynn James contrary to Indiana law because the one-page bills were hardly itemized. Logansport’s city attorney, also the area’s State Senator, successfully sponsored a law that kept the State Board of Account’s oversight of the Clerk/Treasurer’s actions hidden from public view. City and County law enforcement officers were advised not to provide security for anti-incinerator events. “One of the most disappointing things was that several people who had influence refused to get involved. They guessed correctly that the proposals would fail to get funding, fail to get fuel, fail to get permitted,” says Brugh. “What those people chose to ignore was all the money that was being wasted, and the jobs our community lost because our high electricity rates were not being resolved.”

A billboard in Logansport from 2013

A billboard in Logansport from 2013

With such forces arrayed against them, incinerator-doubters formed Citizens Alliance for Responsible Energy (CARE), and began a spirited letters-to-the editor campaign, established a Facebook page called “Logansport Power,” sponsored informational events (videos still available on YouTube), and created flyers and yard signs. Through it all, it was of utmost importance to keep to the facts and stay polite.

logansport-call it off front

The group relied heavily on the research and expertise of Energy Justice.net and GAIA, invited Mike Ewall from Energy Justice Network and Bradley Angel from GreenAction to speak, as well as an Indiana economist/columnist, a solar power expert, and the vice president of the Municipal Power Association. The Facebook page was closely monitored, and people making personal attacks were warned and any offending post was deleted.   Although every member of the group was not always civil, overall CARE developed a reputation for knowledge and civility.   CARE received secret financial support from citizens who wanted to stay in the background.

CARE stuck to the simple question, “Please show us how this works. Here are examples of where it has not worked. Here are reasons this project will probably not receive funding, execute fuel contracts, or get permitted. Show us how this might work.”

logansport-eventWhen the administration was unable to answer, they attacked CARE’s motivations, education, and information. For starters, they insisted that they were not talking about incineration at all. Even after being soundly beaten in the 2015 election, they still pursued an agreement with an incinerator to the last days of their administration.

Citizens and small business people sacrificed their time, money and careers to stop a garbage incinerator in their town. Logansport can now plan for better energy and solid waste management solutions. “It will take us a few years to recover economically from the sacrifices our family made in this campaign. But we had to do it. We had no choice,” stated one CARE member.

logansport-mary Anns rat cartoon

 


Neil Seldman is senior staff to the Waste to Wealth Initiative of the Institute for Local Self-Reliance, Washington, DC. He is a pioneer in the US recycling, anti incineration and zero waste movements. Seldman was a manufacturer and professor of political science before co-founding ILSR in Washington, DC in 1974. ILSR was founded as a community development organization in the Adams Morgan section of Washington, DC.