My sense is that one of the most important impacts of ARRA will be the expansion of the participants in, and beneficiaries of, energy efficiency funding and programs. These new actors and interest groups, I hope, will bring needed changes that will make the industry more effective, broad-based, and transformational. 

As I referenced in my blog post last month, my concerns reflect very deep seated reservations about the governance and oversight of efficiency programs and funding – especially, in regards to how the goals, evaluation metrics, and allocation processes are determined. 

My hope is that ARRA funds will radically transform the equation because: 

• A primary goal of ARRA programs is job growth, not to the exclusion of energy savings, but certainly valued equally to the Kwh and BTUs saved. 
• ARRA has led to a proliferation of new actors within the energy efficiency industry. In the world of finance, for instance, there are now non-profits, community development financial institutions (CDFIs) (such as our affiliate, ShoreBank Enterprise Cascadia), utilities, governmental agencies, and many others that offer novel types of loans for energy saving improvements. 

These unconventional lenders bring new energy and new concerns to the field of energy efficiency. For instance, for my colleagues in Portland, while reducing energy consumption is a priority, so too are creating social equity, job opportunities for disadvantaged populations, and proliferation in access to responsible credit for under-served communities. Reconciling this larger set of goals against the historical focus on energy savings alone will be an important challenge going forward.

My hope is that all of the energy unleashed by ARRA funding will lead to a radical transformation in the energy efficiency space. Underserved communities will be better represented in the sector and, in turn, begin to demand greater inclusion in utility sponsored programs. By doing so, they could become allies for the energy efficiency community and greater advocates for these programs and funding. That would be a welcome change, indeed!

Poverty, sadly, never seems to go away, even in the world’s richest country. Our poverty rate last year rose to 13.2%, encompassing 39.8 million people, among the highest numbers in about a dozen years. In addition, more than 17 million people had an income of less than one-half the poverty threshold, and 6.3 million children lived in such low-income households. 

Stark as these figures are, they present a snapshot of a moment in time rather than an assessment of the dynamics of poverty. In contrast to many parts of the developing world, poverty in America tends not to be a long-term condition. Over the four-year period from 2003 through 2007, just 1.8% of the American population was chronically poor. On the other hand, almost a third of the population could be classified as living below the poverty level for at least two months. More than a quarter of households classified in the bottom 20% by income moved up between 2004 and 2007, while a similar percentage moved down from the top 20%. 

What makes us different from other nations? Mobility. The Census Bureau notes that its statistics “yield insights into…the economic mobility of US residents.” Compared to the millions trapped in generations-long poverty in the urban shantytowns and isolated rural villages of the developing world, poverty in America is relatively dynamic. If there is hope for a better future among those living in despair, it is our nation’s track record of economic mobility.

Though poverty here may not always be a life sentence, having almost 40 million people in poverty at any time remains a national disgrace. It is more than the populations of Connecticut, Mississippi, Arkansas, Iowa, Kansas, Utah, Nevada, New Mexico, West Virginia, Nebraska, Idaho, Maine, New Hampshire, Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota, Vermont, North Dakota, Wyoming, and the District of Columbia combined. It is time to move more people to action.

The environmental impact of paperless, electronic banking should not be underestimated. We’re talking about more than the occasional four-by-two inch ATM receipt. For example, Greendig.net estimates that if every household in the U.S. switches to electronic banking, it would save 16.5 million trees each year. That’s paper for envelopes, paper for stamps, paper for checks…all being saved.

Many customers also seem specifically attracted to the green aspects of paperless banking. In 2008, Newsweek reported that 57% of U.S. consumers expressed an interest in green banking when polled about it.

ShoreBank has always seen its environmental commitment as integrally connected to its community development mission. For example, supporting businesses like Indie Energy—a company that designs and builds environmentally-friendly, renewable energy systems throughout the Chicago region— creates jobs for people in the community while making their homes more energy efficient and affordable. By encouraging energy-efficiency whether by financing a green business or providing homeowners with free energy-audits—ShoreBank is helping homeowners lower their utility bills and tackle global warning by working to reduce greenhouse gas emissions.

Want to learn more? One easy-to-use tool for gaining a better understanding of the link between environmental and economic community development can be found on our new website, https://www.sbk.com/. It’s a fully-functional bank website with state-of-the-art technologies to make it easier to manage your money. It also has stories that will engage you in ShoreBank’s mission. Now you can manage your finances and build wealth while seeing, through customer stories, how we are building stronger, healthier communities and reinvigorating the lives of our customers.

So I am encouraging you to browse https://www.sbk.com to help “put a face” onto the opportunities and people we work with —both through online and good old fashioned brick-and-mortar banking. I think you’ll enjoy learning more and hope from these stories you will either begin or continue supporting ShoreBank in its mission.

Since its inception as a vital component of President Obama’s American Recovery and Reinvestment Act of 2009, the tax credit has assisted nearly 1.5 million Americans, providing $10 billion for the purchase of a new home. The first time home buyer is someone who has been without a principal residence for a three-year period. It is available for homes purchased on or after January 1, 2009 and before December 1, 2009, but does not have to be repaid. Vacation homes and rentals properties are ineligible.

Single tax-payers with incomes up to $75,000 and married couples with incomes up to $150,000 are eligible for the full tax credit. The credit reduces the new homeowner’s tax bill or increases their refund–dollar for dollar. Unlike most tax credits, the first-time home buyer credit is fully refundable. This difference means that the credit will be paid to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed. (For additional information about the home buyer tax credit, visit www.federalhousingtaxcredit.com.)

Helping homebuyers to realize homeownership and life in a strong, healthy community is not only ShoreBank’s mission, but also the dream of millions of Americans. Previously we could rely on consumer spending to lead us through the recession and onto the road of economic recovery, but not now. Those days, I am afraid, are gone. I believe an extension of the tax credit is necessary in order to help stabilize our communities by encouraging consumer spend on home purchases, generating the additional revenues local government agencies need and encouraging the home improvement projects which create the badly-needed new jobs. In fact, unemployment is the number one cause of housing foreclosures, so an extension of the tax credit is essential and best of all, it has proven it works.

The tax credit is in a great position to continue being successful. While some have blamed the mortgage meltdown due to the ease by which many buyers obtained unaffordable loans, most of the irresponsible lenders are no longer in business. And now there are fewer institutions serving the areas hardest hit by the recession, and yet there are plenty of hard working individuals and families out there who need quality loans, and who qualify for them too. 

Some naysayers will point to the tax credit not coming cheaply to American taxpayers. It is estimated to be costing taxpayers about $1 billion a month, but much of the tax credit will inevitably pay for itself. So now is the time for our government to invest in our housing market, our communities, and our taxpayers. Besides its proven record for speeding up the economic recovery, it is also a “tried and tested” formula for creating new jobs that will prevent future foreclosures and help stabilize entire communities.

However, one detail that gets too little attention is the degree to which important policy decisions regarding priorities, goals, and acceptable uses of these funds have fallen to the regulatory bodies overseeing utilities. While extremely competent and professional, these commissions were established to set utility rates, adjudicate grievances, and ensure continuity of services – not administer programs, promote economic development, nor be the driving force behind the enormous task of transitioning the economy to a low carbon future.  In essence, we have transformed the judiciary into a unit of the executive branch without any discussion of the benefits, consequences, or merits of doing so. More alarming, we have done so for one of the most pressing and important challenges we face as a nation (and species).

One consequence of managing these funds through the commission process is that decisions are made according to a very narrow set of criteria. Particularly important is the amount of energy saved compared to resources expended – with no consideration given to the overall economic output produced, jobs created or maintained, markets transformed, or dollars leveraged. Nor does the process evaluate the equanimity of how funds are spent, with assurances of equal distribution to all geographies, incomes, and sectors. Accountability is thought of primarily in terms of seeing that the money produces tangible energy savings, not any of the other elements we all expect and demand from government, such as open access, transparency, helping disadvantaged communities and businesses, incenting innovation, etc.

Given the importance of the decisions being made and the coming scarcity of public dollars, we need a healthy debate about which investments should be made, which outcomes and evaluation metrics are most pertinent, and what process should be used for measuring success and impact. Some states, such as Connecticut and Massachusetts, have created new bodies to ensure that investment decisions better reflect a broad array of policy goals. In Massachusetts, for instance, alternative energy investments are directed by the Massachusetts Technology Collaborative, which seeks to increase installed capacity, as well as foster other important priorities, such as driving innovation, improving global competitiveness, and fomenting job creation. Hopefully, the establishment of these new agencies and wider set of priorities portends the start of the necessary and critical discussion about our best way forward.

The recent Clinton Global Initiative  (CGI) conference focused on “how” the world can address urgent global needs like providing greater access to quality health care and education, and creating sustainable economies. Finance turned out to be one of the “hows.”

President Clinton used his convening capacity to bring private, public, philanthropic and nonprofit partners together in “commitments” (a firm commitment of an amount to launch or expand a scalable program) that gained support and sometimes funding from their presence and coverage at the event. The CGI also featured progress reports on previous “commitments,” showing the power of past conferences. The areas of impact included strides made in expanding access to finance for the poor.

This was an excellent forum for discussing new ideas and models in the field of financial services, of which there are many, like a dramatic increase in small business lending or using microfinance platforms to deliver other services. In the wake of the current global financial crisis, many voices are pointing to the failure of the globe’s largest banks and financial institutions and are seeking either a return to local-scale banking or to business practices that create value beyond short-term financial profits.

This backdrop only increased the urgency my colleagues and I felt about our participation. CGI selected Jan Piercy, Executive Vice President, ShoreBank to be a Finance Track leader, responsible for designing a plenary and three working sessions. In addition to my speaking role on a breakout panel on how banks might better serve consumers who are without access to affordable, traditional banking services, a number of ShoreBank Directors, managers, partners and “alums” served as Finance Track advisors, moderators and speakers.

ShoreBank was also involved in five new “commitments” during CGI 2009, of which three of them were selected to be publicly announced during the sessions. They include:

* John Berdes and his colleagues at ShoreBank Enterprise Cascadia working with more than a dozen organizations in Oregon to create a new loan program to improve energy efficiency for homeowners in Portland and ultimately, elsewhere in the state. The program could grow to be very large and be replicated nationally. This caught the eye of the Clinton Global Initiative staff and the “commitment” was announced by President Clinton at a special plenary session.

* Arjan Schutte of the Center for Financial Services Innovation (CFSI) was recognized in a working session for CFSI’s commitment to establish the Core Fund to finance businesses extending financial products and services to low-income consumers.

* ShoreCap Exchange’s “commitment” to create a Small Business Network to support local financial institutions extending credit to smaller borrowers in developing and emerging markets around the world.

It was also announced that ShoreBank is a founding member of the Investors Council of the Global Impact Investing Network, which committed to expanding the ways to evaluate social as well as financial returns on investments. ShoreBank’s partners in The Global Alliance for Banking on Values (GABV) are Triodos and BRAC. Our three institutions became co-sponsors of a new network of banks that have a triple bottom-line core business model. Launched in early 2009, GABV’s next annual meeting will be in Dhaka in March 2010. Banks with at least $100 million in assets and central social banking focus are sought to join the alliance.

Perhaps the most unexpected aspect of CGI was former President Clinton participating in a half-dozen sessions with all the facts at his fingertips, a passion for change that would benefit ordinary people, and with a strong, often apolitical point of view.

Not surprising? Matt Damon and Brad Pitt can give good speeches!

The Clinton Global Initiative invites members back year after year to report on progress (and obstacles) in achieving commitments made in earlier years. This lends more reality and honesty than is usual in these venues. For example, Brad Pitt reported on some very attractive green housing built by Make It Right in the Lower 9th Ward in New Orleans. He was proud of the hundred-some houses now up and occupied but also modest enough to wish it were hundreds more.

For additional information on all the ShoreBank companies, visit www.shorebankcorp.com or www.sbk.com.

A friend of mine in Northern Minnesota bikes to work year round, even in the cold and snow. Oddly I found this inspiring. So this summer, I bought a bike and began riding it to work. I was a bit hesitant at first, but a month into it I was hooked! I was reducing my carbon footprint, saving money on gas, losing a little weight, and discovering interesting new parts of the city. I sometimes passed Chicago celebrities like Oprah Winfrey or Jesse Jackson Jr. on the lakefront trail. Biking was good.

I discovered interesting new places within the city that I might have missed in a car, including a tiny Lebanese neighborhood (with a bakery selling the best pita bread I have ever tasted), an awesome Romanian restaurant (Little Bucharest—it has since become one of my favorites), and many more museums, businesses, and parks (which I still have yet to stop and explore). After this first month, I felt I was becoming “A real Chicago bicyclist.” Then part of me said: “So maybe it’s time for you to join the Active Transportation Alliance, huh?”

Although we did previously blog on the Active Transportation Alliance (ATA), if you’re not familiar, they are a nonprofit that advocates for bikes (and other non-motorized forms of transportation) in Chicagoland. They have programs promoting bicycle safety, and they lobby to ensure that bike lanes are included on city streets. They also sponsor international events like “World Carfree Day” (which occurred last Tuesday, September 22) to encourage commuters to experiment with going for one day without using a car. 

But I balked. Part of me felt that bicyclists in Chicago already had it good… maybe even “too good.” You see, there are a few bad eggs in the Chicago bicycle community who never obey any rules of the road. Insanely, they think that just having a bicycle makes you above the law! (I used to imagine Chicago cops observing a bicyclist on a crime spree, and saying to one another, “I guess there’s nothing we can do; he’s got a bicycle.”) But biking overall was pretty easy where I was.

So I procrastinated. Then, the next weekend, I decided I would take my bike to run an errand in a less bike friendly region nearby.

Let’s just say I joined the Active Transportation Alliance the next day. 

As I rode in this un-named area, the demeanor changed dramatically for the worse. First, there were no bike lanes, and it was a struggle to figure out where to ride. Then, remarkably, I had people slow down their cars and roll down their windows to yell at me just for riding a bicycle! If you rode on the street, people would yell at you to ride on the sidewalk. If you rode on the sidewalk, people would yell at you to get back on the street. And perhaps most disconcerting of all, there were no other bicyclists. 

I was shocked. Suddenly, the value of the inroads made by groups like the ATA was all too clear. It was also clear that I had taken them for granted. My little test ride provided a vision of how horrible things might be for bicyclists without nonprofits like the ATA working hard to advocate for them.

Yes, it still annoys me when an arrogant Chicago bicyclist acts like he or she doesn’t need to obey traffic signals, but moreover, I’m just thankful for all that we do have here in Chicago. There are miles of paved paths just for bikes. There are bicycle safety awareness programs for motorists. There are bike lanes on the city streets. And if people do roll down their windows to yell at you, it’ll be for some transgression other than simply “being a bicyclist.”

Many people may think of Victory Gardens when they hear the term “urban gardening.” During war time individuals across the country planted gardens in yards and on unused plots. Eleanor Roosevelt planted one at the White House during World War II. Today, however, gardens are back in the limelight – even the White House has one again.

The benefits of gardening in the city are many – and gardens can be even more important in neighborhoods that lack access to good and affordable produce even in stores (“food deserts”). A family garden provides a combination of increased nutrition and decreased cost (some estimate savings of $200 to $500 per year). It also adds a little fun in seeing plants grow.

But what if you don’t have a yard? Unused plots can also be converted into community gardens. Not only do they create a garden oasis, but they can also create an opportunity for neighbors to meet and cultivate a bit of the future together.

A local nonprofit, Growing Home, uses urban agriculture to cultivate lives at a whole different level, as a transitional job training program. Low income and formerly homeless individuals nurture plants in fully organic urban farms. Two of its sites, in fact, are in the middle of the city. Much of the produce is ultimately sold in farmers markets or through delivery, and 100% of the proceeds go back to supporting the program. 

My dinner in the suburbs was great. The food I ate had excellent flavor and I was able to explore a tremendous garden. But I really didn’t have to go out of the city for that experience. Urban gardens, it turns out, are growing more than veggies right here.

Tax Credits.

By incorporating sustainable materials and energy saving products in your home improvement project, you can recoup even more of your project costs and generate a social return. Thanks to President Obama’s America Recovery and Reinvestment Act of 2009 (ARRA) that was signed into law last February, tax credits have been extended and expanded for energy-saving improvements that had expired two years ago. This will save you money at tax time!

Tax credits are available in 2009 and 2010 for 30% of the cost of energy-efficient doors and windows, insulation, air conditioners, furnaces, heat pumps, and boilers for your primary home, up to a lifetime cap of $1,500. Plus you can include the cost of installation for these products. Starting this year, solar water heaters, geothermal heat pumps, and wind energy systems are also eligible for a tax credit of up to 30% of the cost and are available until 2016. More information about energy-efficient improvements and tax credits is available from the Alliance to Save Energy at www.ase.org.

Lower Utility Bills.

By conserving energy you lower your monthly utility bills by 25% to 45%. By including double-paned windows and extra insulation in the attic you can keep cool or warm air from escaping so the HVAC system doesn’t have to work as hard to maintain the right temperature.

Healthier Environment.

And the less electricity and water you use, the less of an impact you make on the earth’s resources while also reducing the amount of greenhouse gas emissions being emitted into the environment. By some estimates, one-third of all hazardous gases are emitted by homes. To discover the more than 40 categories of Environmental Protection Agency (EPA)-approved, home-improvement products and materials like insulation, appliances, windows, siding, and more, visit www.energystar.gov.

Make it Happen.

From our experience with ShoreBank’s Home Energy Conservation Loan Program, I suggest contacting a certified home energy auditor to arrange an in-home inspection of air leaks, insulation, and overall efficiency of mechanicals and appliances to help you determine which improvements offer the best value and environmental impact.

For more information, please visit, www.sbk.com.

When we began planning for our application for a New Markets Tax Credit allocation–a federal tax credit for commercial investments in low income communities–we had numerous discussions internally about how to use the program to promote green projects in Chicago, Detroit, and Cleveland. Eventually, we made the controversial decision to focus exclusively on financing/supporting projects involving green buildings, alternative energy installations, and energy efficiency retrofits. The assumption was that we could use the subsidy provided by the tax credits to incent borrowers to pursue LEED certification or capital intensive but cost effective green technologies and design features. We were convinced that we would have to tussle with potential investees about the requirements and hold fast to our commitments in the face of significant push-back from the project sponsors.

Interestingly, now that we have been awarded a $35 million allocation of the tax credits, we are discovering a vastly different landscape. Our growing pipeline of potential projects consists of a wide array of building types: retail, hotel, mixed-use, industrial, education, and office. Perhaps the only commonality among them is their intent to achieve at least a LEED Silver certification and inclusion of alternative energy systems and technologies. More telling, all of the sponsors were committed to achieving a LEED rating prior to reaching out to us about tapping our New Markets Tax Credits allocation. We did not have to push the developers or even initiate the conversation about choosing to build green. LEED certification was part and parcel of their plans from the outset.

There are a variety of reasons for the decisions to build green. In many cases, doing so is required for other types of public subsidy, such as TIF assistance, Enterprise Zone benefits, or allocations of low income housing tax credits. But reasons extend beyond these governmental requirements. In some cases, the developers believe “green” offers a competitive advantage. In other cases, sustainability is a fundamental component of the developers’ “triple bottom line” objectives. An example of the latter is the redevelopment project planned for a vacant commercial building on Chicago’s southeast side, not far from some of the planned Olympic venues. For the developer, this green project offers a profitable way to promote development in this very needy tract–the tract is under 20% of the area median income and has a poverty rate above 40%, making it one of poorest in the city. Yet, this project is about bringing not only 100 new jobs to this underserved community, but also healthy food options to residents of this food desert through the opening of an organic produce store.

We are pleased to see this progression in the marketplace and excited to help further the green economy by helping these great projects get off the ground (none could move forward without the subsidy provided by these tax credits). With developers more open to green requirements than we expected, we can push further by catalyzing creation of new types of financial modes involving third party ownership of alternative energy systems, being more stringent around energy efficiency requirements (as well as “green” design), and promoting greater opportunity for residents.