Ktismatics

1 November 2008

Election 2008: Boulder County Issue 1A

Filed under: Culture, Reflections — ktismatics @ 1:16 pm

Here’s an intriguing proposition being put to the vote here in Boulder Colorado:

Shall Boulder County debt be increased by up to $40 million… with no increase in any county tax or tax rate, for the purpose of financing the costs of constructing, acquiring, and installing solar and other renewable energy systems or energy-efficient improvements for property owners… by the issuance of special assessment bonds payable from special assessments imposed against benefited properties…?

Say you own a home or business property in Boulder County. You want to retrofit your building for solar heating — install panels, cables, transformers, etc. If Issue 1A passes, you can finance this installation by borrowing money directly from the County government. These loans would be priced below market rates of interest, and for income tax purposes they would be treated like mortgages: the interest paid by the owner is deductible. The loans are attached to the property itself, so that if the current owner sells the building the new owner acquires the responsibility continuing the loan repayments.

The supporting documentation, mailed by the County to every resident, says this:

WHEREAS, coal and natural gas are the principle sources of generation of commercial quantities of electrical energy for the power grid in the Western United States, and home and business consumption accounts for 73% of the overall usage of electric energy; and…

WHEREAS, if the United States is serious about moving away from fossil fuels in order to limit the greenhouse gas effect leading to global warming, the existing occupied building stock must be retrofitted…; and…

WHEREAS, existing homeowners, and to a certain extent business property owners, are highly leveraged on their properties currently…

NOW, THEREFORE, etc. etc.

In addition to the arguments in favor of this bill, the County summarizes arguments submitted in opposition. Here the language gets a little more colorful:

This is another example of Boulder County’s excessive obsession with green initiatives regardless of the negative financial impacts… One of the problems with the current financial meltdown on Wall Street is predatory lending, lending by mortgage companies to people who could not possibly afford the loans. Yet this is exactly what 1A does… To commissioners want to lend money to people that the market has determined cannot repay additional loans, and saddle the poor homeowner with even more easy debt using the good credit of the citizens of Boulder County…

This is similar to mortgage companies who attempted to be so creative in creating debt instruments that we had a housing market collapse… The county is acting like a crackdealer for people hooked on money… Vote NO on this insane proposal by the County Commissioners.

I admire the creativity of a local government that’s prepared to take on the role of lender as a tangible way to encourage use of renewable energy. According to the documentation it will take 20 years before the building owner’s energy cost savings offset the price of the solar equipment installation. In backing these loans the citizenry doesn’t participate in these savings, but they are on the hook in the event of default. Then there’s this crackdealer angle to consider: instead of providing relief for already-distressed mortgagees, 1A would encourage homeowners to take on even more debt.

I wouldn’t be sorry if this bill passed: an innovative and tangible local effort to clean up the commons. However, I can’t get past the crackdealer argument. I’m going to vote NO.

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4 Comments »

  1. Doesn’t the crackdealer argument mean that if there’s an economic crisis then the environment just has to wait its turn? In the UK there has been some noise about the government’s environmental pledges getting lost in the scramble to save the economy.

    The thing is, isn’t the banking bailout – in the US, UK and elsewhere – an attempt to float the banks using our money (because otherwise they’d foreclose our mortgages) in order to keep them lending, even if it means lending “more responsibly”? The state has mortgaged our wealth so that we keep paying mortgages. Debt defines capitalism. Debt and interest, that is. Without the profit motive, so Adam Smith might’ve argued, then nothing gets done. The debt is needed for the system to keep working, like the junkie’s addiction for the crackdealer. Capitalism is the crackdealer. The problem with crack is that it feels really good, so good that you can’t see past the next hit. Not very good for the environment.

    So, in advance of revolution or better ideas, why not turn one’s habit to good use? It’s better than nothing, isn’t it?

    Like

    Comment by NB — 5 November 2008 @ 7:24 am

  2. With most of the votes tallied it looks like the Crackdealer Proposition will pass by nearly a 2 to 1 margin. Boulder is very green: the local government spends proceeds from property and sales tax to buy private property, converting it into “open space” reserved for wildlife, pastureland, wetlands, mountainscapes. Houses bordering on open space command a significantly higher sale price — no pesky neighbors on one side of the property, nice vistas. I don’t know for certain, but I suspect that solar heating is a home improvement that would pay for itself in resale appreciation. Offering income tax deductions for mortgage interest payments exacerbates the debt-financed homebuying spree in the US — I don’t know if it works this way in the UK as well. Also, Boulder is a pretty affluent place with a disproportionate share of big expensive houses. A bigger house can accommodate more solar panels, and more solar panels mean a bigger loan. For the general local citizenry, including renters, to subsidize and to guarantee propertyowners’ debt financing strikes me as regressive.

    On the other hand… $40 million in cheap tax-deductible loans should accelerate the movement toward renewable energy — turning the habit to good use, as you say. It’s a very sunny climate here so solar power makes sense pragmatically as well. It’s certainly better than subsidizing homeowners’ erecting oil derricks in their back yards.

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    Comment by ktismatics — 5 November 2008 @ 8:42 am

  3. “A bigger house can accommodate more solar panels, and more solar panels mean a bigger loan. For the general local citizenry, including renters, to subsidize and to guarantee propertyowners’ debt financing strikes me as regressive.”

    Good point.

    Like

    Comment by NB — 5 November 2008 @ 11:24 am

  4. On a related note, here’s a Wall Street Journal front-page story about the limits of good intentions in Boulder’s greenification campaigns. Homeowners and business owners just don’t seem to be taking steps to make their facilities more energy efficient, even when they’ve paid for energy audits out of their own pockets.

    for the most part, those working on the energy-efficiency plan say the public still backs it. The hitch is in getting residents to move from philosophical support to concrete action. As Mr. Sheldon put it, until his neighbors all decide, “‘We’re doing this!’… the city will be pushing a rope uphill.”

    I don’t know how many property owners have taken advantage of the government-run lending program for installing solar panels, as described in the original post.

    Like

    Comment by john doyle — 16 February 2010 @ 6:36 am


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