Business & Finance

Business & Finance

Ensuring the EcoBlock's financial sustainability

The shared infrastructure of the EcoBlock will require funds for maintenance and insurance after the system is installed, tested and commissioned, and after the project is completed in 2023. The research team will help the participants select and develop an appropriate governance vehicle, such as a Trust, Co-op, or HOA-like organization, such as a Green Retrofit Organization, to help members communicate and coordinate ongoing operation. The shared systems, such as storage, connections, control, solar panels, and EV charging, will be collectively owned by all participants. There will also be a method of collecting the necessary funds for continued operation, maintenance, and insurance after the project ends. The exact form of these organizations is still to be determined, with input from the block.

One option that has been identified is the Community Facilities District (CFD).

A Community Facilities District (CFD) allows a group of property owners and renters to create a funding structure that can pay for capital improvements or services. CFDs are often used in a registered voter election in a part of a City that desires better police, fire, or parks. CFDs are created by a vote of “qualified electors.”  When there are fewer than 12 registered voters in the CFD boundary, it is actually a vote of Property Owners. But when there are greater than 12 registered voters, the process switches to a more classic registered voter election.

So in this case, the EcoBlock participant registered voters (likely both homeowners and renters) could create the CFD, the City of Oakland could act as the governing board, and a local financial firm, DTA, is the administrator. This assesses a special tax that is included in the property taxes of each participating property owner. This tax will be created to pay for the microgrid services. A budget will be determined to cover operation and maintenance, replacement of equipment, insurance, and possibly payment to a Co-op manager, and potentially other costs, such as deductible on the liability insurance. The tax can be distributed among all the participating homeowners according to how much benefit is received from the Co-op (such as energy consumed).

The project team looked at various financial structures, and found that CFDs are known structures, they are credit-worthy and trusted in California as a land secure service or infrastructure. As a secure revenue stream, this protects all the neighbors in the Co-op. If a house is sold, the Co-op and CFD remain with the house. While it may seem daunting to incur additional property tax, DTA creates 150 CFDs every year, and in the last 10 years, has never foreclosed on someone for delinquency on CFD.

The project expects savings of $500-1000+/year from reduced energy and water bills for each participating household; this is expected to outweigh the annual fee. However, while researchers have analyzed the projected savings from various EcoBlock measures and considered them favorable, we cannot know future electricity, gas, and water rates. We also cannot know exactly how your utility usage may change over time. While it is impossible to guarantee a specific amount of savings, the expectation is that the utility savings should be substantially greater than the annual payment (e.g. CFD special tax) you are assessed. The project team will work with the neighborhood to determine the maximum payment that could be assessed. 

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